Question

A measure of real interest rates can be approximated by the Treasury Inflation-Indexed Security, or TIIS. Go to the St. Louis Federal Reserve FRED database, and find data on the five-year TIIS (FII5) and the personal consumption expenditure price index

(PCECTPI), a measure of the price index. Choose “Quarterly” for the frequency setting for the TIIS, and choose “Percent Change From Year Ago” for the unitssetting on (PCECTPI). Plot both series on the samegraph, using data from 2007 through the most currentdata available. Use the graph to identify periods of autonomous monetary policy changes. Briefly explain your reasoning.

Short answer

For illustration, to lower the inflation rate central banks increased$\overline{r}$ to raise the real interest rate this is also known as tight fiscal courses and in recession, fiscal policymakers lowered the real interest rate to advance economy and to stop pretentiousness from falling.

Step-by-step solution

Concept Preface 

Prolusionprivateconsumptioncharge(PCECTPI) is thecriticalexpedientofaccountspending onaffairsandbusinessesin the USeconomy.lt represents about$66$ ofdomesticfinalspending and along with thesecolumns, it's thedirectmachinethat drivescomingeconomicgrowth.
Treasurypretentiousness-ListedSecurities(TIIS) Alludes in abroadrangeofU.S Treasury covers that arepretentiousnesslisted. ForillustrationTIPS. The TIIS increases withpretentiousnessand decreases with deflation, asestimatedby the consumerpriceindex.

Explanation of Result 

The below graph shows the plot of Treasury pretentiousness listed Security (TIIS) and individual Consumption Expenditure Price hand (PCECTPI) from the cycle 2007 to 2017.

The periods of independent changes to fiscal courses as shown by the graph are2007-5-01, pretentiousness ratebetween2.00-3.00 followed by the change in2007-10-01 with pretentiousness ratebetween0.00-1.00. There is an upward trend on2006-7-01 with pretentiousness rate between$2.00$ and$3.00$. In the coming couple of times, changes in fiscal courses took drastic change as on2012-07-01, it reached to inflation rate between-1.00 and2.00 and again in2015-07-01, it reported upward trend with pretentiousness rate between 0 and1.00. The reason ahead all these independent changes to fiscal courses is to control the pretentiousness rate. For illustration, to lower the inflation rate central banks increased to raise the real interest rate this is also known as tight fiscal courses and in recession, fiscal policymakers lowered the real interest rate to advance economy and to stop pretentiousness from falling.