The competition was stiff.
American University economics students were competing against fellow undergraduate finalists from the University of North Carolina and the University of Virginia at the district Fed Challenge, analyzing the current U.S. economic situation and making recommendations for monetary policy.
But the AU team swept the finals of the prestigious competition, held November 13 in the boardroom of the Federal Reserve in Richmond, Virginia.
“AU has sent teams to the competition for a number of years, but this is the first time we have advanced to the district level, let alone the national level,” said Evan Kraft, economist in residence at AU’s College of Arts and Sciences, and the team’s coach. “We are all thrilled to win.”
The winning team was made up of seniors Peter Blankenship, Ayesha Cooray, and Zachary Smith.
At the Richmond finals, teams gave a 15-minute presentation and were scored on their knowledge of the Federal Reserve, the current economic state, and monetary policy, as well as their responses during a question-and-answer period, according to the Richmond Fed.
“Our presentation was broken into three parts,” said Blankenship, a statistics and economics major. “The first discussed the current health of the economy, such as output, inflation, housing, etc. The second part discussed the Federal Reserve's response to the problems in our economy, and our analysis that it was inadequate due to its cautious and vague nature. Finally, we then gave our proposal, known as NGDP [Nominal Gross Domestic Product] targeting, which boils down to the Fed having a policy that will ‘make up’ for the bad numbers in the past few years by being extra aggressive in the future. Basically, they should try to generate more inflation to jump-start the economy and get us back to the same levels of economic activity seen before the crisis.”
The AU students started preparing for the competition in Kraft’s senior research seminar. Five groups looked at important aspects of the U.S. economy, and in October Kraft asked for volunteers to compete in the Fed Challenge.
“They utilized the class's research and made significant efforts of their own, creating their own presentation,” Kraft said. “According to the judges at Richmond, our team was the only one not to use written notes in addition to their PowerPoint presentation.”
So why did the AU students win?
“First, I think having three people has really helped,” said Smith, a mathematics and economics major. Most teams had five members. “We’ve developed a really good sense of who knows what and so we can defer to each other in answering questions.”
Smith added, “I think the most important part of our success is how close-knit we are as a team. We have each other’s backs in front of the judges and I think that shows.”
Cooray said another key was preparation.
“We worked hard to be prepared for the questions we anticipated and put a lot of time into learning the ins and outs of our policy recommendation,” said Cooray, an economics and international studies double major. “We’ve also practiced frequently so we have a clear and cohesive presentation.”
Team coach Kraft had his own take on the students’ winning performance: “They did a superb job of concisely analyzing the current economic situation and pointing out important ambiguities in the Fed's public statements,” he said. “Their proposal for a new policy framework draws on existing proposals, but places these proposals directly in the context of the sluggish recovery and stubbornly high unemployment faced by the U.S. today. In addition, the team members answered questions from the judges with great poise and insight.”
AU won the College Fed Challenge’s preliminary round on November 1 at the Richmond Fed’s Baltimore office. McDaniel College and the University of Maryland Eastern Shore were the other finalists. Loyola University, Mount St. Mary’s University, Notre Dame of Maryland University, and Salisbury University also competed.
The Richmond Fed, one of 12 regional Federal Reserve Banks, serves the district that encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia. It holds the competition to foster better understanding of the Fed, economic conditions, and the economy’s effect on our lives.
AU received an honorable mention in the national Fed Challenge on November 27 at the Federal Reserve Board of Governors in Washington, D.C.