Answer Happy

Since March 2020 we've seen the sharpest recession ever, with the fastest, largest loss of employment since records have been kept. Since that decline, however, has been one of the fastest labor market recoveries on record. In this final, I would like you to interpret these events through the labor market models presented in class. 1. Use FRED to show the evolution of the unemployment rate over the re- cession and what changed it: (50 pts) • Plot the unemployment rate from February 2020 through the present (10 pts) • Plot the finding rate and separation rate in the data over the same period. This should use the series called "Labor Force Flows X to Y" where X and Y are the labor force statuses. This variable in FRED is just a head count, the number going from X to Y, so to make this into a flow rate you need to divide by the number in X, which is also available in FRED. To do the division you can either do that in Excel, downloading both the flow from X to Y and X variables or you can do that within FRED. There are tutorials but you can also go to "Edit Graph”, then under "Customize data" search for the
additional data series, representing X, click "Add" and then write in the formula section "a/b." (20 pts) . With the flow rates from the previous section, plot Alog ft and A log St. (10 pts) • Use the steady state formula for the unemployment rate, take its log and difference from one period to the next (as we did in homework). In the first two months of the pandemic, did changes in stor changes in st+ft (essentially finding) affect the change in unemployment rate more? (10 pts) Notice that in FRED there is another labor force flow, into non- participation ("not in labor force"), so the steady state unemploy- ment rate you get won't be very close to the actual unemployment rate, but the above exercise is still informative.