Econometric Estimates of the Liquidity Trap Hypothesis
Abstract
During my SIP quarter I held a full time internship
with Data Resources Incorporated (DRI) in the main office in
Lexington, Massachusetts. I was hired as a research
assistant and expected to perform the same duties as most of
the other research assistants.
Section I of this paper is a study of the liquidity
trap hypothesis. This section begins with an overview of the
theory that lies behind the hypothesis as interpreted by
Keynes and his successors. Next, some previously conducted
studies are described in order to provide a background for a
current study. These studies include those conducted by
Howard Pifer, Robert Eisner and Panos Konstas and Mohamad
Khouja. Finally, a recent study of the hypothesis is
conducted, the results are listed and conclusions are drawn
from the empirical evidence.
Section II contains the project that I created for DRI
during my internship, an explanation of what the project is,
how it was created and how it will be used in the future by
DRI employees. The project was created for the Foreign
Exchange Service offered by DRI. This service provides
continuous coverage of exchange rates, interest rates and
bond yields for thirty-two industrialized and developing
countries, including comprehensive analysis of the
frequently traded currencies in Latin America and Asia.
Section III is a synopsis of how my internship with DRI
has affected my future career plans. In addition, this part
explains my career goals and graduate school plans.