Five MSU economics students attended the College Fed Challenge competition in Chicago on Monday.
The competition, which had never been held in the Midwest, required participants to understand the Federal Reserve System, analyze the economy and make policy recommendations. The students were asked to make a 20-minute presentation on their recommendations for national monetary policy.
The recommendations are based not on predetermined scenarios, but rather on the current state of the U.S. economy.
"It brings an urgency and a reality to the competition that you can't do with a pre-packaged scenario," said Tim Schilling, an economics education specialist at the Federal Reserve Bank of Chicago. "It approximates what federal reserve economists do because they don't have a pre-packaged scenario to make policy from. They have to make policy in the real world, and the real world is constantly changing."
Economics Professor Norman Obst oversaw the work of the students, but mainly left researching up to them. Economics senior Genna Falzon said the general public should understand the basics of economics to make an informed decision in today's presidential election.
"The entire business world all revolves around the economy, so the economy is basically the foundation of everything," she said. "To understand the economy you kind of understand where we're going as far as our condition is as a country financially."
The students recommended the Federal Open Market Committee to keep the federal funds rate constant in order to help the economy recover from the recession two years ago, said Jon Vaughn, a finance and economics senior and president of MSU's Undergraduate Economics Association. He said researching for the competition prepared him for real life.
"From economics classes taken, you learn theory, but you don't necessarily learn how to apply any of it," he said. "We've been able to research and apply information we've learned in class and in our books to the real world. We've been able to understand a little bit more than the average economics major."
During the final two weeks, the students spent as many as eight hours per day preparing for the tournament.
Northwestern University won Monday's competition.
"They worked so hard and did so much, it didn't matter whether they won or not," Obst said.
