Economics majors are used to analyzing economic data and trends on tests and problem sets in class.
But class is different than a national competition. And in class, $25,000 isn’t at stake.
After winning the districtwide Fed Challenge competition, the Northwestern team, made up of five economics majors — two sophomore and three juniors — is headed to Washington, D.C., to vie for a national victory on Nov. 30.
The winners will take home not only the national championship, but also $15,000 for themselves and $10,000 for their school.
The Fed Challenge is an annual competition sponsored by the Federal Reserve. Teams from across the country are judged on their knowledge of economic issues and the Federal Reserve system. Only three teams make it to Washington for nationals.
The competition consists of a 20-minute presentation and a 15-minute question-and-answer session. The district competition was judged by senior economists from the Federal Reserve System. The Federal Reserve Board of Governors will judge the national competition.
The experience is not new for Weinberg sophomore Josh Plavner — two years ago he was a member of the winning Fed Challenge team in the high school division.
Because NU heard about the competition late in the fall, NU’s team only had 10 days to prepare for the Chicago competition, said Derek Moeller, a Weinberg junior and Fed Challenge team member. The other five teams — which included University of Chicago, University of Michigan and University of Notre Dame — had about three weeks.
“We were meeting about every day leading up to the competition,” Moeller said. “We spent about 40 to 50 hours that week preparing.”
And the preparation paid off. Plavner said one of the judges’ comments was that NU’s team knew things about the Fed they didn’t even know.
“Teamwork is the biggest factor in our success,” said Weinberg junior and team member Alex Leung. “We had good team chemistry and we really knew our strengths and how we could best contribute to the team effort.”
NU’s team used its 20-minute presentation time to simulate an actual Federal Open Market Committee meeting. Each team member took on the identity of an FOMC governor or chairman.
Team member and Weinberg sophomore Rosa Li said this took a good deal of preparation.
“We read up on our characters,” she said. “We learned what their perspectives are on economic policy and what they believe.”
The team researched more than personality.
Moeller said the team also investigated consumer spending, the business market and the foreign exchange market. Because consumer spending is increasing and businesses are doing better, the team proposed the Fed should raise the Federal Funds rate by 25 percent, making it 2 percent. The federal funds rate is the overnight interest rate by which banks loan each other reserves.
“By raising this rate, we can slow the economy and delay inflation,” Moeller said.
At the Nov. 10 FOMC meeting, the Fed raised the federal funds rate as NU’s team anticipated.
Leung said the contest is about even more than learning and money.
“Obviously (the monetary prize) is a nice incentive, but we’re also representing the Chicago district and Northwestern,” he said. “A lot of pride is at stake.”
Reach Corrie Driebusch at [email protected].
