ALBION, MIch. -- Demonstrating their understanding of monetary policy, a team of senior Gerstacker students won the statewide “College Fed Challenge” hosted by the Detroit Branch of the Federal Reserve Bank of Chicago. Albion beat out teams from Central Michigan and Michigan State universities for the win earlier this month.

“The 20-minute presentation and 20 minutes of fielding questions felt like quite a long time,” said team member Kevin Capehart, “but we did a great job with the presentation, presenting data on growth and inflation, its implications for the economy, and how we thought monetary policy should respond. For the question and answer section, we were able to think on our feet and answer questions that ranged from the workings of the Fed to our opinions on the housing bubble.”

The Albion team, consisting of Capehart and fellow students Bill Harrison and Jim Holms, coached by economics professor Jon Hooks, prepared for the competition by studying the current state of the economy, the basics of monetary policy, the structure of the Federal Reserve System, and the recent stance of the Federal Open Market Committee.

As winners of the statewide “Fed Challenge,” Albion goes on to represent Michigan in next month’s District Fed Challenge against teams from Illinois, Indiana and Wisconsin. The district competition requires participants to use their knowledge of existing economic, financial and international conditions to prepare a forecast of the economy, to identify potential concerns, and to make recommendations for national monetary policy.

“Although we did well at the regional competition, the district competition will be much harder as we will be facing schools with top-ranked economic departments such as the University of Chicago and Northwestern,” Capehart explains. “We’re trying to improve our presentation, updating it for the newest economic developments, and just trying to be well-informed for the question and answer section by talking personally with the economics and management faculty.”

The team says the experience has already been rewarding and the district competition will be another worthwhile challenge. They hope to win at Chicago, but realize they have both applied and enhanced their knowledge gained in Albion’s classrooms and during their Gerstacker internships. As an intern at the Federal Reserve Bank of Boston this summer, Capehart learned about the Fed first-hand. Harrison, an intern at NorthPointe Capital, spent the summer analyzing at the stock market, and now understands not only the effects of monetary policy, but how it is devised.

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