Lessons from the Fed Challenge
All in. That’s how Dave Gulley and I approach the monetary-policy competition of the Fed Challenge. Students train intensively for eight full months, all for a one-day academic competition against some of the best schools in the nation. That level of preparation is necessary to succeed against such stiff competition at the regional and national level.Monetary policy has become incredibly complex since the 2008 financial crisis, so the amount of time and effort needed to succeed in competition is enormous. Essentially, your job is to become Ben Bernanke. The fate of the economy, with millions out of work, rests in your policy prescription.”You learn how to take in an enormous amount of information without becoming overwhelmed” says team member Tom Moore. “This skill became extremely useful to evaluate and understand incoming information.”Starting in March, the team digs into large stacks of readings and takes tests for six months, straight through summer. In September the real work starts. Why would any students voluntarily subject themselves to this punishment?Erik Larsson’s motivation was “the opportunity to debate monetary policy with some of the most influential people from the Fed in the very room where the FOMC makes its policy decisions.” This they did, with Fed economists Robert Barsky, Krishna Guha, and Governor Elizabeth Duke as judges. And they may have given Chairman Bernanke a thing or two to think about too. Students do it for the knowledge gained and the desire to be a part of something larger than themselves. And most on the team, like Tom Moore, “are competitive by nature. The FC provides the opportunity to challenge myself intellectually, directly against other students.”It seems to be working. In the last four years, Bentley’s FC teams have come in first place twice, and second place twice in the regional competition; that’s a better record than perennial powerhouse Harvard over the same time. The two national competition advances resulted in a national championship and a second-place finish for Bentley. Perhaps even more remarkable, in a period of tremendous uncertainty over the economy from the fiscal cliff, elections, and global weakness running up to competition time, Bentley’s team recommendation nailed perfectly the expiration of Operation Twist and the exact ramp up in asset purchases the Fed committed to in December.Said Brian Rogers of the 2012 team: “We began learning how to compete at the highest level by competing against each other. Each class reached a higher level than the last because nobody wanted to be outdone.”Team members often note how the Fed Challenge supercharges their college experience: when they interview for jobs upon graduation, they often know far more about monetary policy and financial markets than their interviewers.This type of experiential learning is growing in importance, especially amid the current debate over whether college is worth the cost. Bentley has been at the forefront of these types of programs for a while, which may be why Bentley has an enviable record of job placement. Meantime, the 2013 team will soon assemble. It’s off to make more rocket fuel …Aaron L. Jackson is associate professor of economics at Bentley University.