Lehman College has won the finals of the Federal Reserve Bank of New York’s college fed challenge a competition where macroeconomic knowledge and savvy is the prime currency. The fed challenge team’s success comes in its first year of participation and its quartet of undergraduate economics and business students prepared tirelessly for the competition.
The winning students Jasim Ahmed, Jigme Choerab, Jairo Guerra and Nicholas Wilk, advanced from the preliminary round in October to the “Maiden Lane” finals held at the Fed’s Downtown Manhattan headquarters on November 16. Fed challenge competitors are divided into the Liberty Street and Maiden Lane divisions, depending on the level of economic-related classwork taken.
Professor Nikolaos Papanikolaou, of the Economics and Business Department, has served as the team’s advisor and coach and has helped prepare the students with twice weekly meetings to sharpen their macroeconomics skills such as understanding and interpreting Gross Domestic Product, unemployment rates and price index. The students participated in the Fed Challenge half-day Macro Boot Camp on September 18, introducing them to the intellectual rigors of the competition.
The Lehman competitors have made it a priority to meet as often as possible to discuss policy ideas and to assist each other with research and interpretation of the hypothetical data given to them for the competition. For Senior Nicholas Wilk, the competition has been a life-changing event that “forced me to grow as a person and give more dedication and effort to something than I previously thought possible.” “ The actual fed experience is exhilarating,” Wilk says describing the preliminary competition. “There is the pressure to perform well, the excitement of being in one of the most important central banks in the world and the joy of putting your academic knowledge to use in order to tackle a real world issue. This competition has shown me that success is not only tangible, but probable, as long as you have the passion to pursue it.”
Wilk is majoring in economics and mathematics and wants to pursue a Masters degree in financial engineering after graduation next spring. He gives significant credit for the team’s success to Papanikolaou, whom he says, “encourages and inspires us to achieve more than we think we can.” Papanikolaou says that victory means a trip to Washington, an opportunity to sit in on a Federal Reserve meeting and to meet Federal Reserve Chairwoman Janet Yellen. “I’m looking forward to it just as much as the students,” says Papanikolaou. “To have an opportunity to sit in a room where monetary policy is set by the board of governors is a once in a lifetime experience.” The Lehman team presented their proposal to a team of judges at the Fed in the preliminary round.
The Fed challenge judges are all New York Fed economists and staff and experts on economics and monetary policy. Each team was given a hypothetical competition case study and accompanying set of economic data and were asked to draft a proposal to present. Students are asked to act as if they were federal reserve economists trying to navigate the country through a financial crisis.
“Suppose that four years ago, the United States experienced an unusual economic shock that caused output to fall significantly,” the Lehman team’s hypothetical begins. “Since then, the economy has recovered somewhat, but output and income growth is still very slow.” In drafting their proposal, the team was asked eight questions to analyze based on the hypothetical information and data. Among the questions were: “What difficulties does this situation present for the Fed and “What are all of the options that the Fed has in this situation?”
The judges responded positively to the team with several comments including, “Interesting policy proposal, you showed a strong understanding of monetary policy” and “You understood policy implementations and were effective at answering comeback questions on your own monetary policy proposal.” Teams are scored based on analysis of economic conditions, monetary policy and recommendation and communications/teamwork. For the finals, the teams were asked to refine their initial proposal and respond to questions and criticism provided by the Fed judges.
The judges liked what they heard as Lehman defeated their two opponents, LaGuardia Community College and The College of St Rose. Their next stop will be a meeting with the Fed Chair.
