Why College Students Are Role-Playing as Central Bankers

The College Fed Challenge teaches students about monetary policy.

Ali Haider Ismail’s hands were shaking. Waiting in a Federal Reserve governor’s corner office in Washington, with its fireplace and shelves of books and manuals, he thought about what it would be like to work for the central bank. Then he had to pee again.

It was early December, and Ismail was preparing to argue that the Fed should raise interest rates three times in the coming year, dissenting from those who supported more gradual increases. He knew he’d be grilled on policy recommendations and economic forecasts, and he knew they’d throw some curveballs.

Ismail isn’t a central banker. He’s a senior at Rutgers University who, along with four schoolmates, would win the three-day College Fed Challenge, a competition the central bank runs to teach students about monetary policy and to promote economics as a field of study or career.

Under the chandelier of the Fed’s boardroom, the Rutgers students sweated their way through a presentation and questioning by the judges—Ellen Meade, a senior adviser at the Fed; William Strauss, senior economist at the Federal Reserve Bank of Chicago; and Argia Sbordone, a vice president at the Federal Reserve Bank of New York.

“I was so nervous,” says sophomore Ashton Welles, an economics and computer science major who competes in hackathons in his spare time. “It’s intimidating, because these people are economists. This is what they do all day, every day.”

Ismail, teammates, their faculty adviser, and Janet Yellen at the College Fed Challenge

Source: Federal Reserve

The Rutgers students had rehearsed so much, they could almost recite their presentations from memory. In mock deliberations, team members referred to one another as “Governor,” to replicate official discussions by the Board of Governors. Professors and alumni in business and government—some of them former competitors—drilled the team about labor market data and other issues.

Before the official start on the last day of competition, Federal Reserve Chair Janet Yellen took photos with each of the five finalist teams. In the early rounds, judges praised Rutgers, calling its economic forecast “insightful and well thought out.” Ultimately, the team beat out future economists from Appalachian State, Dartmouth, Princeton, and the University of Chicago.

Two weeks after the event, the Fed increased its benchmark rate by a quarter percentage point, a move widely expected by financial markets. The Rutgers team wasn’t surprised either, having spent 15 hours every week since September poring over news reports and academic papers, even reading the footnotes on former Fed Chairman Ben Bernanke’s blog.

“These are the economics that you learn in class, in practice,” says Ismail, a four-year veteran of the competition who’s double-majoring in economics and mathematics. “After high school you think you’re a big hotshot, you’ve read the macro textbook—and then you walk into the first meeting and you’re like, ‘Oh, man, I know nothing.’ ”

Teammate Karn Dalal, a junior majoring in economics and biomathematics, says the event is a great way to learn more about the Fed and research opportunities there.

Ismail is working on a thesis about the collapse of Bear Stearns. He and teammate Shivram Viswanathan, a junior majoring in economics and mathematics, want to pursue Ph.D.s. But for all the teammates, the real world beckons. In June, Dalal and senior Andrew Lee, a finance major, are headed to Citigroup, for an internship and a job, respectively. Ismail starts at the Chicago Fed after he graduates in May.

The bottom line: College students competing in the Fed Challenge gain a better understanding of how the U.S. economy works.

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