Go to the St. Louis Federal Reserve FRED database and find data on government saving (GGSAVE).

a) Describe what has happened to government saving from 2005 to the most current data available.

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b) Based on your answer to part (a), what do you expect should happen to real interest rates? Why? Use a savinginvestment diagram to explain.

c) One way to measure real interest rates is through Treasury Inflation-Indexed Securities, or TIIS. Download the 10-year TIIS (DFII10). How has the real interest rate (DFII10) behaved since 2005? Is this consistent with what you expected in part (b)? If not, explain why it may not be consistent.


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