04 Jun onomic Thinking
Question
ECN 5050 – Economic Thinking
Data Exercise 2
This exercise is designed to assess your ability to manipulate and analyze data in
accordance with Course Competency (CC)#5: Locate, analyze, and interpret
macroeconomic data.
Instructions:
•Put all of your work in one file;
•Write your name in the header;
•We need to see your work in Excel (i.e., formulas). Do not copy and paste numbers from
your original worksheet to a new worksheet.
When submitting, make sure that the cells in your worksheet show formulas.
Background:
Over the business cycle, many macroeconomic data series move together. The investment
component of GDP is most volatile, and government expenditures typically increase during
recessions to offset declines in private-sector expenditures. However, each business cycle is
caused by different reasons, and therefore, each business cycle is different.
Assignment:
You work as an analyst at an investment bank. The CEO of the firm just came back from the
Annual Policy Symposium at Jackson Hole. He tells you that he listened to the presentation by
Professor Robert Hall, who chairs the National Bureau of Economic Research’s Recession
Dating Committee. The CEO hands you the paper by Professor Hall, “Why Does the Economy
Fall to Pieces after a Financial Crisis?” and wants you to update the figures 1 and 4 in the paper. Specifically, figure 1 plots the change of components of GDP from the second quarter (April-
June) of 2008 on, and figure 4 plots the yield spread between 20-year Treasury bond and Baa
corporate bond from January 2007 on.
a.You have to update the figures 1 and 4 using the most recent data available. Use Excel and
create graphs similar to the figures 1 and 4 using data up to the most recent period. All data
series are available at St. Louis Federal Reserve Bank’s FRED®
(http://research.stlouisfed.org/fred2/). Download appropriate series in Excel.
•To download data from FRED®, you have to register.
You have to use “real” series for all GDP-related data. They are available quarterly.
•You need the following quarterly series for figure 1:
Consumption:
Real Personal Consumption Expenditures: Nondurable Goods
Real Personal Consumption Expenditures: Services
Investment:
Real Personal Consumption Expenditures: Durable Goods
Real Gross Private Domestic Investment, 3 Decimal
Government:
Real Government Consumption Expenditures & Gross Investment, 3
Decimal
Net Exports:
Real Net Exports of Goods & Services, 3 Decimal
•Use the monthly series for the interest rates (figure 4):
20-Year Treasury Constant Maturity Rate
Moody’s Seasoned Baa Corporate Bond Yield
•Since the oldest data you need for this exercise is from January 2007. You may want to
delete data prior to January 2007 to simplify your worksheet
•You need to combine worksheets for figure 1 and figure 4 into one file. To combine two
files into one, use “Home-Format (Cells)-Move or Copy Sheet” and move one sheet to
the other “book.”
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