Spring 2021 (Remote) HW#9 Data Problem ECON 3102-003

Working with Data: Business Cycles. (10 points)

Read the following instructions and follow along to create 6 graphs showing the growth in the real components of
expenditure approach GDP. This builds on the data problem from the previous assignment.
1. Look at the last digit of your student ID. This will determine which country you will gather data on. This
will be the same as the country as from the previous assignment:

Last Digit Country

0 or 1 Canada
2 or 3 Sweden
4 or 5 Australia
6 or 7 Mexico
8 or 9 Japan

2. Locate the data you downloaded for the previous assignment. Make sure you have the following 6 rows of
data for the years 1975-2015. You should already have found these in the previous assignment:
• Real GDP (GDP, expenditure approach, constant prices in OECD base year)
• Real C (Final consumption expenditure, households and non-profit institutions serving households:
current prices, but adjusted for inflation using the deflator you calculated)
• Real I (Gross capital formation: current prices, but adjusted for inflation using the deflator you calcu-
lated)
• Real G (Final consumption expenditure of general government: current prices, but adjusted for inflation
using the deflator you calculated)
• Real X (Exports of goods and services: current prices, but adjusted for inflation using the deflator you
calculated)
• Real M (Imports of goods and services: current prices, but adjusted for inflation using the deflator you
calculated)
3. For each of your 6 “real” variables, do the following steps to crudely detrend the data:
• Take the logarithm of each real data series.
• Calculate the trend for each logarithmically-adjusted variable.
• Convert the trend values back from logs to constant price terms.
• Calculate the percentage difference between the actual data points and your detrended datapoints. These
differences are the cyclical components, or the percentage deviations from trend.
4. Graph these cyclical components across time for each variable. Make sure your graphs are clearly labeled,
with a descriptive title, and properly labeled axes.
5. Finally, calculate some statistics about the business cycle data you found:
• Calculate the standard deviation in the cyclical component of each variable. (Are these variables more
or less volatile than GDP? )
• Calculate the correlation coefficients between each cyclical component and the cyclical component of
GDP. Are your variables (procyclical/countercyclical/acyclical?)
• Make a small table with these statistics, and briefly describe what they mean.

Deliverables: The six graphs from part 3 of this problem, the table of results from part 4, and your interpretation
thereof.
The Table of Results should look something like this:
Y C G I X M
Standard Deviation 0.0381 0.0247 0.0625 0.1112 0.0943 0.0524
Coorelation with Y Component: - 0.8233 0.625 0.3456 -0.2354 0.4652