During the 2007-2009 period, the economies of the United Kingdom and the United States experienced similar problems. High oil prices and a housing bubble affected both economies. The financial crisis in the United States also affected investment in the United Kingdom, both by limiting credit and by increasing risk premiums. Using data from the St. Louis Federal Reserve (research.stlouisfed.org/fred2/) FRED database, examine the behavior of the U.K. economy since 2007.
a. Download quarterly data for real GDP (GBRRGDPQDSNAQ) and the GDP deflator (GBRGDPDEFQISMEI) for the United Kingdom from 2006 to the present. Calculate the growth rate of real GDP as the percentage change from the same quarter in the previous year and calculate the inflation rate as the percentage change in the GDP deflator from the same quarter in the previous year. Download data on the unemployment rate (GBRURHARMMDSMEI) for the same time period. For the frequency of the unemployment rate data, select quarterly, to match the frequency of the real GDP and GDP deflator data.
b. Download the three data series from 2007 to the present in the same graph. What do the data indicate about how similar the experience of the United Kingdom was to that of the United States during those years?