Question
can you help me with this question? for the data analysis For this set of questions, you need to upload your written answers to each
can you help me with this question?
for the data analysis
For this set of questions, you need to upload your written answers to each question and Excel file with computations (or some other Spreadsheet). Your answers can be typed in a word processor or written by hand, and then uploaded as a PDF.
1. Your first task is to download the data from FRED. You will need to download three GDP series, labeled Gross Domestic Product by Expenditure in Constant Prices: Total Gross Domestic Product for United States, Canada, and Korea. The data must be Seasonally Adjusted and at a Quarterly frequency. The time horizon is 1961:Q1 and 2020:Q3 (here Q1 means 1st quarter and Q3 means 3rd quarter). We will call each series Yi,t where i denotes the country, so i = {US,CA,RK} and t denotes the period (composed by a year:quarter pair). Save these results in a spreadsheet.
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2018
2019
2020
PQ
PQ
PQ
Apples Bananas
5 20 70 40
6 20 71 45
7 21 73 45
- (a)De-trend each series using the linear regression method. For each country i, you need to compute and report the intercepts ?i and slopes ?i of the regression equation
- ln(Yi,t) = ?i + ?it + ?i,t,
- where i denotes the country, and ?i,t represents the error term. Please show intermediate steps on your spreadsheet, and clearly indicate where the intercepts and slopes were computed. You should report one intercept and one slope for each country.
- (b)Using the results from the previous step, what can you say about the annual long-run growth rates of these three countries? Be as precise as possible (e.g. use computed numbers, not just anecdotal evidence). Hint: make sure to compute your quarterly growth rate to an annual one).
- (c)Using the results from part (a), compute the deviations from trend (e.g. the difference between the actual GDP values and the fitted values in each coun- try, see class notes for details) in your spreadsheet. These will represent GDP fluctuations and be used to characterize business cycles of these countries in the next questions.
- (d)In one figure, plot the GDP fluctuations over time for each country (that is, you will have three lines that move over time). To the best of your ability, explain what you see.
- (e)Which country has the largest volatility of output over the business cycle? Be as precise as possible (e.g. use statistics on GDP fluctuations and not just eye-ball the plot).
- (f)How correlated are the business cycles of Canada and US? How correlated are the business cycles of Korea and US? (again, present statistics using the GDP fluctuations). Explain intuitively.
- (g)If you were to invest in any of these countries, which one would you choose to put your money on and why?
2. Wenowwanttoseehowsensitiveourresultsaretoanalternativede-trendingmethod. To do this, download the same data from FRED, but expressed as Percent Change from Year Ago and answer the following:
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- (a)What can you say about the annual long-run growth rates of these three coun- tries? Be as precise as possible How does it compare to the rates computed before?
- (b)In one figure, plot the evolution of YoY growth rates over time for each country (that is, you will have three lines that move over time). Compare to what you found in part (d) of question 1.
- (c)Compute the standard deviation for each country, and compare to the volatility measures obtained before. Why are they different?
- (d)How correlated are the YoY growth rates of Canada and US? How correlated are the YoY growth rates of Korea and
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