D15.3 [Comparing business cycles across countries] 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 Federal Reserve Economic Data (FRED) website (fred.stlouisfed.org), examine the behavior of the U.K. economy from 2007 to 2011.

a. Download quarterly data for real GDP (GBRRGDPQDSNAQ) and the GDP deflator (GBRGDPDEFQISMEI) for the United Kingdom from 2006 to 2011. 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 (LRHUTTTTGBQ156S) 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 part (a) for the years from 2007 to the present in the same graph. Download the same three data series GDP (GDPCl), GDP deflator (USAGDPDEFQISMEI) and unemployment rate (LRHUTTTTUSQ156S) for the United States for the same years. Briefly discuss the similarities and differences in the experiences of the United Kingdom and the United States during those years.