MGMT 673 – Global Economic Analysis
Assignment 1: The Great Recession
This assignment is due by the end of Module 2.
The global recession that began in 2008, generally known as the Great Recession, was the worst economic downturn since the Great Depression of the 1930s. The objective of this assignment is a deeper understanding of the relationship between economic indicators and the business cycle. You will track several important economic metrics through this extraordinary recession and recovery.
Begin by choosing a country of interest from those listed in Marthinsen Appendix
1-1 (Excluding the United Kingdom as it is provided as an example). Using the International Monetary Fund’s (IMF) World Economic Outlook database, obtain the following economic metrics for the years 2007 to the present: 1. Gross Domestic Product, 2. Investment, 3. Saving, 4. Inflation, 5. Unemployment rate, and 6. Government debt. Data for some countries may be incomplete. If so, please choose another country.
For this assignment, begin with an introduction explaining the purpose of the paper and the country chosen. Then, present these metrics graphically so that relationships to the contraction and subsequent expansion in GDP are apparent. Detailed guidance on how to create a graph in MS Excel is provided below. The IMF database allows for several choices for the computation of each metric, so notes to the graph and in raw data should specify what the metric measures, for example, year over year percentage change in GDP. Next, explain how and why each varied during the course of the Great Recession. Determine whether each indicator (except GDP, which is the measure of the recession) is procyclical, countercyclical or acyclical. Did the indicator move as the discussion in Marthinsen (see Exhibit 4-13) suggested? If not, suggest a reason.
When interpreting the data, keep in mind that some indicators are computed as a year over year percentage change. If GDP, for example, drops from a 5% year over year increase in one year to zero percent (0%) in the next, then GDP remained unchanged over the two year period. Similarly, some indicators, such as Savings, are computed as a percentage of GDP. If Savings as a percent of GDP showed no change from one year to the next, but GDP declined, then the Savings declined with GDP.
The paper should be in APA format. Use an APA style guide such as the Purdue Online Writing Lab. Purdue OWL also includes an APA sample paper which may be helpful. Do a search within the Purdue OWL website for “sample APA paper.” The paper should not exceed four pages excluding a title page and reference list and appendix.
The graph of the economic indicators should be placed in the body of the paper for easy reference but the raw data is best suited for an appendix.
Creating an Excel Chart Using IMF Data
Access the IMF World Economic Outlook (WEO) database with this path: IMF Home/Data and Statistics (top menu)/ World Economic Outlook Databases (scroll down to find) /World Economic Outlook Database (most recent)/Download WEO Data – By Countries/then select the desired country and select the desired metrics in a five step process. Generate the report which may then be downloaded in an Excel compatible format. The database should look like this:
Here is an example of the report for the United Kingdom.
The data from the IMF report were then copied and pasted into Excel. Next, the Excel table was modified by deleting some unneeded columns and a row was added that computes the budget deficit as a percent of GDP. Here is the result.
|Subject Descriptor||Units Scale||2007||2008||2009||2010||2011||2012||2013|
|Gross domestic product, constant prices||Percent change||3.427||-0.769||-5.17||1.66||1.117||0.251||1.756|
|Total investment||Percent of GDP||18.195||17.092||14.071||15.016||14.934||14.656||14.382|
|Gross national savings||Percent of GDP||16.009||16.149||12.656||12.323||13.471||10.925||11.045|
|Unemployment rate||Percent of total labor f||5.35||5.725||7.65||7.85||8.1||7.95||7.604|
|General government revenue||Percent of GDP||36.964||37.433||35.561||36.181||36.943||36.806||37.737|
|General government total expenditure||Percent of GDP||39.848||42.449||46.818||46.155||44.729||44.768||43.536|
|Deficit = revenue – expenditure||Percent of GDP||-2.884||-5.016||-11.257||-9.974||-7.786||-7.962||-5.799|
Finally, the spreadsheet was modified to a format suited for creating a line graph.