MGMT 673 – Global Economic Analysis Assignment 1: The Great Recession done june 2015

MGMT 673 – Global Economic AnalysisAssignment 1: The Great Recession

Due Date

This assignment is due by the end of Module 2.

Objective

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.

Directions

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 Total investment

Gross national savings Unemployment rate

General government revenue

General government total expenditure Deficit = revenue - expenditure

Percent change Percent of GDP

Percent of GDP Percent of total labor f

Percent of GDP Percent of GDP

Percent of GDP

3.427 18.195

16.009 5.35

36.964 39.848

- 2.884

-0.769 17.092

16.149 5.725

37.433 42.449

- 5.016

-5.17 14.071

12.656 7.65

35.561 46.818

- 11.257

1.66 15.016

12.323 7.85

36.181 46.155

- 9.974

1.117 14.934

13.471 8.1

36.943 44.729

- 7.786

0.251 14.656

10.925 7.95

36.806 44.768

- 7.962

1.756 14.382

11.045 7.604

37.737 43.536

- 5.799

Finally, the spreadsheet was modified to a format suited for creating a line graph.

2007

2008

2009

2010

2011

2012

2013

GDP Investment

Savings Unemployment

Deficit

3.427 18.195

16.009 5.35

- 2.884

-0.769 17.092

16.149 5.725

- 5.016

-5.17 14.071

12.656 7.65

- 11.257

1.66 15.016

12.323 7.85

- 9.974

1.117 14.934

13.471 8.1

- 7.786

0.251 14.656

10.925 7.95

- 7.962

1.756 14.382

11.045 7.604

- 5.799

Excel will create a graph with a few clicks. Select the entire table, then use Insert/Line graph (do not choose one the “stacked” graphs as these add each data point to the

previous). Adding a chart title and moving the X-axis label to the bottom yields this chart:

UK Economic Indicators

20

15

10

GDP

Investment

5

Savings

0

Unemployment

-5

Deficit

-10

-15

2007

2008

2009

2010

2011

2012

2013

If you need help with creating graphs, Excel has an excellent help feature. Many videos are also available at YouTube.

Percent