Question 1
Go to either the OECD at https://data.oecd.org/ (https://data.oecd.org/) , World Bank at https://data.worldbank.org/ (https://data.worldbank.org/) , IMFat https://www.imf.org/en/Data (https://www.imf.org/en/Data) , St. Louis Federal Reserve FRED at https://fred.stlouisfed.org/ (https://fred.stlouisfed.org/) or Eurostat at http://ec.europa.eu/eurostat/data/database (http://ec.europa.eu/eurostat/data/database) . Take one data source as your base source, and if this does not have all data for your country you can resort to one of the others.
Download the following data (time) series:
1. Current account balance as a % of GDP
2. General government debt as a % of GDP
3. Interest rate on government bonds (10 year), also called “Long term interest rate”, in %/annum 4. Exchange rate against the US dollar
5. Total GDP, in millions of US dollars
6. Investment (usually Gross Fixed Capital Formation), in millions of US dollars
7. Gross national savings as a % of GDP (savings rate)
Instructions for choosing the series:
Download the above mentioned data only for “your country”. No need to download this data for the US as well.
Download quarterly time series. If these are not available, download yearly.
Take at least 10 years of data (more is better) up until the latest available year or quarter, which is most likely 2018-Q4.
If your assigned country does not have a sufficiently long history, it can be shorter than 10 years; please indicate this in your answer.
Important: you may have to look in different databases to find all the series. Sometimes, variable series may be very short or not even available at the above mentioned sources; you are then invited to take a further look for comparable series at other sources. As long as you have series that you can plot in a graph and that allow you to answer the questions below.
Then do the following
1. Present the time series of all variables in one table per frequency: one for quarterly variables, and the other for yearly ones. Two tables in total.
2. Each variable should be in one column, and each table should fit on one page.
3. Put them on the first page of your answer file and provide an Excel file.
Question 2 Use the dataset you have created to answer the following questions:
- Plot government debt and the interest rate in two graphs and put them next to each other (if you know how to plot both quarterly and yearly data in one graph, you are welcome to do so). Do they move together, or not? Explain their development over time and (lack of) co-movement in economically intuitive terms. (50 words).
- Do the same for the current account and the exchange rate. Do they move together, or not? Explain their development over time and (lack of) co-movement in economically intuitive terms. (50 words).
- What macroeconomic events and/or policy responses related to your assigned country can explain both the development of debt & interest rates and the current account & the exchange rate? If you want, you can provide a few references (not Wikipedia). (75 words)
- Is your assigned country in a currency union, or does it have a currency peg (Google is your friend here)? What does this mean for its policy possibilities to remedy large current account imbalances? (50 words)
Question 3
Use the dataset you have created to answer the questions below. Note: these are about chapter 20, which will be treated only after the computer lecture. But you can take information from the book and lecture slides!
- Calculate the investment rate as a % of GDP, and then provide a table with the resulting time series. Add this series to the Excel file you made for question 1.
- Plot the savings and investment rates (both in % of GDP) in one graph.
- Do you see any evidence for the so-called Feldstein-Horioka puzzle (home bias), or has it
disappeared over time? (50 words)
Country list
Group
Group 1 Group 2 Group 3 Group 4 Group 5
Country assigned
Argentina Australia Austria Bangladesh Brazil
Group 6 Group 7 Group 8 Group 9 Group 10 Group 11 Group 12 Group 13 Group 14 Group 15 Group 16 Group 17 Group 18 Group 19 Group 20 Group 21 Group 22 Group 23 Group 24 Group 25 Group 26 Group 27 Group 28 Group 29 Group 30 Group 31 Group 32
Canada
Chile
China, PR Colombia
Czech Republic* Denmark* France Germany Iceland
India
Israel
Japan
Korea
Mexico Netherlands Norway
Peru
Portugal Romania Russia
South Africa Sweden* Switzerland Thailand Turkey
United Kingdom Uruguay
