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An Overview of Economic Data Su, Chapter 2, section I
23

An Overview of Economic Data Su, Chapter 2, section I.

Jan 02, 2016

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Page 1: An Overview of Economic Data Su, Chapter 2, section I.

An Overview of Economic Data

Su, Chapter 2, section I

Page 2: An Overview of Economic Data Su, Chapter 2, section I.

Classifications of Economic Data

• Many ways to classify economic data

• Most depend on some observable feature

• Classification helps to put the data in context

Page 3: An Overview of Economic Data Su, Chapter 2, section I.

Primary vs. Secondary Data

• Primary: First Hand. Generated by researcher in experiments. Common in physical sciences. Can be replicated

• Secondary: Collected by another party, typically the government. – Non-experimental– Observational– Needs careful treatment

Page 4: An Overview of Economic Data Su, Chapter 2, section I.

Time Series vs. Cross Sectional

• Time Series - “Dynamic”– Generated sequentially through time

– A measurement of the same economic agent (individual, firm, etc.)

– Dynamic

• Cross Sectional - “Static”– Generated across different agents

– At same point in time

– Static

Page 5: An Overview of Economic Data Su, Chapter 2, section I.

Panel Data

• Combination of cross-sections over time

• Combines features of both types

Page 6: An Overview of Economic Data Su, Chapter 2, section I.

Macroeconomic vs. Microeconomic

• Depends on level of aggregation

• Macro– Measures activity of entire economy– Reflects many agents behavior

• Micro– Measures activity of individuals

Page 7: An Overview of Economic Data Su, Chapter 2, section I.

High-Frequency vs. Low Frequency

• Time Series and Panel distinction only

• Most series are “discrete”

• Categories– Real Time– High Frequency– Low Frequency

• Hourly, Daily, Weekly, Monthly, Annual

Page 8: An Overview of Economic Data Su, Chapter 2, section I.

Frequency Considerations

• Little high frequency economic data exist

• Must use care when mixing frequencies

• Low frequency data can be treated as high frequency data aggregated over time

• Information is lost as high frequency data are aggregated

Page 9: An Overview of Economic Data Su, Chapter 2, section I.

Stocks vs. Flows

• Stock data: Measures data at a point in time– Capital stock, end of month checking balance

• Flow data: Occurs over a period of time– Investment, monthly earnings and spending

Page 10: An Overview of Economic Data Su, Chapter 2, section I.

Units of Measurement

• Data in levels: Absolute size of these variables convey sense of magnitude– Billions of Dollars

– Millions of persons

• Data in changes: Sense of dynamics. Ratios.– Growth rates

– Differences

• Economic data are typically expressed in dollar terms

Page 11: An Overview of Economic Data Su, Chapter 2, section I.

Real vs. Nominal

• Data measured in dollars must be corrected for changes in prices

• Ruler of variable length

Page 12: An Overview of Economic Data Su, Chapter 2, section I.

Indexes

• Relative comparison of values• Commonly used

– Price Indexes

– Dow Jones Index

– Industrial Production

• Laspeyers: t = (PtxQo)/(PoxQo)x100– Base Weighted

• Paasche: t = (PtxQt)/(PoxQt)x100– Current weighted

Page 13: An Overview of Economic Data Su, Chapter 2, section I.

Ratios

• Growth Rate of • GDP = (GDPt - GDPt-1)/GDPt-1x100

• Inflation = (Pt - Pt-1)/Pt-1x100

• Interest = (Dt - Dt-1)/Dt-1x100 D: Deposits

• Unemployment Rate = (LF-EMP)/LFx100• LF: Labor Force

• EMP: Level of employment

Page 14: An Overview of Economic Data Su, Chapter 2, section I.

Historical Movements

• Use Plots to depict movements– “Time Shape” or “Time Path”

• Generate characteristics or “summary statistics”

• Conveys much information

Page 15: An Overview of Economic Data Su, Chapter 2, section I.

Quarterly GDP 1947 - 1967

1000

1500

2000

2500

3000

35001947

1948

1950

1952

1954

1955

1957

1959

1961

1962

1964

1966

Page 16: An Overview of Economic Data Su, Chapter 2, section I.

30 Year Mortgage Rates 1971-1991

0

5

10

15

20

1971

1972

1974

1975

1977

1978

1980

1981

1983

1984

1986

1987

1989

1990

Page 17: An Overview of Economic Data Su, Chapter 2, section I.

Monthly Unemployment Rate

024681012

1970

1971

1973

1974

1976

1977

1979

1981

1982

1984

1985

1987

1989

1990

Page 18: An Overview of Economic Data Su, Chapter 2, section I.

First-Order Difference

• Or “First Difference”

Yt = Yt - Yt-1 for all t

• Change in Y

• If negative, Y fell

• If positive, Y rose

• Like Growth RateGR(Yt) = (Yt - Yt-1)/Yt-1 = Yt/Yt-1

Page 19: An Overview of Economic Data Su, Chapter 2, section I.

First Difference of Quarterly GDP

-100

-50

0

50

100

150

1947

1948

1950

1951

1953

1954

1956

1957

1959

1960

1962

1963

1965

1966

Page 20: An Overview of Economic Data Su, Chapter 2, section I.

Growth in Quarterly GDP

-20

-10

0

10

20

301947

1948

1950

1951

1953

1954

1956

1957

1959

1960

1962

1963

1965

1966

Page 21: An Overview of Economic Data Su, Chapter 2, section I.

First Difference of Mortgage Rate

-3

-2

-1

0

1

2

3

1971

1972

1974

1975

1976

1978

1979

1980

1982

1983

1984

1986

1987

1988

1990

1991

Page 22: An Overview of Economic Data Su, Chapter 2, section I.

Second-Order Difference

• Or “Second Difference”

Yt = Yt - Yt-1 = Yt - 2Yt-1 + Yt-2

• Change in Y

Page 23: An Overview of Economic Data Su, Chapter 2, section I.

Second Difference of Quarterly GDP

-75

-25

25

75

125

1947

1949

1950

1952

1953

1955

1956

1958

1959

1961

1962

1964

1965

1967