Exercise 13 Some US data to download and plot 1 Download the

Exercise 1.3 Some US data to download and plot 1. Download the following data from the Federal Reserve Bank of St Louis’ website:

a) Gross Domestic Product (GDP) from https://research.stlouisfed.org/ fred2/series/GDP/downloaddata (choose Frequency: Annual Data)

b) ConsumerPriceIndexforAllUrbanConsumers: AllItems(CPIAUCSL)from https://research.stlouisfed.org/fred2/series/CPIAUCSL/downloaddata (choose Frequency: annual data)

c) Total Population: All Ages including Armed Forces Overseas (POP) from https://research.stlouisfed.org/fred2/series/POP/downloaddata(choose Frequency: annual data)

d) PersonalConsumptionExpenditures(PCE)fromhttps://research.stlouisfed. org/fred2/series/PCE/downloaddata (choose Frequency: annual data)

2. If your father’s rst monthly wage was $1000 in 1985, how much is it in today’s dollars?

3. Plot for the longest possible period, for example putting all of this data on Excel oronGoogleSheets, andtransformingit(using GDPandCPIAUCSLto calculate realGDP,etc.),theannualgrowthrateofRealGDPpercapitausingtwomethods:

• The yt+1yt yt method.

• The log(yt+1)log(yt) method.

Provide the plots in your answer sheet.

4. Do the same for the annual growth rate of Real PCE per capita.

Solution

Q2. Monthly salary in 1985 = $1,000

CPI in 1985 = 107.60

CPI in 2015 = 238.11 (approx)

Value of monthly salary at present (2015) -

Value = Monthly salary in 1985 * (CPI in 2015/CPI in 1985)

         = $1,000 *(238.11/107.60)

         = $2,213

Thus, if our father’s rst monthly wage was $1000 in 1985 then in today’s dollars it will worth $2,213 per month.