ECON 3020

Spring 2013

Dr. Tufte

Homework 3

Due: at the start of class on Monday, February 4

1) Download nominal and real GDP from the Bureau of Economic Analysis website. Rename this spreadsheet something instructive (you know … including your last name, Homework 3, and ECON 3020).

2) For the quarterly data, calculate the natural logs of nominal GDP and put them in column I. Difference those to calculate the approximate growth rates and put those in column J. Do the same things for real GDP, but put the results in columns M and N. Show your results for columns I and M to an accuracy of 3 digits to the right of the decimal. Show your results for columns J and N as percentages, with an accuracy to 1 digit to the right of the decimal.

3) Download the “percent change from the previous period” data from the Bureau of Economic Analysis website.

4) Copy the appropriate columns from that second spreadsheet into columns L and P in your first spreadsheet. They should not match what you have in columns J and N.

5) The reason that column J doesn’t match column L (or that N doesn’t match P) is that the approximate growth rates you created are quarterly, while the growth rates you downloaded from the BEA are annualized. Annualize your quarterly growth rates and put them in columns K and O. Annualizing is like calculating compound interest for 4 periods: you add 1 to the (net) growth rate to get the gross growth rate, you raise that to the 4^th power, and then you subtract the 1 back out.

6) Calculate the GDP deflator and put it in column Q. The GDP deflator is the price index you get by dividing nominal GDP by real GDP, and scaling it so the base quarter is 100. Make the base quarter the quarter of your birth. Now calculate the approximate growth rate of the GDP deflator by logging and differencing, and put the results in columns R and S.

7) Highlight the row showing the quarter in which you were born.

8) E-mail me your completed spreadsheet.

9) Print a page of your spreadsheet and bring it to class for discussion. It only needs to include the last 10 years or so of your data … so you should feel free to squish it onto one page.