ECO 2147 ANALYSIS OF ECONOMIC AND SOCIAL DATA SUMMER 2022 ASSIGNMENT 3
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ANALYSIS OF ECONOMIC AND SOCIAL DATA
ECO 2147
SUMMER 2022
ASSIGNMENT 3 (TP3)
Instructions: Please respect to avoid serious penalties
This is an individual assignment. You can however consult each other to work on the assignment but you must return your own individual copy. Under no circumstances can you submit your assignment by email; you must submit it on Brightspace. Tardiness will be penalized at the rate of a 10% deduction per day up to a maximum of 3 days after which time no assignment will be accepted. Include with your working document a typed title page that is produced with word processing software such as MS Word or Pages; do not submit a handwritten cover page. Your last name (family name) should be in caps so that we can best
identify you (do not capitalize your given name.) A sample title page can be found in this document on page 18:https://socialsciences.uottawa.ca/public-international- affairs/sites/socialsciences.uottawa.ca.public-international-affairs/files/guidelines-
20110217/WritingandStyleGuide2010-2011_001.pdf
Which is a sub section of this very good writing guide which I think every university-level student should read.
I would also like to point out that a subset of the exercises will be corrected and not the entire assignment due to lack of resources. However, you must attempt all the exercises, otherwise points will be deducted for incomplete work.
Note for some targeted exercises, the graphs and tables that you construct in MS Excel will need to be included in your working document; these exercises will be identified as such. There are several ways to go about transferring charts and tables from an Excel file to the working document. Here's an example (the same approach is used if you're using Pages):
https://support.microsoft.com/en-us/office/insert-a-chart-from-an-excel-spreadsheet-into-word-
0b4d40a5-3544-4dcd-b28f-ba82a9b9f1e1
You can also with these methods to resize your graphs and tables so that they can fit on the page of your document. Always include labels on your charts to identify axes and series and a title. Tables should always include a title.
Note that tables and graphs should include a title with and the axes of the charts should be labelled.
One of the goals of these exercises is to assess your ability to find data, so please don't ask me where the data is, as that defeats the purpose of the exercise. If it proves impossible to find the requested data, then simply skip the question.
With every assignment you will be asked to submit in Brightspace the following:
1. A copy of your working document, which is typically produced in MS Word (or Pages) and then saved as a PDF file. You submit the PDF file.
2. Your MS Excel file.
Additional guidelines for submitting the assignment
Please observe the following advice/instructions to avoid point deductions:
1) Work submitted by email will not be graded.
2) Do not return your documents in a ZIP file.
3) When you are asked to do calculations in the Excel file, you must use the formulas in MS Excel to perform them. You should never just write a result in a cell without it having been calculated in Excel.
4) When you apply an Excel formula, you must use the cell addresses in the formula and not use the numbers taken directly from the table, for example.
5) You have a grace period of two days after the deadline to return the assignment but with penalties. Delays will be penalized at the rate of 10% per day (maximum tolerated of 2 days). After this date, the window for returning the work will be closed and it will be impossible to submit the TP regardless of the motivation.
6) Back up your files to one of the many services that exist in the cloud since there are no exceptions to deadlines in case you have technical problems that prevent you from submitting the work on time.
7) If you have any questions, please ask them in the forum for a timelier response. Do not communicate by email any questions about the assignment.
8) It is advised to start the assignment earlier than later. That way, if you have any questions, they have a better chance of being addressed before the deadline.
9) In addition to saving your graphs in your working document (unless otherwise specified), all graphs constructed in Excel should be saved on a separate sheet within your Excel file as per this method: https://www.excel- easy.com/examples/chart- sheet.html.
1. House prices
In most situations, we can accept the quality of our data sources and use them with confidence; this is especially true in the case of official statistics. However, we must remain vigilant, because even the statistics produced by public organizations such as Statistics Canada can sometimes be dubious. The following two exercises illustrate this.
You are a junior economist recently hired by Canada Mortgage and Housing Corporation (CMHC). You are assigned as the first task to analyze how house prices in Vancouver have been behaving over time and to quantify/illustrate the recent surge in these prices for a soon to be made presentation by the director at the Vancouver Chamber of Commerce. For this task, you have decided to use price data from January 1995 to December 2021. By the way,
house prices in Vancouver (and elsewhere in Canada) have been a hot topic for a while as discussed in this article: https://globalnews.ca/news/8489938/metro-vancouver-home-sales-
For your analysis, you must:
a. For the price data, you have found two possible sources: the Teranet/National Bank of Canada series and the Statistics Canada new homes series (land and structure). Complete the table in the Excel template on the houses sheet.
b. Represent on a graph these two monthly series using January 1995 = 100 as the base year and move this graph to a separate sheet in the Excel file as per instructed above in the instructions to this assignment.
c. Calculate the % change of the two series between the two extreme points January 1995 and Dec 2021 in the highlighted yellow cells in row 337 on the houses sheet.
d. Now you face a dilemma, because the two series do not behave the same way and there is no way that you will provide the director with a graph showing two series that are different despite them seemingly measuring the same phenomena. You need to choose one of the two for your project. In your opinion, which of the two series most accurately represents the situation of the Vancouver real estate market? Explain in your working document the reason for your choice. Also keep in mind that Canada's CPI uses the New Home Price Index in calculating some of its owned accommodation components; this sort of makes you wonder about the accuracy of the CPI.
e. Yet another case study which can also sow doubts on the question of the
reliability/credibility of the data and lead us to sometimes be wary of these series. Please
begin this exercise by reading this article:https://www.cbc.ca/news/business/statscan- admits-to-five-years-of-cpi-mistakes-1.610973
Suppose you are employed by the Canadian Tourism Association and you have tom produce a report in which you must include two graphs for the period January 1991 to December 2021: one that shows the history of the evolution of the price index that the article refers to and the other that shows the 12-month change in the index (e.g., January of year X versus January of year x -12). Include your data on the travelers sheet. With the graph of variations, one should be able to easily identify the effect of the error on the index. Name these graph Traveler 1 and graph Traveler 2 then move them each to a separate sheet in the Excel file as per the instructions above.
f. Include in your working document a note to readers of your report that explains why the results of this graph should be interpreted with caution and why.
2. Economic growth and the environment
Let’s first start by being introduced to the Environmental Kuznets Curve (EKC).
https://www.economicshelp.org/blog/14337/environment/environmental-kuznets-
curve/It looks like this:
a) For this exercise update the following figure with the latest available data you can find (hint, you need only visit one website for these data). Use as many countries as you can from your data source and do not forget to calculate the regression line equation and R2 from within Excel like in the graph below. Provide an interpretation of the equation in your working document. Include your data on the Kuznets 1 sheet and save the chart on a separate sheet as per the instructions above. Name the chart Chart Kuznets 1
b) Now replicate the figure below (this is a version of the EKC but in time series form) using data from the 1950 to 2018 period for the following countries: Canada, China, France, USA, and Cameroon. Create a data table with these data on sheet Kuznets 2 Save these graphs as separate sheets as per instructed above and name these sheets respectively: Graph Canada, Graph China, Graph France,
Graph USA, and Graph Cameroon. To obtain these data go to this site:
https://github.com/owid/co2-dataThese data our part of this site:
https://ourworldindata.orgHave a look and see the great data they produce and why. To help you select your data from this large, downloaded dataset, don’t hesitate to apply the filter feature in Excel. Also provide a brief interpretation of the results.
3. COMPUTING TRADITIONAL AND CHAIN-WEIGHT GDP MEASURES
Read the instructions below on COMPUTING TRADITIONAL AND CHAIN-WEIGHT GDP MEASURES and then do the problem/calculations on the sheet called CHAIN in the Excel template file. In other words, using the data below for an economy that only produces two types of stuffed animals, calculate for each year possible:
a. Nominal GDP
b. Real GDP using the fixed-weight measure and 1999 as the base year
c. The real GDP growth rate using the fixed-weight measure (and 1999 as the base year) (d) the GDP deflator using the fixed-weight method (and 1999 as the base year)
d. Real GDP growth rate using the chain-weight measure
e. Real GDP using the chain-weight measure (using 1999 as the base year)
f. The GDP price index using the chain-weight method (and 1999 as the base year) Four decimal places should be enough for percentages (e. g. 0.0452 = 4.52%).
.
Are there consistent differences between the fixed-weight and chain-weight statistics? If so, explain what may be causing them. (Hint: by what percentage did each of the prices change? By what percentage did each of the quantities
change?)
h. Can you find online an explanation as to why most national statistical agencies have moved to the chain-weighted method for computing their real GDP? Provide this explanation.
Overview
“Fixed-weight” measures tend to give consistently wrong numbers. This handout will discuss how to compute chain-weight real GDP, chain-weight real GDP growth rate, and chain-weight price indexes as well as their fixed-weight counterparts.
Notation
We will use the following notation:
- Y means real GDP
- P means a good’s price or the price index
- Q means a good’s quantity produced
- y means real GDP growth rate
- Σ means summation
- a subscript defines the year
For example, y t means “real GDP growth rate in year t” . ΣPb⋅Qt means sum up the product of the prices and quantities for all goods, using year b’s prices, and year t’s quantities.
Fixed-weight measures
Real GDP
The fixed-weight real GDP figure uses a chosen base year’s prices to calculate real GDP for every year. To figure out the fixed-weight real GDP figure for any yeart, you must do the following:
1. Choose a base year. (We will call this base year “year b”)
2. Real GDP for any year t equals the sum of year t’s quantities of production multiplied by the base year’s prices: Yt = ΣPb ⋅ Qt
3. For year t+1, real GDP is: Yt + 1 = Σ Pb ⋅ Q t+1; for year t - 1, real GDP is: Yt - 1 = Σ Pb ⋅ Qt - 1, etc.
Real GDP growth rate
To figure out the real GDP growth rate for year t, figure out the percent increase in real GDP from year t - 1 to year t: y t = (Y t – Y t - 1)/Y t - 1
Real GDP deflator (price index)
To figure out the fixed-weight GDP deflator (price index) P( ), divide real GDP (computed above) into nominal GDP (ΣPt⋅Qt): Pt = ΣPt⋅Qt / Yt
Chain-weight measures
Calculating real GDP with the chain-weight method is significantly more complicated. The following brings you through the steps in calculating the chain-weight GDP price level index. Along the way, the chain-weight real GDP growth rate and chain-weight real GDP figures will also be determined.
Chain-weight real GDP growth rate
To figure out the chain-weight real growth rate for year t, you take the geometric average of 2 measures of the real GDP growth rate: one using the current year, and one using the previous year. Specifically, complete the following 3 steps for every year:
1. Calculate the real GDP growth rate for a year t using that year t as the base year. That is, use the prices in year t for both year t’s and year (t - 1)’s GDP. The formula is: (ΣPt⋅Qt - ΣPt⋅Qt-1)/ ΣPt⋅Qt-1
2. Calculate the real GDP growth rate for year t using the previous year(t-1) as the base year. That is, use the prices in year (t-1) for both year t’s and year (t-1)’s GDP. The formula is: (ΣPt-1⋅Qt - ΣPt-1⋅Qt-1)/ ΣPt-1⋅Qt-1
3. Geometrically average your answers in steps 1 and 2 to get the chain-weight growth rate of real GDP. To geometrically average two numbers (say a and b), multiply them and take the square root of the resulting product ((a ⋅ b)1/2). Note: if you have 2 negative growth rates from steps 1 and 2, make sure the final answer is negative. If you have 1 negative and 1 positive growth rate, use an arithmetic average instead. Repeat steps 1 to 3 for each year.
Note that this growth rate is not dependent on a base year. Each year’s real growth rate uses its year and the previous year as the base year. Fixed-weight growth rate statistics use a single year as the base year. This means that fixed-weight growth rate statistics vary depending on which base year is chosen; when the base year is changed, so does history!
Chain-weight real GDP
To figure out actual real GDP (denoted with Y), continue from step 3 above. Essentially, you choose a base year, and declare real GDP equal to nominal GDP in the base year. Then, impute chain-weight real GDP after and before the base year by using the chain- weight growth rates calculated above. Specifically, complete the following series of steps:
4. Choose a base year b. In the base year, nominal GDP is real GDP. Thus, chain- weight real GDP is equal to nominal GDP in the base year: Yb =Σ Pt ⋅ Qt.
5. To compute chain-weight real GDP for the following year (b+1), use the chain- weight growth rate for year b+1 computed above in step 3 to add this growth to the base year’s (b) real GDP. The formula is: (Yb+1) = (Yb (computed in step 4))× (1+ y b+1 (computed in step 3))
6. Chain-weight real GDP for year (b+2) and after is calculated similarly; add the growth for any given year to the previous year’s real GDP: Yb+2 = Yb+1(1+ y b+2), Yb+3 = Yb+2(1+ y b+3) etc.
7. Chain-weight real GDP for years before the base year is computed a little differently. Essentially, you start with the base year’s real GDP and subtract the growth that occurred in the base year. In this way, you move backwards in time. Mathematically, start with the formula for the base year’s real GDP, except
written like the formulas in steps 5 and 6: Yb = Yb - 1(1+ y b). If you rearrange this equation to solve for Yb-1, you get: Yb-1 = Yb/(1+ y b).
8. Chain-weight real GDP in years (b-2) and before can be computed similarly – divide the following year’s real GDP by (1+ the following year’s growth rate): Yb- 2 = Yb-1/(1+ y b-1), Yb-3 = Yb-2/(1+ y b-2), etc.
Note that the calculations form a chain to the base year: to figure out any year’s real GDP after the base year, you need to know the previous year’s figure...to figure out that previous year’s figure, you need to know the year before, etc. all the way to the base year.
Chain-weight price index (deflator)
Continuing from step 8 above, to calculate the chain-weight price index, P divide the chain-weight real GDP figure by nominal GDP for each year:
9. The formula is: Pt = ΣPt⋅Qt/Yt
4. Forecasting
This is a continuity from assignment 1 using car purchases . Use the same source document Quantitative Methods for Business and Management (from assignment 2) and focus on pages 139 to 140 and read both pages from start to finish. Using data on the Excel sheet Forecasting and applying the Moving average method found on page 139 in the Quantitative Methods document, calculate the forecasted values of car sales from January 2019 to December 2019 (included your values in the shaded area in the Excel table); Assume, like in the previous document, that the forecasting model is additive. Make sure I can see the Excel formulas you have used to calculate your forecasted values (do not only include numbers in the cells). How do your values compare to the actual car sale values for those months for which your forecasted values and the actual values overlap? To answer this question, draw a bar graph like the one below (don’t forget labels and title). Save this graph on a separate sheet as per instructed above and name it Chart Cars.
5. Statistics
You will be using the data from the student expenditure survey to calculate several key descriptive statistics for food bought from stores only. See sheet Spending Sample for the required data for this exercise. You will be calculating these statistics for 4 samples sizes: 10 observations, 20 observations 30 observations, and for the entire population (this would be a census). The calculations are to be done on the sheet named DESCRIPTIVE. For the three samples, you will be drawing them randomly from the population of students but only for the observations for Food bought from stores. You draw the random samples from within Excel using its random sample generator (cool stuff). Apply that tool for drawing the samples and include the sampled observations in the appropriate location on the sheet DESCRIPTIVE. Then calculate the various descriptive statistics that are found on the Descriptive sheet.
2022-06-13