WORKING WITH MACROECONOMIC DATA
For data to use in these exercises, go to the Federal Reserve Bank of St. Louis FRED database at fred.stlouisfed.org.
1. A popular measure of a country's “openness" to international trade is an index computed as the sum of the country's exports and imports divided by its GDP.
Calculate and graph the openness index for the United States using quarterly data since 1947. What has been the postwar trend? Can you think of any factors that might help explain this trend? (Hint: Be careful with the data, as some databases record imports with a negative sign and then add them to exports to get net exports. If that is the case with your data, take the absolute value of imports before adding it to exports, because we are interested in the total volume of trade, not the balance of trade.) What usually happens to the openness index in recessions?2. Using quarterly data since 1960, graph output and absorption (both in real terms) in the same figure. In another figure, graph real investment, national saving, and the current account balance for the same period. (Use real GNP, which includes net factor payments, as the measure of output and/or income.) What is the relationship between the two figures?
3. Using quarterly data since 1960, graph the following four series, expressing each as a percent of GDP: exports of goods (sometimes called merchandise), exports of services, imports of goods (sometimes called merchandise), and imports of services. What trends do you notice in U.S. exports and imports of goods and services? How has the interdependence of the U.S. economy with the rest of the world's economies changed over time? (Note: When computing the percentage of GDP, you should note that quarterly data on exports and imports often are not expressed at annual rates, but the data on GDP are expressed at annual rates; if this is the case with your data, multiply your data on imports and exports by 4 to get the appropriate ratio relative to GDP.)
4. In FRED, find and plot data on the ratio of outstanding total international debt to GDP for (a) the Euro area, (b) the United States, and (c) Japan. These amounts represent the international indebtedness of each region to the rest of the world. Which region has the highest international debt relative to GDP? Which region has the lowest international debt relative to GDP? Describe how all three ratios have changed over the past five years.