Economic Statistical Report: The global influence of the changes in a Country’s economic indicators

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Economic Statistical Report: The global influence of the changes in a Country’s economic indicators

Written By: Haydn Rees

Written for: Hossein Hassani

Date of Submission : 30/04/2012

Word Count (Without contents, References and Title page): 2,497

Contents

1.1 - Introduction – Page 3

2.1 – Data set, Annual GDP % Change Comparisons – Page 3

2.2- The mean – Page 3

2.3- The Median – Page 4

2.4- Histograms – Page 4

2.5- The Range – Page 5

2.6- Simple Linear Regression – Page 6

3.1- Time series analysis – Line Graph (Cyclical) – Page 8

4.1- Conclusion – Page 8

5.1- References – Page 9

1.1 Introduction
In this report I will use data compiled from the IMF displaying one economic indicator taken from 2 more economically developed countries (MEDCs), which are highly dependent on one another. I will use the time frame of 1980-2009 to see the effects that a normal economic cycle has on one country’s economic indicators, and if those effects can affect another’s, either directly or indirectly. The economic indicator I will be studying is the country’s GDP annual percentage change. With many economically developed economies becoming increasingly interdependent, the general assumption is that if one economy falters, then others will feel an adverse knock on effect of that country’s economic difficulty. 2.1 Data set – Annual GDP % Change Comparisons

The descriptive statistics below show the % change in both countries annual GDP figures, starting in 1980 up to 2009, as seen in Figure 1. This is an example of continuous data, which is data that can take on an infinite number of different values. All data is different on an annual basis, this therefore makes all data for both countries ungrouped. (Source – IMF Statistics World Economic Outlook Database, October 2008). Statistics

UK
USA
Number of entries

30
30
Mean
2.3215
2.7764
Median
2.7880
3.1315
Std. Deviation
1.78675
1.81385
Variance
3.192
3.290
Range
7.11
9.12

2.2 – The mean
Mean is a measure of central location and is used as a method of finding the raw data. The equation

for mean is shown as,, where ¯ = Arithmetic mean, xi = Value of each item of data

and where n = number of items of data. With the UK’s average growth being at 2.3% and the US’s 2.7% (The mean), this initially shows me that both governments have achieved the economic objective of maintaining levels of inflation and growth at 2% in order to keep and uphold sustainable growth. In turn, this shows that there is most likely a normal economic cycle in action for both countries in order for them to achieve the average growth rate of 2% over the span of 30 years. Using the mean to gauge the levels of growth or reduction in a country’s economic activity is good for looking at the end result, but does not show the levels of interdependence when comparing two or more countries. In this case, simply looking at the mean alone, whilst showing that both figures are similar, does not prove that one countries economic activity is directly influencing another during the period of a normal economic cycle.

2.3 – The Median
The median is another measure of central location, and is the data value which is in the middle of the data once it is sorted. There is no equation for locating the median, instead the Median calculation is as follows: 1. Arrange the data in ascending order from lowest value to highest value. 2. Select the middle observation. If the number of observations is odd, the median is the middle data value, whereas if the number of observations is even, the maiden is the average of the two middle values. As both sets of data have skewed distribution (see 2.4, Figure 2 & 3), the use of median and mean is advantageous due to its freedom from distortion, which increases the validity and reliability of the central location as a means of analysis. The central location found through median for...
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