DATA ANALYSIS FOR ECONOMISTS

1. Go to the OECD website (www.oecd.org) and click on the “Data” tab at the top of the page.

Browse/search for General Government Debt expressed as a percentage (%) of GDP. Select and

download data for the period 2007 to 2013. Restrict your sample to the following 21 countries:

? Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary,

Iceland, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia,

Spain, Sweden, United Kingdom.

The above selection criteria should result your sample to 21 countries.

a) Use a bar graph to display the 2007 and 2013 measure of Government Debt

levels for each of the 21 countries (use a single graph for all countries).

[10 marks]

b) Discuss the main features of the data and comment on observable differences

i) between countries and ii) over time.

[10 marks]

c) Report descriptive statistics for 2007 and 2013 separately and comment on

any significant differences between them (hint: report the statistics in a table).

[10 marks]

d) Use the 2013 data to generate a histogram based on bins (class intervals) of 10

per cent. Report the frequency table and histogram then comment on the

shape of the distribution. Compare this finding with the descriptive statistics

discussed in part c).

[10 marks]

e) Explain the key differences between a bar graph and histogram and the

relative merits of each.

[10 marks]

2. a) Suppose I deposit £10,000 at the beginning of the year at 4% interest per annum.

What is the final value of the deposit after 6 years:

i) When interest is paid on a simple basis?

ii) When interest is compounded annually?

iii) When interest is compounded monthly?

What is the Effective Annual Rate (EAR) for part iii)?

[8 marks]

b) Assuming that I can borrow and lend any amount at 6% per year, with interest

paid or received annually in arrears:

i) What is the present discounted value (PV) of £30,000 due 5 years from now?

ii) What principal (lump sum) must I invest now in order to have £250,000 in 25

years’ time?

[8 marks]

c) A businessman wishes to set up a trust fund to support his child whilst at

University. He requires the fund to pay £12,000 per annum across a three year

period.

i) How much does he need to invest if money can be invested at 4% per

annum with interest compounded monthly?

ii) Demonstrate that this investment is sufficient to generate the desired

£12,000 per annum for each year.

[12 marks]

d) Your lecturer plans to purchase a new mobile phone handset at a cost of £600

and is offered finance terms of 24 equal monthly instalments at 3.8% APR with

interest charged on the outstanding debt on a monthly basis.

i) What is the amount of each monthly payment?

ii) What is the total amount of interest to be paid?

[8 marks]

e) Distinguish between the CPI, RPI and RPIJ price indices and report and comment

on the latest UK inflation rate using these three indicators of inflation.

[8 marks]

g) Explain why economists are concerned with using data measured in “real” rather

than “nominal” values. What challenges may this present to the researcher when

undertaking data analysis?

[6marks]

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