a. Using that mouse over feature on the graph, create a peak-trough table showing the date for each recession’s trough and the highest peak during each expansion. (Please do it year, quarter format, i.e. 2011, Q1.) Note, each business cycle should only have one expansion, so find the highest value during an expansion phase. You do not need to print the Fred graph, only the table you create.
b. For each of the 11 expansions and recessions, determine the length in quarters (remember an expansion is from the trough to the highest expansion peak, and a recession is from the highest peak to the next trough, thus much of your recession period will not actually fall into the “gray” recession lines). Add a column to your table for the length of each period, and find an overall average length of expansions and recessions for the country.
c. Next, search for “Real Government Consumption Expenditures and Gross Investment. The fifth choice in that category is percent change from preceding period, quarterly. Select that option and generate a peak-trough table for government spending the same way you did for real gdp in “a”. Note, you may want to switch to the 10-yr view of the graph, the option is to the top right of the graph on Fred.
d. Based on your data, determine if for each real gdp expansion and recession if government spending is pro or counter cyclical as well as if it is leading or lagging.
For 1.c, essentially you want to see if the government series follows the same pattern as gdp. So look at the all of the gray bars first (those gdp recession bars....where gdp had a trough) During those 11 bars does government have a trough or peak (record those values). Then If it has a trough, the next period (the white phase) look for its highest peak and record it. It it had a peak in the gray value then you would do the opposite find the lowest trough in the white phase.
For 1.d is just a couple of sentences comparing the results. i.e leading or lagging, pro or counter cyclical or no correlation, etc.
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