"> (Answered) Assignment 2 Deadline: Friday, June 30, 2017 at 11: Instructions: If you do not follow these instructions (e. Please note that you only need to... - Tutorials Prime

## (Answered) Assignment 2 Deadline: Friday, June 30, 2017 at 11: Instructions: If you do not follow these instructions (e. Please note that you only need to...

Assignment 2 Deadline: Friday, June 30, 2017 at 11: Instructions: If you do not follow these instructions (e. Please note that you only need to...

Friday, June 30, 2017 at 11:59pm.

Instructions:

in PDF format through D2L

. If you do not follow these

Please note that you only need to submit your 6 plots (i.e., only part (c) of Question 1, parts (c) and (f) of

Question 2, and so on). Each of these plots is worth 1 mark.

1. This question will utilize data from the Bank of Canada (bankofcanada.ca).

(a) Download daily observations on target for the overnight rate from January 2, 2008 to December 31, 2008.

(b) Download daily observations on the overnight money market Â±nancing rate from January 2, 2008 to

December 31, 2008.

(c) Plot the data you obtained in parts (a) and (b) on top of one another.

2. This question will utilize data from the FRED database (fred.stlouisfed.org).

(a) Download annual observations on Canadian GDP from 2006 to 2015. (HINT: Use the series labelled â€œGross

Domestic Product by Expenditure in Constant Prices: Total Gross Domestic Product for Canadaâ€.)

(b) The following table provides estimates on the output gap (as a fraction of potential GDP) from the OECD.

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

0.02293

0.01912

0.00672

-0.03982

-0.02836

-0.01744

-0.01995

-0.01701

-0.01038

-0.01602

Use this data, along with the data you obtained in part (a), to calculate potential GDP for the years

from

2000 2006 to 2015. (HINT: The numbers in the table above are calculated using the equation at the

bottom of p. 352 in the textbook; solve this equation for

Y

â‡¤

.)

(c) Plot the data you obtained in parts (a) and (b) above in a single Â±gure.

series labelled â€œUnemployment Rate: Aged 15 and Over: All Persons for Canadaâ€.)

(e) Use the data provided in part (b), along with the data you obtained in part (d) and Okunâ€™s law, to calculate

the natural rate of unemployment. (HINT: Make sure to keep in mind that the data you obtained in part

(d) is expressed in percentage terms, e.g., in 2006, the unemployment rate was 6.3%, so that

u

=0

.

063 in

Equation (12.1) in the textbook.)

(f) Plot the data you obtained in parts (d) and (e) above in a single Â±gure.

3. This question will utilize data from the FRED database (fred.stlouisfed.org) along with some data you obtained

in the Â±rst assignment.

annual observations on M1 for Canada from 1991 to 2016.

(b) Use the data you obtained in part (a) to calculate the annual growth rate of M1 for Canada from 1992 to

2016.

(c) Use the data you obtained in part (a) of Question 3 on the Â±rst assignment to calculate the (annual)

inÂ²ation rate for Canada from 1992 to 2016. (HINT: You can disregard the data you previously obtained

for years up to 1990.)

(d) Plot the data you obtained in parts (b) and (c) above in a single Â±gure.

4. This question will utilize data from Questions 2 â€“ 3 above.

(a) Use the data provided in part (b) of Question 2 above (potential GDP), along with the data you obtained

in part (c) of Question 3 above (the inÂ²ation rate), to calculate the interest rate prescribed by the Taylor

rule for the years 2006 to 2015. (HINT: Use Equation (15.2) in the textbook, making sure that

â‡¡

is

expressed in percentage terms, e.g., in 2006,

â‡¡

=1

.

73.)

1

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