Motivation
The financial crisis occurres as a result of risky financial dealings in the real estate market which spilled over into the economy at large (Marshall, 2009). The resulting economic downturn, particularly the periods before and after the collapse of Lehman Brothers in September-October 2008, provides an opportunity to compare impact on different economic measures in different regions of the world. We utilize the financial crisis scenario as a timeframe to analyze the relationships between Consumer Price Index (CPI), unemployment, and the unorganized labor force in three major geographic regions.
Research Question
How did CPI change before and after the 2007-2009 financial crisis in the three major geographic regions?
How did employment rates vary before and after the 2007-2009 financial crisis in the three major geographic regions? How would the employment rate be if the financial crisis had not occured.
Three regions of focus: Euro, South East Asia, USA indicators.
Analysis Methods
- Exploratory data analysis.
- Time series analysis.
- Regression on time series using tslm function.
- Tests of significance - Hypothesis testing.
Expected results
Following the recession, unemployment hit an all time peak. Our research will drill down on unemployment to reveal impact in the unorganized labor sector. Also, we will observe inflation rates through the lens of CPI. The results will tell the reader about the region of the world that was impacted the most in terms of labor and the least in terms of labor in the unorganized sector. CPI as an indicator will reveal analysis about inflation rates in these regions. The results will be supported through examination of what policy reforms, if any, that affect CPI and labor.
Appendix
Datasets involved
● World Bank Datasets
- GDP, in current US$:
URL: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in current U.S. dollars. Dollar figures for GDP are converted from domestic currencies using single year official exchange rates. For a few countries where the official exchange rate does not reflect the rate effectively applied to actual foreign exchange transactions, an alternative conversion factor is used.
- Manufacturing, value added (% of GDP):
URL: http://data.worldbank.org/indicator/NV.IND.MANF.ZS Manufacturing refers to industries belonging to ISIC divisions 15-37. Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. It is calculated without making deductions for depreciation of fabricated assets or depletion and degradation of natural resources. The origin of value added is determined by the International Standard Industrial Classification (ISIC), revision 3. Note: For VAB countries, gross value added at factor cost is used as the denominator.
- Unemployment, total (% of total labor force) (modeled ILO estimate)
Source: http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS Unemployment refers to the share of the labor force that is without work but available for and seeking employment.
- Consumer Price Index:
Source: http://data.worldbank.org/indicator/FP.CPI.TOTL Consumer price index reflects changes in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used. Data are period averages.
References
Marshall, John. (2009.) The financial crisis inthe US: key events, causes and responses. House of Commons Library. Retrieved 2/8/2017 from http://www.voltairenet.org/IMG/pdf/US_Financial_Crisis.pdf