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Complete 9 pages APA formatted article: The Relevance of Inflation, Unemployment and Interest Rates in Predicting the UK Gross Domestic Product.
Complete 9 pages APA formatted article: The Relevance of Inflation, Unemployment and Interest Rates in Predicting the UK Gross Domestic Product. The dependent variable used for this study is the Gross domestic product (GDP) of the United Kingdom (UK). GDP is an important measure for any country because it represents the healthiness of its economy. It is calculated by summing the market value of all goods and services produced within this economy. The percent change in GDP is used to measure the growth in the economy during the specified period. GDP is measured in real prices in order to remove the effect of inflation.
The data for the GDP for the UK is extracted from the Economic Trend Annual Supplement (ETAS) database. ETAS has released annually from the British office of national statistics (ONS). It contains a summary of the United Kingdom (UK) economic accounts. Field number 2.1A is selected from the database which contains the time series of GDP chained volume measures which is referenced by the variable ABMI. These values are seasonally adjusted to represent the period from 1948 to 2005. Annually linked and weighted chain volume measures better highlight changes in GDP than constant price values. This because takes account of year-to-year changes.
The time series of the British GDP (appendix A) is presented in the following graph:
Figure 1 shows little change from year to year in UK GDP. Therefore the percent change from year-to-year is computed and replaces by the real values of annual GDP. The percent change in the British GDP (appendix B) is shown in the following figure:
Figure 2 amplifies the changes and highlights that occurred during the period of the study. It shows periods when GDP positively increased or negatively decreased which were not visible in figure 1. From the above graph, the following years experienced a major increase in the British GDP: 1973 (7.1%), 1964 (5.5%), 1960 (5.3%), 1988 (5%). The following years also experienced the most decrease in GDP values: 1980 (-2.1%), 1981 (-1.5%), 1991 (-1.4%), 1974 (-1.4). .
