Thursday, November 1, 2012

Too much?

Slide your mouse pointer along the Number Bar below Graph #2 to see subsets of the data, with breakpoints at X-Axis minimums.

Couple weeks back, I showed a graph with real GDP growth on the Y-Axis and percent changes in the ratio of total debt to nominal GDP on the X. This graph:

Graph #1: Change in Real GDP (left) vs Change in the Debt/GDP Ratio (bottom)
Click graph for FRED source page, Graph #bLT

Jerry's idea, more or less.

The general trend (I said at the time) seems to run from upper-left to lower-right: From large increases in growth and small changes in the debt/GDP ratio, to minimal increases in growth and large changes in the debt/GDP ratio. Most of the connecting lines between the "blueberries" seemed to tend in that direction.

Well, you just know I had to look at it.

I moved the numbers into Excel, identified minimums and maximums in the ratio of total debt to GDP, and wrote some VBA code to process the information. You can see the results below.

Slide your mouse pointer back and forth on the number-bar below the graph to see subsets of the data.

Graph #2: RGDP Growth versus the Change in "Total Debt relative to NGDP

0 0
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0 9
1 0
1 1
1 2
1 3
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1 5
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2 0
2 1
2 2


If you're game, you can view the Excel spreadsheet via Google Docs, or Google Drive or whatever they call it now. Viewing the thing won't do much for you, but you can download it from there, and play.

1 comment:

The Arthurian said...

In mine of 21 March 2010 I wrote:
If growth was better in the 1980s than in the '70s, this trendline shows why: It took a lot of debt to boost economic growth.

On the slider bar below Graph #2 above, put your mouse pointer on #15. This highlights the time from the First Quarter of 1984 and the Third Quarter of 1989 -- after the 1980 and '82 recessions -- when economic growth was good.

The highlighted portion is the most upper-right data: some of the best economic growth, but also showing the greatest increases in debt relative to GDP.

It is true that the Great Inflation made debt look small for two decades before 1984, so that the 1984-89 debt growth may be somewhat overstated. (I have not yet considered this.)

But the black line, the trend line for the highlighted 1984-89 data, is not very steep. Means there was not a lot of bang for the buck for the highlighted data.