FRED Exercise https://fred.stlouisfed.org

Current Account

Since international capital flows is our topic this week, as promised, your first task is to graph the recent evolution of thequarterlyU.S. Current Account Balance (National Accounts basis) as a percentage of GDP fromQ1 1980throughQ4 2020.

Create the current account/GDP ratio yourselves by first accessing the quarterly, seasonally adjusted annual rate Current Account Balance (National Accounts basis) series, FRED code =NETFI.(Make sure this is the quarterly series.)

Then, while in "Edit Line 1," type in "GDP" in the dialog box labeled "You can begin by adding a series to combine with your existing series."Among the available series options, scroll down to find "Gross Domestic Product Quarterly Billions of Dollars Seasonally Adjusted Annual Rate."(Careful. You donotwant to upload "Real Gross Domestic Product ...."Click on the correct series; then click on "Add."

You should now have two series, "a" and "b."Finally, simply transform the series by computing the ratio of the Current Account Balance) to GDP, expressing it as a percentage.So if series "a" = current account; series "b," GDP, then you'd enter "(a/b)* 100" into the series transformation box.

(i)Show this graph and attach it.

(ii)What is the Q4 2020 value of this ratio,rounded to 2 decimal places?

(iii)For the most part, excluding our current Pandemic recession, what happens to the Current Account Balance as a percentage of GDP during recessions?Why do you think that is the case?

(iv)Is the behavior of this measurement for the pandemic recession different from earlier recessions?Why do you think that might be the case?