The goal of this assignment is to explore the possible statistical relationship between the length of recovery
Question:
The goal of this assignment is to explore the possible statistical relationship between the length of recovery time (in months) from an economic recession and percent drop in GDP during the recession. There have been 11 economic recessions in U.S. since 1950 with the first one occurring in 1953. This period will be the focus of our research - use the first 10 recessions for your analysis. A common definition of an economic recession is two consecutive quarterly decline in the Gross Domestic Product (GDP), lasting over six months. Recession data as well as length of recovery data are available on the Web.
Please provide your answer to the following questions:
a. What would you expect to be the relationship between the length of time it takes to recover from an economic recession and the percent drop in GDP?
b. What would be the appropriate technique to investigate the stated relationship?
c. Is there a statistically significant relationship between recession recovery length and the drop in GDP?
d. Can one reliably predict the length of recovery by using percent drop in GDP? Why or why not?
Fundamentals of Financial Management
ISBN: 978-0324302691
11th edition
Authors: Eugene F. Brigham, ? Joel F. Houston