Macroeconomics 5th Edition by Olivier Blanchard

Exercise 9

The labor market and the recession of 2001
Go to the Web page of the Bureau of Economic Analysis, at www.bea.gov. Find NIPA Table 1.1.6. (NIPA stands for national income and product accounts.) Retrieve the quarterly data in chained 2000 dollars.
a. Plot the quarterly GDP growth rates from 1999 through 2002. Did any quarters have negative growth Go to the Web page of the Bureau of Labor Statistics, www. bls.gov. Retrieve the monthly data series on the participation rate, employment, the employment-to-population ratio, and the unemployment rate for the period 1994 to 2004. Make sure all data series are seasonally adjusted. The data will be easier to interpret if they are presented graphically rather than as tables of numbers. (As of this writing, the BLS website provides the option to show data graphically)
a. How did the unemployment rate change in 2001 and after Do you think the unemployment rate tells the whole story about the labor market How did the participation rate evolve What might explain the change in the participation rate
b. Some economists prefer to look at employment as opposed to unemployment. How did the growth of employment after 2001 compare to the growth of employment before 2001 How did the employment-to-population ratio change
c. The National Bureau of Economic Research (NBER), which dates recessions, identified a recession beginning in March 2001 and ending in November 2001. In other words, according to the NBER, the economy began a recovery in November 2001. Given your answers to parts (b) and (c), do you think the labor market recovered as quickly as GDP Explain.
For more on NBER recession dating, visit www.nbecorg. This site provides a history of recession dates and some discussion of their methodology.