ECONOMETRICS
You recently returned from the 2023 Rugby World Cup in France and decided to analyse some drivers
of the French economy.
In their Country Report, the International Monetary Fund (IMF) notes that:
'France saw a robust recovery from the Covid-19 shock but is now facing the repercussions of Russia's
war in Ukraine. In 2021, output rebounded by 6.8 percent and recovered to pre-crisis levels. The
recovery was broad-based and faster than in most other European countries... The government sees
unemployment, pension, and vocational training reforms, as well as measures to foster youth
employment as key levers to raise labor supply and potential growth'.
According to theory, GDP is negatively correlated with inflation and interest rates. The causality
regarding unemployment is, however, difficult to determine.
You manage to find the following data for France, where:
(a) During your trip, a lot of locals complained about 'how expensive consumer goods' became recently. Use the data provided to test if this is evident in the data. Make sure to support your answer with calculations, graphs, etc.
Inflation, consumer prices (annual %) INF
Unemployment, total (% of total labor force) (national estimate)
France - Interest Rates: 3-month or 90-day rates and yields: Int
France - Interest Rates: 3-month or 90-day rates and yields: Int
Unemployment, total (% of total labor force) (national estimate)
France- Interest Rates: 3 -month or go-day rates and yields: int
Unemployment, total (% of total labor force) (national estimate)
JUST MAKE USE OF THE GRAPHS IN ORDER TO ANSWER THE QUESTION
240,000
240,000
220,000 GDP 200,000 (constant LCU), r 180,000 160,000 GDP 140,000
220,000 200,000 GDP (constant LCU), mil. GDP 180,000 160,000 140,000
.
120,000 0
1
2
3
4
5
6
120,000 -2
0
2
4
6
8
10 12
Inflation, consumer prices (annual %) INF
France - Interest Rates: 3-month or 90-day rates and yields: Int
240,000
GDP 220,000 200,000 (constant LCU), mil. 180,000 160,000 GDP 140,000
Inflation, consumer prices (annual %) INF
6
5
1
120,000 7
8
10
11
12
13
0 1985
9
1990
1995
2000
2005
2010
2015
2020
Unemployment, total (% of total labor force) (national estimate)
France - Interest Rates: 3-month or 90-day rates and yields: Int
Unemployment, total (% of total labor force) (national estimate)
12
13
10
12
11
6
10
4
2
9
0
8
-2 1985
1995
2015
2020
7 1985
1990
2000
2005
2010
1990
1995
2000
2005
2010
2015
2020
