Question

Calculate the contemporaneous correlation coefficient between M3 monetary aggregate and real GDP. Is M3 money procyclical,...

Calculate the contemporaneous correlation coefficient between M3 monetary aggregate and real GDP. Is M3 money

procyclical, countercyclical, or acyclical?

STATISTICS CANADA FED. RESERVE BANK OF ST.LOIUS DATABASE
v62295562 NOMINAL GDP GDP inplicit price deflator M3 Canada
Quarterly v62295562 CANGDPDEFQISMEI MABMM301CAQ189S
Q1 1981 354784 42.6981111563270 204311333333.333000
Q2 1981 366788 43.6610414619373 207984000000.000000
Q3 1981 371560 44.6289982488560 216848000000.000000
Q4 1981 375352 45.2908438640580 218082333333.333000
Q1 1982 381676 46.6083169696692 217479333333.333000
Q2 1982 385140 47.5798005714623 219886000000.000000
Q3 1982 388116 48.3739589515175 222330333333.333000
Q4 1982 392160 49.3332837976593 224303666666.667000
Q1 1983 401680 49.7132764420135 226140000000.000000
Q2 1983 414192 50.2629287746804 224478333333.333000
Q3 1983 427308 51.2735886446178 225279333333.333000
Q4 1983 435584 51.6100587828056 227179000000.000000
Q1 1984 446148 51.9704332373390 228299666666.667000
Q2 1984 457828 52.3078242790523 232617333333.333000
Q3 1984 463424 52.7234393892383 237141000000.000000
Q4 1984 473572 53.0419705221036 240676666666.667000
Q1 1985 484236 53.4248646801094 244980666666.667000
Q2 1985 493432 54.2651363424060 248915000000.000000
Q3 1985 501888 54.5050406104313 252450333333.333000
Q4 1985 512744 54.8402543483894 257010333333.333000
Q1 1986 516520 55.2563471757913 264237333333.333000
Q2 1986 521696 55.4905938946598 268411333333.333000
Q3 1986 528016 56.0912868820489 271948000000.000000
Q4 1986 531568 56.8783672063315 281530000000.000000
Q1 1987 550140 57.5331726280666 291176666666.667000
Q2 1987 565020 58.3329586106209 299965333333.333000
Q3 1987 579244 58.8991659148336 305585000000.000000
Q4 1987 593300 59.5551334351729 308066333333.333000
Q1 1988 608480 60.1983695890770 312459000000.000000
Q2 1988 618684 60.6688271152181 322487333333.333000
Q3 1988 628884 61.6639931654208 334801000000.000000
Q4 1988 641556 62.4675832898810 342957666666.667000
Q1 1989 653604 62.9230187813054 351835000000.000000
Q2 1989 667232 63.9891857525244 362677333333.333000
Q3 1989 676572 64.6515735155241 373417666666.667000
Q4 1989 678696 64.9938035437062 385481666666.667000
Q1 1990 689404 65.4053174795630 395554333333.333000
Q2 1990 693132 66.0335409650038 403660333333.333000
Q3 1990 695180 66.7074542949967 410993000000.000000
Q4 1990 694272 67.2229092303363 418720000000.000000
Q1 1991 691484 67.9358867564054 427352000000.000000
Q2 1991 699036 68.3651754145162 432806000000.000000
Q3 1991 702272 68.5940617050403 433277000000.000000
Q4 1991 704220 68.6605906722587 439452666666.667000
Q1 1992 707560 68.9409138782662 445822666666.667000
Q2 1992 712328 69.3220218584220 450337333333.333000
Q3 1992 719252 69.6211620321044 457429000000.000000
Q4 1992 724936 69.7765180875810 464676666666.667000
Q1 1993 731528 69.9656587109988 470009333333.333000
Q2 1993 742932 70.4157578434308 472942333333.333000
Q3 1993 747640 70.1916798780568 475799000000.000000
Q4 1993 756332 70.7036428640034 479652333333.333000
Q1 1994 770204 70.9563366240710 483569666666.667000
Q2 1994 781204 70.9302942329507 489882666666.667000
Q3 1994 798332 71.5711306989413 500109333333.333000
Q4 1994 808288 71.9416971772689 503524666666.667000
Q1 1995 821384 72.4390916469671 507562000000.000000
Q2 1995 826212 72.8401001006197 515417000000.000000
Q3 1995 830332 73.1077825297892 524551000000.000000
Q4 1995 837964 73.4818206549499 529711333333.333000
Q1 1996 841428 73.7397502509859 539296666666.667000
Q2 1996 850092 73.9840384720222 545921666666.667000
Q3 1996 861784 74.3493097777886 550767333333.333000
Q4 1996 874788 74.8757297563110 555780666666.667000
Q1 1997 888792 75.0836834730396 565661666666.667000
Q2 1997 896372 74.8808106697226 570634000000.000000
Q3 1997 909568 75.0860762489510 575824666666.667000
Q4 1997 920876 75.2978869642336 585015666666.667000
Q1 1998 931392 75.1046350933545 588563000000.000000
Q2 1998 931908 75.1135712732412 592121000000.000000
Q3 1998 935696 74.7257156114256 597459000000.000000
Q4 1998 950184 74.8713125826619 602598666666.667000
Q1 1999 971824 75.2132579621472 602128666666.667000
Q2 1999 990748 76.0392703195479 613186666666.667000
Q3 1999 1017736 76.9124930375418 621062333333.334000
Q4 1999 1037516 77.3084355684222 632911000000.000000
Q1 2000 1066576 78.2253076703945 648037333333.333000
Q2 2000 1095808 79.4231270199059 658563666666.667000
Q3 2000 1117980 80.2197887281136 674680666666.667000
Q4 2000 1129156 80.8777498195676 683844000000.000000
Q1 2001 1145988 81.6584179087384 693688666666.667000
Q2 2001 1148844 81.6511752702768 696378000000.000000
Q3 2001 1134708 80.7075989533769 704540333333.334000
Q4 2001 1132480 80.0583261990426 716819666666.667000
Q1 2002 1154524 80.4186128711966 729263333333.333000
Q2 2002 1181544 81.8342312523710 734895000000.000000
Q3 2002 1199908 82.3863168304407 750366666666.667000
Q4 2002 1221832 83.4295096246934 758437000000.000000
Q1 2003 1245676 84.5915961928836 761874333333.334000
Q2 2003 1233300 83.8756114085764 782063333333.334000
Q3 2003 1253900 84.9563535157002 796029000000.000000
Q4 2003 1268384 85.3524375953563 807003000000.000000
Q1 2004 1291688 86.2984173391169 830867000000.000000
Q2 2004 1323544 87.3933537225520 850392666666.666000
Q3 2004 1346952 87.8940467656236 863960666666.666000
Q4 2004 1362528 88.2766989258531 885819000000.000000
Q1 2005 1375720 88.8284711216400 914545000000.000000
Q2 2005 1394868 89.4281759217071 938963333333.334000
Q3 2005 1432508 90.7248398753612 954247000000.000000
Q4 2005 1465016 91.8737448622839 962154666666.666000
Q1 2006 1471532 91.5485959664185 981504666666.666000
Q2 2006 1486320 92.4240019517174 999682333333.334000
Q3 2006 1500672 93.0578461870277 1022335000000.000000
Q4 2006 1510304 93.3031750994111 1049037333333.330000
Q1 2007 1543024 94.7121381586897 1076024666666.670000
Q2 2007 1572372 95.5909583532087 1102485333333.330000
Q3 2007 1578004 95.5363830210746 1142791333333.330000
Q4 2007 1600728 96.7766040729664 1178060333333.330000
Q1 2008 1633172 98.6795982118646 1211173333333.330000
Q2 2008 1673096 100.7423478842510 1251918000000.000000
Q3 2008 1690428 100.9439216617930 1280277333333.330000
Q4 2008 1614996 97.5679320107047 1304474333333.330000
Q1 2009 1553180 96.0274938544994 1298672333333.330000
Q2 2009 1544376 96.5485034790035 1298280333333.330000
Q3 2009 1563964 97.3326293089344 1305895333333.330000
Q4 2009 1607940 98.9011493507786 1314978666666.670000
Q1 2010 1640056 99.6888942637875 1328744333333.330000
Q2 2010 1649184 99.7309222511040 1362917666666.670000
Q3 2010 1661488 99.7625657199286 1392024666666.670000
Q4 2010 1697792 100.8028477235720 1405771666666.670000
Q1 2011 1733840 102.1875932072840 1431352666666.670000
Q2 2011 1755640 103.2762483720390 1457841333333.330000
Q3 2011 1781600 103.3687046675840 1489281000000.000000
Q4 2011 1808604 104.1128450595840 1521511000000.000000
Q1 2012 1810720 104.2014186581510 1551157000000.000000
Q2 2012 1814628 104.0827415172180 1575889000000.000000
Q3 2012 1826288 104.5453545777180 1595356333333.330000
Q4 2012 1839596 105.1788905382050 1610977000000.000000
Q1 2013 1872136 105.9475735850920 1636067666666.670000
Q2 2013 1881924 105.8155098284980 1670534000000.000000
Q3 2013 1907692 106.3926058259960 1698329666666.670000
Q4 2013 1928372 106.4727711361750 1750656666666.670000
Q1 2014 1958572 108.0058207369650 1789161666666.670000
Q2 2014 1983684 108.0948484736960 1812507000000.000000
Q3 2014 2009164 108.6916968608050 1855005333333.330000
Q4 2014 2009312 108.2081792915810 1891814000000.000000
Q1 2015 1985880 107.1608188524930 1928273666666.670000
Q2 2015 1987968 107.4289333876190 1954606333333.330000
Q3 2015 2005556 107.7699515620920 2018570666666.670000
Q4 2015 2000240 107.3727068910550 2055766000000.000000
Q1 2016 2008964 107.1804260993930 2099063333333.330000
Q2 2016 2009416 107.4862374222420 2144635000000.000000
Q3 2016 2044564 108.2285573437300 2197352000000.000000
Q4 2016 2079080 109.4481762883230 2234697333333.330000
Q1 2017 2115064 110.2520311567150 2251366000000.000000
Q2 2017 2136712 110.1958833973290 2301119333333.330000
Q3 2017 2145824 110.2431624671200 2290363666666.670000
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Homework Answers

Answer #1

When there exist a positive correlation between two variables, the variables are said to be pro cyclical. Two variables are countercyclical if there exists a negative correlation between them and acyclical if there is no correlation and the two variables are independent of each other.

The correlation coefficient between M3 monetary aggregate and real GDP is 0.94390523. This implies a strong positive correlation between the datas. Hence the two variables are pro-cyclical.

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