Question

The Federal Reserve Bank of St. Louis offers a wide range of economic data at its Web site, called FRED (fred.stlouisfed.org/) including data for Japan. We can use these data to compare the behavior of real GDP per capita and inflation in Japan and Canada. a. Download annual data on real GDP per capita in Japan (JPNRGDPC) and for Canada (CANRGDPC) from 1960 to 2011. Chart the two data series on the same graph. How does real GDP per capita in Japan compare to real GDP per capita in Canada? Have there been any changes in the relationship over time? Briefly explain. Download annual data on the consumer price index for Japan (JPNCPIALLAINMEI) and Canada (CPALCY01CAA661N) from 1961 to 2019. For both Japan and Canada calculate the inflation rate as the annual growth rate of the consumer price index. Chart the two data series on the same graph. How does the inflation rate in Japan compare to the inflation rate in the Canada? In particular, how do the inflation rates in the two countries compare since 1990? Has either country ever experienced negative inflation rates?

Answer 1

Real GDP per capita in USD was lower than Canada in Japan till 1991 where Japan's per capita GDP started to inch higher, however after that it has fallen again and is lower than Canada's per capita GDP.

Annual Growth rate of CPI.

Inflation rate in Japan can be seen to be highly volatile as compared to Canada.

Since 1990, Canada has experienced deflation in only one year and its inflation rate has been stable whereas Japan has experienced deflation/negative inflation rate and near zero inflation rate in majority of the years since 1990.