Economic data analysis using software STATA Essay

Economic data analysis using software STATA - Essay Example variables; GDP, the rate of inflation, the rate of un-employment, long term interest rate, short term interest rate, the CPI-consumer price index an, the money supply (M) and regression analysis done using STATA. When investing, you are most likely to hear the terms inflation, unemployment, Consumer Price Index (CPI) and Gross Domestic Product (GDP) about every day (Barnes, R 2007). Investors are often made to feel that these terms should be looked deeply as a surgeon would study a patients chart prior to operating (Barnes, R 2007). Countries really need to find a level of understanding which can assists them in decision making without engaging piles of data to solve the problem. Inflation in the increase in the  money supply. It can also mean an increase in price levels for different commodities. Generally, inflation is about a prices increase as compared to some set levels (Richmond, H 2006). According to Gay, A (2006), if the money supply goes up, this is usually manifested in higher price levels for commodities, however, he continues to state that, this manifestation takes only a short while and that, it is simply a matter of time. According to Dawson, G. et al. (2006), Gross Domestic Product in a country represents the total aggregate output of its economy. Further to him, the GDP figures which are reported to investors and those that want to invest are already adjusted for inflation. For example, if the gross GDP is calculated to be 6% above than the preceding year and inflation calculated at 2% over the same period, then the GDP growth would be reported as 4% (6%-2). The relationship between inflation and GDP is like a delicate dance where any can break affecting the masses (Dobson, S & Palfreman, S 1999). The annual GDP growth is vital for each and every country in that, if the overall economic output declines or holds steadily, then many organizations will not be in a position to increase profits which is the sole driver of stock performance in all of