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Canadian Federal Debt Analysis

Canadian Federal Debt Analysis. Linda Elbagoury Mr. Riegert December 15, 2003 Pickering High School MDM 4U1. Thesis. Determine which variable had the greatest correlation with the federal debt to project the state of the economy. Overview.

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Canadian Federal Debt Analysis

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  1. CanadianFederal Debt Analysis Linda Elbagoury Mr. Riegert December 15, 2003 Pickering High School MDM 4U1

  2. Thesis Determine which variable had the greatest correlation with the federal debt to project the state of the economy. Federal Debt Analysis

  3. Overview • Investigate the variables involved in the calculation of the federal debt • Discover which variable had the strongest correlation with the federal debt to compose an index • Project the state of the federal debt for future years Federal Debt Analysis

  4. Quantitative Variables Federal Debt • Gross Domestic Product • Exports • Imports • Trade Balance • Revenue • Expenditure • Population • Average Exchange Rate Federal Debt Analysis

  5. Federal Debt • The total amount that a government owes on money it has borrowed to fund deficit budgets in the past Federal Debt Analysis

  6. Federal Debt 1980-2002 Federal Debt: Statistics Canada; http://www.fin.gc.ca/purl/dmr-e.html Federal Debt Analysis

  7. Federal Debt Federal Debt Analysis

  8. A Closer View of Federal Debt1993-2002 Federal Debt Analysis

  9. The total value of all final goods and services produced by an economy in a given year Gross Domestic Product GDP: Statistics Canada; http://www.statcan.ca/english/pgdb/econ/05.htm Federal Debt Analysis

  10. Federal Debt Analysis

  11. Federal Debt Analysis

  12. Federal Debt Analysis

  13. Exports • Export – An international transaction in which a foreign currency is converted into a domestic one in order to purchase a domestic good Exports: Statistics Canada; http://strategis.icgc.ca/sc_mrkti/tdst/tdo/tdo.php#tag Federal Debt Analysis

  14. Federal Debt Analysis

  15. Imports • Import – An international transaction in which a domestic currency is converted into a foreign one in order to purchase a foreign good Imports: Statistics Canada; http://strategis.icgc.ca/sc_mrkti/tdst/tdo/tdo.php#tag Federal Debt Analysis

  16. Federal Debt Analysis

  17. Trade Balance Trade Balance = Exports – Imports Trade Balance: Statistics Canada; http://strategis.icgc.ca/sc_mrkti/tdst/tdo/tdo.php#tag Federal Debt Analysis

  18. Federal Debt Analysis

  19. Federal Debt Analysis

  20. Revenue Statistics Canada; Revenue, Expenditure, Deficit/Surplus http://www.statcan.ca/english/Pgdb/govt01a.htm Federal Debt Analysis

  21. Federal Debt Analysis

  22. Expenditure Statistics Canada; Revenue, Expenditure, Deficit/Surplus http://www.statcan.ca/english/Pgdb/govt01a.htm Federal Debt Analysis

  23. Federal Debt Analysis

  24. Population Statistics Canada; Estimated Population http://www.statcan.ca/english/Pgdb/demo02.htm Federal Debt Analysis

  25. Federal Debt Analysis

  26. Federal Debt Analysis

  27. Deficit or Surplus1998-2002 Deficit or Surplus = Revenue - Expenditure Statistics Canada; Revenue, Expenditure, Deficit/Surplus http://www.statcan.ca/english/Pgdb/govt01a.htm Federal Debt Analysis

  28. Federal Debt Analysis

  29. Average Exchange Rate Average Exchange Rate: Statistics Canadahttp://www.fin.gc.ca/er/dmr-e.html Federal Debt Analysis

  30. Federal Debt Analysis

  31. Federal Debt Analysis

  32. Which variable had the highest residual (R2) value in correlation to the federal debt? A) Exports B) Gross Domestic Product C) Expenditure D) Imports E) Revenue Federal Debt Analysis

  33. Answer B) Gross Domestic Product • R2 value of 0.9992 • The closer the residual value is to 1, the stronger the correlation of the data Federal Debt Analysis

  34. Notice the inverse relationship between the GDP & Debt from 1997-2002 Federal Debt Analysis

  35. Index The lower the Index value, the better the state of the economy Federal Debt Analysis

  36. Federal Debt Gross Domestic Product Debt/GDP (as a percentage) Federal Debt Analysis

  37. Index = Debt/GDP(as a percentage) The state of the economy is improving from 1996 onward Federal Debt Analysis

  38. 2003 Federal Budget: CIBChttp://research.cibcwm.com/economic_public/download/fbfeb03.pdf CIBCDebt-to-GDP Ratio Federal Debt Analysis

  39. CIBCDebt-to-GDP Ratio • Measurement of the federal debt as a percentage of Canada's Gross Domestic Product • Measure of the debt in relation to the economy and of capacity to carry and repay the debt Federal Debt Analysis

  40. Conclusions • The Gross Domestic Product in the Index had the most correlation with the Federal Debt • The CIBC Debt-to-GDP Ratio confirmed that the Gross Domestic Product in the Index had the greatest correlation with the Federal Debt • According to the Index and the CIBC Debt-to-GDP Ratio, the state of the economy is improving and forecasting a further reduction of the Debt in future years Federal Debt Analysis

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