Monday, September 15, 2014

Prime less inflation

Showed this Quandl graph the other day, the Real interest rate:

Graph #1: Real Interest Rate
SOURCE: Quandl
As I discovered when I tried to duplicate their graph at FRED, They don't specify the interest rate used in their calculation. I took a shot and guessed the prime rate. For the inflation I subtracted the GDP Deflator, which they specified; I used percent change from year ago of the Deflator, which they didn't specify.

Then, as my graph turned out much more jiggy than theirs, I specified annual frequency for the data on my FRED graph:

Graph #2: The Prime Rate less Inflation, Annual Data
That's a pretty good match for the Quandl data. Theirs starts in the early 1960s, and lacks the rounded tops the FRED graph shows before 1960. And my FRED numbers may be a little higher -- but not much. Anyway the trends are similar, and that's the main thing.

Here's the jiggy one:

Graph #3: The Prime Rate less Inflation, Quarterly Data

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