The Research Question

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Background

SAMD's problem area was based in Economics and involved looking at the effect interest rate changes had on Gross Domestic Product (GDP) in the UK over the period 1960 - 2000. This is a substantive Economics problem in that interest rates can have a profound effect on GDP (a key measure of total national income and its growth or decline), seen as a major indicator of the economic health or otherwise of a nation. Interest rates can have a profound effect on GDP, and are used as an important tool in the UK Government's Monetary Policy.

Sensier, Osborn and Ocal examined the asymmetries in the response of UK GDP to monetary policy (interest rate changes). Sensier et al find that interest rate effects on GDP are larger when lagged growth has been high and when there has been a substantial increase in the interest rate. They do not find the opposite effect for low growth phases and decreases in the interest rate. This was published as Sensier, M., Osborn D.R. and Öcal N.(2002) ‘Asymmetric Interest Rate Effects for the UK Real Economy’, Oxford Bulletin of Economics and Statistics, Volume 64, September 2002, n°4

The team were able to solve a genuine problem from the UK academic social science community that involved a multivariate analysis design using a complex mathematical algorithm. The research was based on a major social science databank, the Office for National Statistics Time Series Data, hosted at MIMAS, University of Manchester.

The graphs below give some idea of the economic variables the research was trying to model. The interest rates and GDP graphs represents the two time series taken from the ONS Time Series Data that was Grid-enabled in the SAMD project.

Graph shows changes in UK interest rates 1957-2000 Graph showing changes in UK GDP 1960-2000