Due May 13, 2026 at 11:59PM

Prompt

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In most countries, central banks set explicit inflation targets. When inflation rises too much, they step in to cool demand and slow price increases. Today, many central banks aim for an inflation rate of about 2 percent. This assignment examines whether that policy target is justified.

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You will investigate whether countries with low inflation (especially <2–2.5%) experience higher real GDP growth. Using World Bank data, you will:

1. Group country/year observations into inflation ranges.
2. Compute the median real GDP growth rate for each inflation group.
3. Create comparative visualizations (Figures 1–5, see below) using ggplot2.
4. Interpret patterns and evaluate correlation vs. causation.
5. Connect your findings to Chang (2012), 23 Things They Don’t Tell You About Capitalism, Chapter 6.

Datasets Provided

WB_gdp_growth.xls

WB_inflation.xls

Before you begin:

You must create a single self-contained folder that includes:

1. Your R Project file (final.Rproj)

2. All raw datasets, exactly as provided:

   • /input_data/WB_gdp_growth.xls
   • /input_data/WB_inflation.xls

3. Your Rmarkdown script (only one script), named:

   analysis.Rmd