Using Gapminder and FRED to Teach Macroeconomic Theory

The subject of macroeconomics benefits from a large set of easily accessible data which can be used to introduce/supplement/reinforce teaching of important concepts revolving around the macroeconomics of the long- and short-run. There are many methods/sources teachers of macro can use to access these data, but Gapminder and FRED offer simple and powerful tools to not only download, but also visualize these data. Starting with the long-run, key questions concerning economic growth include:

i. Why is the standard of living in many countries much higher today than a century ago?
ii. Why have some countries stagnated?
iii. Why is economic activity increasing at a faster pace in some countries than others?

Addressing these questions requires knowledge of what constitutes economic activity and the standard of living. Real GDP per capita serves as macroeconomists’ benchmark measure of both concepts. Most macro courses spend significant time introducing real GDP and real GDP per capita, how to calculate both figures, and how they represent good measures of economic activity. Furthermore, it is straightforward to tie real GDP per capita to a country’s material standard of living. However, it is not so straightforward to tie real GDP per capita to a nation’s welfare in a holistic sense. Gapminder is a website that provides a cornucopia of international data on macroeconomic, political, social, health, and education data that allows teachers of macro to easily visualize the correlation between real GDP per capita and broader measures of welfare for their students. Other broad measures of welfare include indicators of health, social, and political outcomes. Gapminder graphs are constructed that illustrate the relationship between real GDP per capita and measures of these items: life expectancy, infant mortality, maternal mortality, childhood malnutrition, literacy rates, gender representation and education, corruption and human development index.