Data Management Project
Canadian Federal Debt Analysis

Project Summary

By Linda Elbagoury, Pickering High School, Durham District School Board
for Mr. Riegert

The Canadian Federal Debt Analysis was an investigation of the federal debt and a study of eight economic factors to determine which one affects the federal debt the most. Essentially, the purpose of this project was to determine which variable had the most correlation with the federal debt in order to project the future state of the economy with respect to the debt.

An investigation of the behaviour of the national debt with respect to eight different variables was done on a yearly basis from 1993 to 2002, to determine which variable had the most correlation with the federal debt. Each variable was graphed on an x-y scatter plot, with the year on the x-axis and the variable in question on the y-axis. If there was a visual correlation between the federal debt and the variable currently being investigated, then that variable was also graphed against the federal debt. Outliers were removed, and the value of the coefficient of determination was found. The higher the r 2 value, up to a maximum value of 1, the better the variable correlation with the debt. The gross domestic product had the best correlation with the debt, with a r 2 value of approximately 0.9992, indicated an almost perfect fit. From this, an index was composed from the federal debt divided by the gross domestic product, expressed as a percentage. A scatter plot consisting of the years and the percentage value of the index was made. Finally, a trend was observed that from 1996 onward the debt has been reducing. Extrapolation of the graph shows that the debt should continue to reduce in future years, thus projecting a healthy economy.

Prime data sources used were Statistics Canada, Department of Finance, Industry Canada's Strategis and CIBC.