11 Comments
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Dan Stillit's avatar

Great post Craig. I see this a lot (but missed the one in X which I've now abandoned). Analytical policing is underrated.

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Chris Crook's avatar

I'd be curious to see what it looks like to plot the ratio of the two lines. That'd capture the relationship trend in a single line. Of the three you provided, I definitely like the last most. The trick, as you mention, is making sure casual readers understand it's a counterfactual. Also making sure they understand the assumption being made is critical.

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Craig Palsson @ Market Power's avatar

The ratio would make sense, except the Renminbi value is 0 before 2016. So that section of the line is undefined.

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Dan Stillit's avatar

Isn't a ratio more volaile if the numerator and denominator are negatively correlated?

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Chris Crook's avatar

Oh yes, I was only focused on the period where data for both existed. My assumption was the prior data for Renminbi was missing/unknown, not zero so ignoring it may make sense in this situation. It's definitely a major limitation.

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Tyler Ransom's avatar

Regardless of whether this actually resolved the issue, you get points for looking up the RGB/Hex color codes for the FT chart and matching them exactly in Stata. Job well done!

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Craig Palsson @ Market Power's avatar

Another good point about going until the marginal cost exceeds the marginal benefit: I didn't match the text color. At that point I figured it looked good enough.

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Jadrian Wooten's avatar

I've always struggled with dual axis charts because of what you're showing here. I like your final product, and wonder if a stacked area chart would do the trick or even a proportional stacked one with the 3rd category being "all other currencies"

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Craig Palsson @ Market Power's avatar

Stacked area charts are tough. I think they look really cool, but they're basically time series pie charts, which means they carry the flaws of pie charts over multiple years. I think for it to work you have to have each subgroup following a distinct trend over the entire sample period.

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Chris Crook's avatar

That's a great description to their failings... "basically time series pie charts"... I'm going to steal that phrase. I have stakeholders asking for stacked charts all the time when multiple lines conveys a much clearer story. They only get it when I show them both versions.

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Craig Palsson @ Market Power's avatar

Yeah, I had a project where I was deriving some conclusions from a stacked area chart, but when I broke it into multiple lines it was easy to see that I was wrong. I've seen cases where they work well, but you have to have a specific type of compositional trend.

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