Shady Areas and No-Worry Lines—171

Shady Areas and No-Worry Lines

Adding shaded areas or vertical or horizontal lines to graphs is a very effective way of focusing your audience’s attention on specific aspects of a plot. The button brings up the Lines & Shading dialog, which is used to place both lines and shades.

Shades

Beginning in 1942 and ending with the March 4, 1951 TreasuryFederal Reserve Accord, the Federal Reserve kept interest rates low in support of the American war effort. We can use shading to highlight interest rates during this period. Define a shaded area by entering Left and Right observations in the Position field of the Lines & Shading dialog.

Hint: To put in multiple shaded areas, use repeatedly.

Hint: The Apply color to all vertical shaded areas checkbox lets you change the color of all the vertical shades on a graph with one command. This checkbox morphs according to the type of line or shade selected. For example, if you’ve set the combo for Orientation to Horizontal - left axis, the checkbox reads Apply color, pattern, & width to all left scale lines.

172—Chapter 6. Intimacy With Graphic Objects

Shading can also be applied horizontally. After the Bretton Woods agreement on exchange rates broke down, a number of European countries agreed to keep their exchange rates from rising or falling more than 2.25 percent. Sometimes this worked and sometimes it didn’t. Shading visually highlights a band of the appropriate width for the Belgian/Dutch exchange rate in the figure to the right.

Lines

Adding a vertical or horizontal line, or lines, to a graph draws the viewer’s eyes to distinguishing features. For example, long term interest rates are usually higher than short term interest rates. (This goes by the term called “normal backwardation,” in case you were wondering.) The reverse relation is sometimes thought to signal that a recession is likely. Here’s a graph that shows the difference between the one year and three month interest rates.

Templates for Success—173

Use to add a horizontal line at zero, as shown.

In the revised figure it’s much easier to see how rare it is for the longer term rate to dip below the short rate.

Templates for Success

What’s really useful is to see how the difference between long and short term interest rates compares to (shaded) periods of recession. Periods in which the long rate dips below the short rate are associated with recessions. On the other hand, there have been a number of recessions in which this didn’t happen.

In fact, adding shading for recessions has become something of a

Templates for Success—175

Hint: Applying a template can make a lot of changes, and there’s no undo once you exit the dialog. It can pay to use Object/Copy Object… to duplicate the graph before making changes. Then try out the template on the fresh copy.

Text, lines, and shades in templates

Radio buttons offer three options for how text, line, and shade objects are copied.

Do not apply means don’t copy these objects from the template. Use this setting to change everything except text, line, and shades to the styles in the template. Any text, line, or shade objects you add subsequent to the choice of template will use the template settings.

Apply template settings to existing uses the template styles for both existing and future text, line, and shades.

Replace text & line/shade wipes out existing text, line, and shade objects and then copies these objects in from the template. In the

previous figure, we manually re-entered the zero line after the recession shading was applied from the template. This was necessary because the template didn’t have a zero line, and all lines get replaced.

Hint: If you regularly shade graphs to show periods of recession—something commonly done in macroeconomics—make a template with recession periods shaded and then use Replace text & line/shade to copy the shaded areas onto new graphs.

Hint: Nope, there’s no way to copy text, line or shade objects from the template without replacing the existing ones.

Axis and legends in templates

Two checkboxes handle how axis and legend settings are copied.

Check the first box to apply axis settings from the template related to the label and scale. The second checkbox will replace the current legend text with that of the template.

If neither is checked, these items will not be copied.