macroeconomic project Macroeconomics Project Guidelines
• Choose one country to investigate. Then find data (quarterly or annual) for three major macroeconomic variables (inflation, unemployment, growth) for your chosen country. (Hint: IMF, World Bank, and National Statistical Agencies are good sources). You have to present your statistics by using excel graphs, and you should MAKE your own graphs, you will not get any points for graphs copied and pasted from internet.
• Define the three macroeconomic variables (inflation, unemployment, growth) and comment on their trends according to your graph.
• Then, by using the aforementioned data, you need to come up with some economic policy recommendations for two of the following: monetary policy, fiscal policy or growth policy. There is not one correct answer, but you need to be able to justify your chosen policies in an understandable manner, with the use of economic theory.
Here are some hints:
1- Before you make your recommendation, you might want to compare your country with other countries
(maybe with the World average). This will help you to understand whether the inflation or unemployment is too high, or growth is too low in your country.
2- Make sure that your recommendations are consistent! It does not make much sense if you recommend decreasing government spending for fiscal policy and then suggesting increasing it for the growth policy.
3- Not doing anything is also an option. As we will learn later, it is called “non-activist approach”. However, you need to convince me that this is a viable option.
4- While making a recommendation for the monetary policy, try to remember the effects of money on nominal and real variables in the short-run and in the long-run. Also make sure that you find out whether your country uses open market operations, discount loans or reserve requirements as a monetary policy tool.
5- While making a recommendation for the fiscal policy, try to remember the short-run and long-run effects of government spending and taxes. You might also want to check whether your country has a budget deficit or surplus, as it does not make much sense to advise a country with a huge deficit to increase spending.
6- While making a recommendation for the growth policy, it might be wise to remember the determinants of productivity (K/L, H/L, N/L and A) and then find data on government spending on education and research (as a percentage of GDP), saving/investment as a percentage of GDP) as well as trade openness (imports+ exports as a percentage of GDP) and to compare these statistics with similar countries as well as Western countries. This will give you an indication in which areas your country needs a significant change.
7- All sources have to be clearly documented (data and information)
8- The assignment will be submitted on the blackboard via safe assign
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