Macroeconomics Project Guidelines

Macroeconomics Project Guidelines
• Choose one country to investigate. Then find annual data for three major macroeconomic variables
(inflation, unemployment, growth) for your chosen country, for a period of 10 years. (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 the internet.
• Define the three macroeconomic variables (inflation, unemployment, growth) and comment on their
trends according to your graph.
• On the same graph, add data of World/or Regional averages for each of the three variables
• Then, built on the aforementioned data, you need to come up with some recommendations for the
monetary policy and/or the fiscal policy, showing the impact of your recommendations on the three
macroeconomic variables.
• There is no one correct answer, but you need to be able to justify your chosen policies in an
understandable manner, with the use of economic theory (liquidity preference framework and the
aggregate demand-aggregate supply analysis).
Here are some hints:
1- Comparing the variables of your country to the world/or regional averages 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
two policies working in two different directions.
3- Not doing anything is also an option. As we will learn later, it is called the “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- All sources have to be clearly documented (data and information)
7- The assignment will be submitted on the blackboard via safe assign
8- Due date is May 7, 2020