Macroeconomics Theory and Policy (ECO202) 2020 – 2021 Writing Assignment#2

Macroeconomics Theory and Policy (ECO202)
2020 – 2021
Writing Assignment#2
Total: 100 marks.
The purpose of this assignment is to estimate the Phillips curve and Okun’s Law for the country of your
choice and write a well-structured research report about the whole process of acquiring and refining your
date, estimating, and interpreting the estimated coefficients based on the theoretical background of your
models and empirical implications of the estimated equations for the country of your study.
In order to help you, your article should include, among other things, the following steps. Please note that your
final paper must have a complete structure from introduction to conclusion and references with internal
coherence. These steps are just to help you to organize your paper, and not to be treated like questions to
get your answer mechanically.
In order to find help for writing, referencing methods, avoiding plagiarism, please consult with the following
1- Choose a period time not shorter than 20 years and as recent as possible. For each year, find the
following time series data for your country from reputable sources (World Bank, IMF, UN, or local
statistical agency of your country of choice): Inflation rate (the GDP deflator inflation rate is preferred),
unemployment rate, and real GDP, in terms of local currency. A description of the used data sources
should be included. (15 points)
2- Present the data in form of tables and graphs that you think are informative for your audience. Discuss
the sources of your data, nature of the data, and the assumptions that you may use to construct the needed
data. It is preferable to put the tables and graphs in the appendix. (10 points)
3- You can use the Microsoft Excel LINEST function to estimate a and b coefficients in a different version
of the Philips Curve in an equation like this:
t t 1 Yt     a  b 
– Instead of the unemployment rate, we have the real output in this version of the Phillips curve, so b must turn
out to be positive, not negative.
– You can use any other statistical software that you know, instead of the LINEST function.
– If you have any problem working with the LINEST function, search YOUTUBE, for the tutorials. You
can learn it within a few minutes, using the tutorials and my example file.
– In order to see one example of using the LINEST function for estimations, check the posted example on the
– All estimated coefficients and statistics should be fully presented. The exact output of the LINEST
function or any other software that you use must be included. (15 points)
4- Using algebra, rearrange your estimated equation into the standard Phillips Curve like below to find α
and natural level of output for your country of choice. Note again: I used Y instead of u in this version of
the Philips Curve):
Y Y t  t1   t 
Discuss the size and sign of these values. Discuss the statistics of the model, like R2
. (15 points)
5- In this part, you should estimate Okun’s Law by estimating an equation like this:
t t 1 b gyt u  u   a 
Where gyt is the growth rate of real GDP. All estimated coefficients and statistics should be fully presented.
The exact computer output of the estimation should be included. (15 points)
6- Rearrange the estimated equation into standard Okun’s Law like below to find β and g, which is called
normal growth rate: u u g g t  t1   yt  .
Discuss the size and sign of these values. Discuss the statistics of the model, like R2
. (10 points)
7- General organization, quality of presentation, creativity and elaboration of the paper and also proper
referencing: (20 points)
Administrative issues:
– The project should be done by each student independently. You should let me know the following
information by email, :
– Your name and Student ID Number.
– A list of six or seven countries from the next page list, in order of your preference. I will choose
and let you know the country that you should work on. You cannot change your country, after my
approval. Countries will be assigned on a first come first serve basis.
– The quality of analysis always matters more than quantity. But your assignment could be around 2000
words (excluding the tables, graphs, and references).
– You should report all your references. As you know plagiarism is a violation that is prosecuted based on
the university rules. In suspicious cases, I may decide to check your assignments by Turnitin.
– The assignment must be submitted before, through Quercus. The assignment
must include the names and student ID Numbers, on the cover page, otherwise, your marks may not
be recorded correctly.
– The deadline will not be extended. No excuse like network failure or system interruption … is acceptable.
If you miss this project, it cannot be substituted by anything else.
-The only acceptable submission format is ONE file in PDF format, with following name. Marks will be
deducted if the rules are not followed.
For example, for Nigeria: ECO202 _Nigeria_Jones_123456789.pdf
– The file must be sent only once. If you send several versions or several times, one of them is selected,
RANDOMELY, by the computer.
List of Countries
A: Algeria, Argentina, Armenia, Azerbaijan
B: Brazil, Bulgaria, Burkina Faso
C: Cambodia, Cameroon, Chile, Colombia
E: Egypt, Ethiopia
G: Ghana, Guatemala
H: Honduras
I: India, Indonesia, Iran, Israel
J: Jordan
K: Kenya, Korea (South)
M: Madagascar, Malawi, Malaysia, Mali, Mexico, Morocco, Mozambique, Myanmar
N: Nepal, Niger, Nigeria
P: Pakistan, Paraguay, Peru, Philippines
S: Senegal, Singapore, South Africa, Sri Lanka, Sudan
T: Thailand, Tunisia, Turkey, Tanzania
U: Uganda, Uruguay
V: Vietnam
Z: Zambia, Zimbabwe