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macroeconomic variables.
The objective of this project is for the students to get familiar with macroeconomic data and to analyze the relationships between macroeconomic variables.
Four countries will be assigned to each student. The countries include a high-income country, two middle-income countries, and a low-income country. Each student should produce two files: (1) an Excel file that includes country data; (2) a Word file that includes the analysis of data.
High income country: United states
Upper- middle income country: Botswana
Lower- middle income country: Georgia
Low income country: Afghanistan
1) An empty Excel file is available on the course website. Fill in the economic and financial indicators of your four assigned countries in the Excel file. Note that you may not find all indicators for all countries. This is especially the case for the low-income country.
2) Write a report about your findings from the data by answering the following questions:
a. Confirm the following relationships and explain if your findings are consistent with theory:
i. Absolute purchasing power parity (PPP) between the two selected countries (choose two countries of your assigned four countries for which you have enough data):
ii. Relative purchasing power parity (PPP) between the two selected countries (choose two countries of your assigned four countries for which you have enough data):
iii. The Fisher effect between the two selected countries (choose two countries of your assigned four countries for which you have enough data):
iv. National income identity: Y = C + I + G + NX
or, Y = C + I + G + CA
b. Explain the relationship between the movements of the GDP (business cycles) and the main economic indicators of your assigned four countries:
i. Examine if this statement: decrease in investment usually precedes recession, and boom is usually led by increase in consumption.
ii. What is the relationship between the movements of the GDP and exports, imports, and net exports?
iii. What is the relationship between the movements of the GDP and unemployment?
c. What is the relationship between money growth and inflation in your assigned countries?
d. What is the relationship between inflation and exchange rates in your assigned countries?
e. Can you identify signs of “financial system distress” that could signal a financial crisis?
You can download data from the World Bank’s “World Development Indicators” (WDI):
http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators
https://datacatalog.worldbank.org/dataset/world-development-indicators (for bulk download)
The report should be double-spaced, font 12 “Times New Roman”. Feel free to use graphs to explain your findings. The report should not exceed eight pages.
The report and data file should be uploaded on cuLearn by June 16. Late submissions result in 20% deduction of the mark per day. The project accounts for 40% of the final grade.
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