Question Part One: Data Analysis
- You will use data from the IMF’s World Economic Outlook (WEO) database. Currently,
the latest edition is October 2010. To access the dataset, go to
http://www.imf.org/external/pubs/ft/weo/2010/02/weodata/weoselgr.aspx
Alternatively, follow the path:
IMF web page (www.imf.org) –> Data and Statistics –>World Economic Outlook Database for October 2010 –>Download WEO data: By countries (country-level data) - Select one of the “Advanced Economies” or one of the “Emerging and Developing
Economies”. Collect available data series for the 5-year period 2004-2008. Analyze the
data focusing on the presentation of major macroeconomic variables: real GDP growth,
inflation, unemployment, government budget, current account, etc.
SAMPLE ANSWER:
In the last decade, US economy has seen two recessions. As compared to the 2001 recession, the latest recession was much more severe and the GDP loss added up to -2.4 for the year 2009 (Bureau of Economic Analysis, 2010:5). Although, the current growth figures are strongest in last 6 years but, the financial system is still seems to be depression. Many of the banks in USA are facing trouble and on life support on tax payers money. Consequently, the banking activism in money supply is still far below the levels compared to pre-recession period. On the managerial side there are strong incentives for the managers to increase their lending targets in the middle of economic growth.
Question Part Two: Policy Recommendation
- Identify one macroeconomic problem that you think is the most pressing (i.e., low
growth, high inflation, a large deficit, etc) for the country of your choice. - Suggest fiscal or monetary policies that can address this problem. Use the IS/LM/FE
and/or the AD/AS models to derive the short-run and long-run effects of these policies
on the identified problem and on the rest of the macroeconomy.
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