This is a team assignment. Just do the Executive summary and part 1&2 of this assignment.
1) Task
It is useful to look at fluctuations in macroeconomic indicators during times of major crisis (or times of shifting international consensus with implications for trade, etc.). From such study, we can learn from the past and use this understanding to design appropriate policy responses to deal with future crises. This task requires you, as a group, to analyse the fluctuations of macroeconomic indicators for a country in the wake of the COVID-19 pandemic and during a time of rising global energy prices.
To prepare for this task, you will need to clarify the time period that is under analysis. Within your group, you should clarify your understanding of the timing of the events that you are focusing on. Remember to focus on the post-pandemic economic recovery and consider how events associated with rising global energy prices have impacted the economy and its recovery.
You will need to collect data for several years preceding the start of events you are considering, so that you can show the impact and compare the economy’s performance. You can ask your Lecturer/Tutor for guidance on this during your class sessions.
Specific steps you’ll need to take are as follows:
1) Choose one country: Australia or Singapore
2) Confirm the years of data that you will need to gather so that you can discuss the impacts of the pandemic including economic recovery and how this has been impacted by rising energy prices.
3) Source macroeconomic data for your country for the following indicators. You should ensure that you are sourcing your data from a credible statistical authority and cite your data source in your report.
Executive Summary (350-400 words)
Provide a bullet list of 5 key sentences that sum up the most useful insights from your policy brief (it is sometimes recommended to complete this section last).
Key points should include the following:
• What useful information does your policy brief offer your readers.
Which country’s economy and what events are you analysing?
• What are the key findings of your analysis: Which events have had impacts and what are these impacts?
• Why should policymakers be concerned about unemployment, inflation and the growth of the economy?
• What is your assessment of the country’s prospects for dealing with economic recovery after the recent pandemic and the impact of rising energy costs?
1. Business cycle (250 words)
a) To equip your reader with necessary background information, provide a brief explanation of the macroeconomic concept of the business cycle and explain the four phases of the business cycle. Clearly mention which macroeconomic indicator is used to track the phases of the business cycle.
b) Provide a simple diagram that illustrates these four phases. For illustrative purposes, this conceptual diagram can be stylized and simplified (that is, it does not need to be based on real data).
c) According to macroeconomic theory, explain what is expected to happen to the macroeconomic indicators of unemployment and inflation at these different stages of the business cycle.
2. Real GDP growth rate (400-450 words)
a) Provide a clear definition of Real GDP and the formula that economists use to calculate the Real GDP growth rate. Provide a brief comment on why economists use Real GDP as a measure of economic activity.
b) Acknowledge some of the limitations of using Real GDP as a measure of economic prosperity and well-being.
c) Using data on the Real GDP growth rate for your country of analysis, present your graph for this data and look for the ways that this indicator has fluctuated over time.
d) Referring to your graph, describe:
i) the impact of the pandemic on the economy,
ii) the post-pandemic economic recovery, and
iii) the impact of rising energy prices on the country’s economic growth rate. You should aim to identify the different stages of the business cycle as they occur in your graph. When identifying the contraction phase of the business cycle, provide the technical definition of a recession (as per the standard definition that we have learnt in class) and note whether any of the contraction periods that have occurred in your country would be classified as a recession.
e) Consider the contractionary period that occurred during the COVID-19 pandemic along with the impact of rising energy prices. Based on the Real GDP growth rate, describe how these two crises compare in terms of their impact on Real GDP.