ECO320 Advanced Macroeconomics
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Advanced Macroeconomics
ECO320
Coursework (Group Project). Total Score: 100 Points, which has a 15% weighting on the final mark of this module.
Release Date: 17Marah 2023, 5:00 p.m., on Learning Mall (Friday)
Submission Due Date: 5 May 2023, 5:00 p.m., on Learning Mall (Friday)
This assignment (group project) assesses the learning outcomes of “E” defined in the module specification and counts towards 15% of final mark. The students would organize and present information using appropriate statistical techniques to evaluate the economies during business cycles.
This assignment focuses on business-cycle facts discussed in the lectures. The students would calculate the Business-Cycle Statistics for the poor, emerging and rich economies. Each group comprising of 5 students (or 4-depending on the actual number of students in Week 3) would select total 5 countries, including 2 poor (Least developed countries), 2 emerging economies and 1 rich economy, as given below in Table 1, discussed in the lectures. If the group is uneven like 2/3 students left, they would then select 3 countries from each category. The selection of countries should be completed by the end of Week 6 and shared with the module leader for confirmation. Each group should have at least 3 different countries for the macroeconomic analysis.
The students would analyse the business-cycle statistics at the annual frequency starting from 1980 to 2020. The minimum number of observations should be 30for this macroeconomic analysis. Download five major macroeconomic indicators namely output (real GDP), private final household consumption, investment (capital formulation), government spending and trade (export and imports). The data can be downloaded from WDI, IMF, and other potential sources, as discussed during the lectures. Convert all the data in the natural logarithm of realper capital terms. Attach your tables in Appendix in the submission file, showing the series after transformation, with clear explanation using a section called Data sources and construction before attempting all the questions. You are required to perform the following tasks, providing clear explanation for each task.
a. Plot the components of aggregate demand (AD) as percentage of GDP over time. Copy these graphs in your word file, using footnotes under these graphs for clear presentation of information from the macroeconomic data. (15 marks)
b. What do you observe about the share of each component of AD in the output in the rich countries than in the emerging economies? (15 marks)
c. You would now employ two alternative measures of the cyclical components, namely, log-quadratic detrending and Hodrick-Prescott (HP) filter with the smoothing parameter 入 = 100. Make the graphs of the cyclical component (output gap) for each economy and analyse the periods of recessions and expansions. (20 marks)
d. Calculate the volatility (standard deviation) of output in the poor, emerging and rich countries based on two measures of quadratically detrended in natural logarithm and HP filtering detrended in natural logarithm. Which countries have more volatile output? Discuss how the detrending method influences the volatility of the cyclical component of output. (25 marks)
e. Calculate the relative consumption volatility using the two measures of the cyclical components obtained in part c. What do you observe about the consumption smoothing in the poor and emerging economies than in the rich countries? (25 marks)
Table 1. List of Countries
Coursework Requirements
• Symbols and equations are encouraged to present your information from the macroeconomic data.
• Please attach the cover sheet and submit your PDF file before the aforementioned deadline. Late submissions will incur penalties according to the XJTLU Code of Practice on Assessment. There is a 5% point mark deduction for any lateness at all (even 1 min); an additional 5% point deduction for each day of the late submission. Weekend days count in this penalty too. The maximum penalty is 25% points.
• Please put your name and ID down at the end of each section for identification that this is the section you take care of.
• By signing the Coursework Submission Cover Sheet, you acknowledge that the work is your own, and that there has been no copying or collaboration with others. I would use Turnitin to check for plagiarism. Any suspected cases of plagiarism will be formally dealt with according to the XJTLU Academic Integrity Policy.
• There is no maximum word limit. However, you need to provide concise and clear answers with economic interpretations, where required.
• You do not need introduction and conclusion.
• Graphs should be explained, with proper labelling. The footnotes should be used in the Graphs for explanation.
• Reference lists/Bibliographies are encouraged. Provide all the complete references (i.e., journal articles, reports and data source) used in this assignment.
• Appendices/Footnotes provided should only be used when necessary. If appendices or footnotes are used excessively or contain material that should clearly be included in the main body of this assignment, you should include them in the body of the text.
2023-04-28