ECON 0500 International Economics Spring 2022
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ECON 0500 International Economics
COUNTRY GROUP PROJECT #1: INTERNATIONAL FINANCE
Spring 2022
The International Finance Report is due on Sunday, 2/13/22, at 11:59pmET and is worth 25 points as detailed below. A grading rubric at the end of the document explains how points will be awarded. Report submission requirements include the following:
• The report must be submitted as a word document that is uploaded to the Canvas assignment.
• The report should be submitted with appropriate header information and grammar.
• All research (including data and the work of others) must have clearly cited references and a bibliography that uses a recognized citation style. See the Pitt Library for citation guides (https://pitt.libguides.com/c.php?g=12108&p=64729). The document should make clear what data is associated with each reference.
• For verification purposes, data sources should include either a link to the raw data or an attached document with the raw data. If you use a link, it must bring the user directly to the actual data and not to a search page for the data source. Otherwise the data should be copied and pasted into a file.
• Economic analysis should be specific to your country. Comments that only provide generic analysis (eg, “tariffs can slow trade”) will not receive full credit.
• You can divide that work among the members of the group, but make sure to work together to ensure that each question is addressed fully. Communicate with each other and provide constructive feedback. Remember that each member of the group receives the score of the full report.
Report Questions
1. (5 points) Go to the official government website that reports the country’s Balance of Payments and provide a link to the data. Use the data for the most recent full year to demonstrate that the Balance of Payments adds to zero (or close to zero). Clearly state whether the country is currently a net borrower or lender in the world and explain how the data supports your statement. Briefly (a few sentences) describe any major trends in the Balance of Payments data over the past 3 years.
2. (5 points) Identify the currency used by your country. Find the country’s exchange rate against the U.S. dollar over the past 5 years and provide a graph. Remember that your case study country is the “home” country and the U.S. dollar is a foreign currency. Briefly describe how the home currency has appreciated or depreciated over the past 5 years. Identify any possible reasons for the major changes that you observe. Determine whether the country has a fixed or floating exchange rate regime. Briefly discuss the possible reasons for the country’s exchange rate regime and its pros and cons.
3. (5 points) Identify a key annual interest rate for your home country and a similar interest rate for the United States. (A good place to find comparable interest rates is the
International Financial Statistics of the IMFhttps://data.imf.org/?sk=4c514d48-b6ba- 49ed-8ab9-52b0c1a0179b&sId=1409151240976). Identify the spot exchange rate
between your home country and the U.S. dollar for the time period of the interest rate and for one year later. Make sure to set the date of the interest rate and the exchange at a similar time period in each year—for example, January 2013 and January 2014 or first quarter of 2018 and first quarter of 2019. Clearly identify your data, the time periods, and the source information in your work. Using your collected data, answer the following questions:
• Use the equation for uncovered interest rate parity to calculate the future exchange rate (ReH/$) that you expect given your first year of interest rate data for the home country and the United States.
• Use the second year of data to assess the results of the interest rate parity condition. Did the exchange rate in the second year move toward the value predicted by ReH/$?
• Provide a brief assessment (2-3 sentences) of your data results.
4. (5 points) Using The Economist’s Big Mac Index Interactive map, identify the price of a Big Mac in the home country’s currency and the Big Mac’s purchasing power parity exchange rate. Given the current exchange rate with the U.S. dollar, identify whether the home country’s currency is overvalued or undervalued. Briefly describe possible reasons that are specific to your country’s economy (beside exchange rate valuations) why the price of Big Mac may be different in your country.
5. (5 points) Read about your country on the IMF Covid Policy Tracker
(https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19) and Covid Lending Tracker (https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending- Tracker#APD). Briefly describe your country’s Covid policy and identify the following
elements of the policy:
• Whether your country used expansionary or contractionary fiscal policy
• Whether your country used expansionary or contractionary monetary policy
• Whether your country received any financial support from the IMF
Reminder about the Assignment Scoring Policy
Group points may be lost for missing deadlines, providing incomplete or inaccurate information, and for poorly cited or inadequate references. All research (including data and the work of others) must have clearly cited references using a recognized citation style. See the Pitt
Library for citation guides (https://pitt.libguides.com/c.php?g=12108&p=64729). A grading rubric will be available for each assignment.
Group members will also grade each other’s performance through the Peerceptive system. Individuals will be eligible to receive the points awarded to the group unless their score on the Peerceptive system indicates that they have not been full participants in the group effort. So, even though a group may achieve a high score on the assignment, an individual within the group may be awarded a low score or even fail the assignment if the group members identify a lack of participation in the work. Individuals may also lose points for failing to participate in the Peerceptive evaluation of their team members.
Grading Rubric
5.0 pts Excellent
All parts of the questions have been addressed fully. Data is accurate and well presented. Analysis is clear and thoughtful. Economic understanding is very strong.
4.5 pts Very Good
All parts of the questions have been addressed fully. Data is accurate and well presented. Analysis is clear and thoughtful but limited. Economic understanding is strong but has some limitation or error.
4.0 pts Good
Most of the question is answered and data is accurate, but not well presented. Analysis is clear and thoughtful but limited. Economic understanding is mostly accurate but has some limitation
or error.
3.5 pts Acceptable
Answers to questions are partial or incomplete. Data has accuracy and/or presentation issues. Analysis is included but is not clearly explained. Economic understanding appears to be present but is not clearly demonstrated.
3.0 pts Inadequate
Answers to questions are partial or incomplete. Data is accurate, but not well presented. Analysis is included but is not clearly explained. Economic understanding appears to be present but is not clearly demonstrated.
2.0 pts Poor
Answers to questions are partial or incomplete and suffer from more than one of the following problems: inaccurate data, missing analysis, confusion in understanding the relevant economic concepts.
1.0 pts Very Poor
Answers to questions are partial or incomplete and suffers from more than one of the following problems: inaccurate data, no analysis, significant confusion in understanding the relevant economic concepts.
2022-02-11
COUNTRY GROUP PROJECT #1: INTERNATIONAL FINANCE