Global Economy Short Report

Purpose of the Report, Definition of Output Gap and Report Structure

Aim: To assess the use of the ‘output gap’ as a tool to inform economic policy   

Submission Deadline: One electronic copy in Word document format submitted through StudyNet by MONDAY 22 March 2021 23.59 

Assessment weight: 25 per cent of the final module mark.

Structure and Content of Your Report

• Word length 410 words(plus or minus 10%).
• 1: Introduction

State briefly the purpose of the report. This must include: a statement of the purpose of the report, a definition of the output gap and the structure of the report. [word guidance 40 words].     

i) Briefly describe the pattern of GDP growth from 2006 to 2020 (use GDP data at constant prices showing the percentage change in GDP on the previous year). Show this data in a Figure (labelled Figure 1). Ii) State whether there appears to be an economic cycle (business cycle) in the pattern of growth. Ii) Explain why it is appropriate to use the GDP growth rate at constant prices and not GDP growth at current prices. (word guidance 50 words)  

Calculate the ten-year moving average of percentage change in GDP growth 2006 to 2020. You will need the GDP data for 1997 to 2006 inclusive to calculate the 2006 number).  Use this data to plot a second line on Figure 1 to represent trend growth (the ten-year moving average). Briefly describe this pattern of trend growth and the resultant output gap. (word guidance: 20 words)

The Inflation Path

Briefly describe the pattern of inflation over the period 2006 to 2020 (use annualised figures). Show the data in a graph (numbered as Figure 2). State two areas of the economy not covered by consumer price inflation. [word guidance 30 words].

Draw a third figure, Figure 3 to show the evolution of unemployment 2006 to 2020. Briefly describe the path of unemployment. [Word guidance 20 words]. Comparing Figure 2 with Figure 3, what do these two sets of data suggest about the relationship between inflation and unemployment (often represented in the Phillips Curve). (word guidance: 40 words)

Write a short, critical review of the concept of the output gap’ and its measurement for guiding economic policy designed to secure economic growth and full employment without igniting inflation. [word guidance 200 words]

6: Conclusion

Based on the arguments in your report, write a brief reasoned statement on the use of the output gap for setting fiscal and monetary policy [word guidance 30 words]

The above points should form the core of the material covered, but you are free to add other material of relevance.

Presentation of Material: The report must be presented in standard report format with the report title, followed by your student number. DO NOT INCLUDE a title page, list of contents or appendices as the report is very short.

The sub-sections listed above must be used and numbered as above.

A list of references in alphabetical order must follow the Conclusion. The report must be paginated. Figures must be numbered consecutively (Figure 1, 2; etc; with titles and data sources. On Figures, the axis units must be clear either on the axes or from the title). The line chart for Figure 1 (GDP) will require a key to distinguish the two lines.  

Presentation of Graphics (see below)

Word length is subject to a tolerance of plus or minus 10 per cent -with cumulative 10 per cent penalties being applied for every 10 per cent outside this range). The list of references, words used in Figures and Tables and quotations do not count towards the word totals. As normal, plagiarism will be penalised.

NOTE: Check the IMF database to make sure that the data you require is available for the country you have chosen

DATA SOURCE: International Monetary Fund, World Economic Outlook, October 2020 

https://www.imf.org/en/Publications/SPROLLs/world-economic-outlook-databases#sort=%40imfdate%20descending

Select:  By Countries (country-level data)

Clear all countries, then select the one you have chosen

For GDP select GDP at constant prices, per cent change

For inflation select: Inflation average consumer prices per cent change

For unemployment select: Per cent of total labour force