Nternational Monetary Economics

PLEASE NOTE THAT WHEN CHOOSING A COUNTRY YOU CAN CHOOSE ANY COUNTRY BUT AUSTRALIA

Assessment name: Assessment 2A (1) Step 1 : Executive summary Report  – Formative assessment on research tasks 1-4 . You will receive feedback on the work submitted to inform and improve your final report due in May

Weight: 5%

Formative Assignment due date: 17th April –    Submission of  a work  in progress for comment and feedback relating to Executive summary report.

You are required to  demonstrate  that you have actively engaged with the economic theory and measurement tools taught in the first four course topics and begun to gather information and relevant data trends so you can produce a comprehensive assessment of the international macroeconomic context of a chosen region or country. This can be any country other than Australia.

Please refer to the Economics page in the Library (Links to an external site.) for information around access to country related information and data

( ID and code)

s3614390

SPFdjh21PZ@

Research project Tasks  relating to topics 1 -4

· Students will receive feedback on their progress which will then inform their final Executive summary report submission due on 16 May

Students need to submit the following :-

·  A word document demonstrating that the group have completed research relating to Topics 1 – 4 as specified below and discussed in tutorials.

· An RMIT assessment coversheet  (Links to an external site.)

Feedback mode: via Canvas

Learning Objectives Assessed:

CLO’s 1  to 3

1. Analyse the concept of a nation’s balance of payments to examine the economic importance of changes in a nation’s net foreign wealth position.

2. Synthesize and evaluate theories of exchange rate determination.

3. Assess the policy options available in an open macroeconomic environment.

You will apply research and critical thinking skills to inform strategic approaches, solutions and options

Graduate Outcomes supported: 

This assessment supports the following graduate outcomes.

1) Work ready

2) Global in outlook

3) Innovative

4) Life-long learner

Assessment Details: 

“The King Centre of International Economics  (KCIE)is an economic consultancy that provides independent, quantitative, evidence-based advice to support practical decision-making. Our work is about applying the tools and techniques of economic analysis to help solve problems for our government, private, non-government, and international clients. We work across all sectors and have built a reputation for analysing difficult and complex economic issues, and producing well researched, comprehensive and credible economic assessments. We are proud to make available a wide range of our reports, which are published on our website and available upon request. We have worked in both developed and  developing countries in Asia, Africa,  Europe, Latin  and Northern America and the Pacific, advising on economic policy and institutional development across a diverse range of subjects”. 

Our international  work varies however recent work has included the impact of the government and central bank policies to support the macroeconomy during the pandemic crisis. The analysis we provide   focuses on assessment of the  clients domestic market and their interaction and exposure to  international  markets and key trading partners.  Assessment of expectations regarding relative interest rates, the value of the domestic currency, commodity markets and expected policy directions are also provided

Task: You are graduate employee at  “KCIE” research and you have been allocated to a team asked to provide some current research on a client market  in a country of your choice.  (This can be any major economy in the world for which you can access information for key economy variables) .The audience for the research and the executive summary is the manager of the regional “country” division you have chosen to study, and will be passed on to the client (large company considering expanding operations in your country of choice)  once reviewed by your manager.

The task is to apply the  economic models covered in class to help the client understand the current economy in the country of choice and the likely implications of changing trade patterns, policy developments and political sentiment towards  globalisation.  Your team are expected to conceptually model  likely changes in key economic variables  with a specific focus on international flows in trade and capital and the mechanisms that drive these flows. You may also choose to explore the development of the digital economy in these countries and explore how the rate of growth of decentralised ledger technologies might impact trade flows across sectors.  As a group you will  be expected to apply the tools developed in the course content to  develop an assessment  the current situation and likely development of your economies macroeconomy.  Your assessment of the international  macroeconomic conditions of your market will support the client by ;-

Helping clients to:

· Be better equipped to make the right strategic business decisions

· Plan more effectively when entering new markets

· Understand the bigger picture when making investment appraisals

· Be better prepared for policy or regulatory change

· Influence policy-makers, officials, regulators, customers or the public with greater authority

You are required to develop a research strategy supported by the set of tasks listed below.

Drawing on that research you are then required to draft an Executive summary report (1400-1500 words) highlighting the key points of your findings and  providing an assessment of expectations regarding relative interest rates, the value of the domestic currency, commodity markets, the digital economy and expected policy directions.

For example, Why can theory  tell us about recent changes in exchange rates ?, what is the role of monetary and fiscal policy ?and implications for internal and external balance, domestic saving and consumption practices and what this means for the balance of payments? etc…

The following tasks provide some guidelines to support your research .

suggested tasks are:-

Task 1 

· Form groups (max 5 – minimum 2) in your tutorial class and update details on Canvas.

· Identify groups interests and capabilities

· Set up a shared group within microsoft teams

· Choose the country / region you would like to research

· Consider recent events and complete an initial library desktop review  (Literature search) on the specific region and country

Task 2

· Begin to identify data sources (most recent available – refer to national statistics websites)  and collate information on trends in  the following variables  referred to in the course materials some examples may be :-

· Unemployment rate

· CoVid 19 data

· Inflation rates

· Interest rates

· Interest rates of trading partners

· Real GDP growth

· Balance of payments (current account balance)

· Net Debt – as per International investment position

Task 3

Applying and contextualising the data collated in the previous week assess:-

· Provide an assessment of the countries current account balance? What does this imply about trading consumption across time. what is the economic significance of the Current account balance  and how does that relate to the International Investment position

· Can you deduce anything about preferences for current / future consumption

· What can you determine from (real) interest rates on the return on domestic investment relative to foreign investment. Does capital flow in the direction predicted by the intertemporal model of the current account? Why/ why not?

· Have there been any changes in trading patterns recently

· Have there been any significant change in the digital economy – Has the central bank made reference to use of digital currencies ?

Task 4

· Consider the exchange rate: is it a flexible or managed exchange rate mechanism? and what are driving recent trends in exchange rates ?

· The big mac index – is the markets currency considered under or over-valued according to PPP

· Does the economy have a well developed financial market – is there a high degree of capital mobility across borders?

· Trade in goods and services (how dependent is the economy on international trade in goods and services)?

· What is the role of the central bank in influencing exchange rates (direct or indirect)

· Are there controls on capital flows in and out of the country – Could this be impacted by the use of Cryptocurrencies ?

· If the exchange rate is flexible how volatile have fluctuations being  – could volatility be explained by any of the theories of exchange rate determination

Consider how topic 4 – the elasticities model and the absorption  model might be relevant to your country specific analysis?