Description:Length: Executive summary (1400-1500 words) and appendix. (Note: the appendix is not included in the word count - this should show the comprehensive research completed relevant to the various course topics and tasks)
Submission: In addition to the final report students need to submit the following information as an appendix.
-The topic specific research (as per tasks below) - this will include the research submitted for review in step one which should incorporate any feedback received in step one.
RMIT Cover Sheet - signed by all members
PLEASE NOTE THAT WHEN CHOOSING A COUNTRY YOU CAN CHOOSE ANY COUNTRY BUT AUSTRALIA
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.
Synthesize and evaluate theories of exchange rate determination.
Assess the policy options available in an open macroeconomic environment.
Evaluate the extent to which macroeconomic policy effectiveness is affected by macroeconomic openness.
Assess the implications of a government’s choice between a fixed and a floating exchange rate regime
You will apply research and critical thinking skills to inform strategic approaches, solutions and options
Assessment Details:
Executive Summary Report
“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 inlfuencing 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
Task 5
Is the trade balance sensitive to changes in foreign prices for imports and exports
Estimate which quadrant of the SWAN diagram your country of choice may be operating in?
What might that predict about the role for policymakers
What drives the RER - is it changes in the price of Non tradeables or the nominal exchange rate
What does the RER suggest about the countiries competitiveness
Task 6
Assess possible events that might affect these markets. Use the IS LM BP model to frame your analysis:-What if:
There was either expansionary fiscal or monetary policy
What if relative interest rate rise (fall)
What if social and political concerns impact trade
Task 7
How exposed is the market to external shocks (e.g trade flows / NX)
How exposed is the economy to internal shocks (eg. fluctuations in demand for money / regional shocks )
Specify the exchange rate regime and analyse the risks inherent in that exchange rate regime
What type of policy interventions are likely given the country context - Monetary? / Fiscal?
Task 8
As the assessment is the executive summary .keep it succinct but informative. The group will need to collaborate on the key messages from their research in the "appendix" that would add value to the manager of your section. For example
The purpose of the report - define the report objective (e.g identify recent changes in key variables and apply theory to understand expected future changes )
The results of the research - key findings - refer to appendix to provide supporting information / analysis
The conclusions drawn from the research - identification of key risks etc.
Recommendations for clients operating in that markets - likely macroeconomic trends etc ..
MORE INFO:
2) Executive summary report - (Strict word count). The executive summary report should demonstrate the most interesting elements of your research into the macroeconomic conditions and international context of your choosen country context. You do not need to cover all tasks / topics in this section - just those specifically relevant or interesting from the perspective of the choosen country. eg. has there been any movement in interest rates or fiscal policy - what might be the implications of that (using an application of IS LM BP model) - what is the international trade situation like - what's happening to the value of the currency and are any of the theories discussed in topic 3 relevant in explaining those movements - if not what are the assumed drivers of exchange rate fluctuations etc ... building on this week you could also explore if that country are in the process of developing a central bank digital currency for example. This needs to be a cohestive summary with a well thought out narrative - not segmented by contributions from various group members. (Do not refer to tasks in this section - the tasks were to guide the necessary research to inform the development of the executive summary)
3) Appendix: (No word count) This section will show all your research related to the assignment tasks for Topics 1 - 7. This is an opportunity to show the depth of research the group has conducted. Although not marked directly - markers will refer to it if deemed necessary as supporting information.