Final Project (50% of Grade due on the Last Day of Class)
The Final Project is designed to engage you in the work of macroeconomists. Typically policymakers requests advice from economists in the form of a memorandum(memo). For your memo, you should divide the paper into 4 separate sections bulleted below:
? Executive Summary
? State of the Economy
? 2 Short-Term Policy options to address areas of concern in the economy
? 2 Long-Term Policy Options to address economic growth.
For each section, you should write 2 to 4 paragraphs and support your claims with evidence presented in charts (pie or bar), graphs (time series or supply and demand graphs) and tables. These support areas may be taken from any website or notes from class that are posted on blackboard. When it is done, the memo should be between 5 and 8 pages, including graphs, charts & tables.
As for the format of the memo, in the next page I have detailed some suggestions. The only requirement I have is that your memo be printed in 12 point font and be double-spaced. Everything else is up to you. Feel free to modify it to your preference. As usual, if you have any questions, don’t hesitate to ask.
Remember also that if you work as a team, you may submit a Team Memo, but be prepared to present your project orally in class (no powerpoint presentation necessary) for about 15 minutes.
To: Presidential Candidate 2012
From: [Your full Name and/or the Names of everyone in your team]
Subject: Macroeconomic Policy Recommendations
Executive Summary (1-2 Paragraphs):
This section essentially functions as your introduction. It should summarize your assessment of the economy in terms of the 3 major “vital signs” of the economy we discussed in class [GDP, Employment & Inflation], your proposal for 2 long term economic growth policies, and your proposal for 2 short-term economic policies to deal with the current condition of the economy. There should be NO ILLUSTRATIONS in this first section of your memo. This is simply a summary and it should be no more than 2 paragraphs (up to 1 page maximum) in length.
State of the Economy
In this section you should devote a subsection to GDP, one to Employment & one to Inflation. In class we talked about leading and lagging economic indicators. All of these indicators point to one of the 3 major “vital signs” of the economy. You should organize your presentation of the data around these 3 areas. You may discuss only one or two indicator and illustrate using a graph or chart. Please include at least 2 graphs/charts/tables in this section.
Remember that for macroeconomic analysis it is more important to discuss data across time (minimum of 6 months) than to simply present data on the current month/quarter. The websites we talked about in class has charts and graphs conveniently sketched over time. Feel free to copy and paste these into your memo (or draw your own), but make sure you interpret each chart, graph or table you present.
The analysis you present about the state of the economy should lead to 2 policy recommendations to address short-term concerns you have about the economy. Keep in mind that short-term is typically 1 to 2 years.
2 Short-term Economic Policy Options
Here you should suggest 2 policy options to address short-term concerns you have concerning GDP, Employment or Inflation. Feel free to address only one or all three. The policies can be fiscal, monetary, both or neither. If you do decide to recommend no government intervention, make sure you discuss concerns and criticisms you have about fiscal and monetary policy.
You should present at minimum 2 graphs to support your short-term policy options from the following selections:
? Aggregate Demand/Aggregate Supply (Goods Market)
? Money Supply/Money Demand (Money Market)
? Loanable Funds (Credit Market)
? IS-LM (integrating both Goods & Money Markets simultaneously)
? Philips Curve (PC).
The graphs need not include data but they should represent hypothetical results of the policies you recommend. Make sure you conclude with the impact of your policy option on the Price Level, Employment, Interest Rate and Output (GDP).
2 Long-term Economic Policy Options
In this section you should suggest 2 options to enhance long-term economic growth. These policies do not have to be linked to your evaluation of the state of the economy. The only requirement you have is to make sure the policies relate to the factors that contribute to long-term economic growth we discussed in class.
You are not required to support your long-term policy recommendations with graphs, charts or tables, but if you include them you will be given extra credit. Graphs and Tables will necessarily be Time Series in nature and be able to discuss trends over a minimum of 10 years.