Current U.S. macroeconomic conditions, including projections of key macroeconomic variables for 2014
You are required to submit an eight-page typewritten assessment (double-spaced) of current U.S. macroeconomic conditions, including projections of key macroeconomic variables for 2014. This paper is a scholarly endeavor that must include a bibliography of at least 10 items, in addition to articles cited in your journal. The paper is due Monday, June 9 (the last regular class meeting), and is worth a maximum of 80 points. Late papers are penalized two points per calendar day.
Macroeconomists are routinely asked how the U.S. economy is likely to perform in the year ahead. Your task is to answer that question for 2014. In doing so, first review macroeconomic conditions over the past year or so — at what rate did the economy grow in 2013 and in the first quarter of this year? What about interest, inflation, and unemployment rates? Did the value of the U.S. dollar rise or fall? And so on. Then, based on your understanding of the economy’s recent performance and your analysis of current macroeconomic trends (your journal entries should prove helpful here), assess the country’s macroeconomic prospects for the remainder of the year. As part of your analysis, include broad numerical projections for the rates of inflation, interest, unemployment, and economic growth in 2014.
Approach this assignment as if a friend, who knows you’re an economics major, asks your opinion about the outlook for the U.S. economy this year. Your friend is acquainted with basic economic theory and terminology, but only vaguely familiar with how the macroeconomy really works. Your task, therefore, is to use macroeconomic concepts to analyze and explain the current state of the economy and project its path for 2014.
Suggested Approach to Assessing Macroeconomic Performance
Keeping in mind that the crucial measure of any economy’s short-run performance is the amount of output it produces, i.e., real GDP, your most fundamental task is to determine (through your research and analysis) whether or not total output is likely to increase or decrease (and make an educated guess at the approximaterate it will rise or fall) this year.
What causes businesses to increase or decrease production in the short run? Most importantly, business people’s perceptions of demand for their products. Thus, in order to determine how much the level of output is likely to change in 2014, you must examine the components of total spending (consumption, investment, government purchases, and net exports). If you determine that total spending is likely to rise, you can reasonably conclude that output will increase too. On the other hand the likelihood of declining aggregate spending would suggest the opposite conclusion.
Once you have projected the path of total output for 2014, you will also have established the basis for predicting 2014’s inflation, unemployment, and interest rates since the levels of these latter three variables depend in part on the rate at which output is growing.
Since you are analyzing current macroeconomic conditions, you will not find articles written on this topic in economic research journals such as the American Economic Review or the Journal of Political Economy. Instead consult current periodicals and newspapers such asBloomberg Businessweek,The Economist, Forbes, Fortune, Time, and the Wall Street Journal. All of these titles are available in Pfau Library, either online or hard copy (or both).
note: Web access to some magazines/periodicals is available only to paid subscribers. Pfau Library subscribes to many online sources. So, if you’re checking sources such as those listed above, check them online through Pfau Library (lib.csusb.edu) instead of trying to access them directly on the Web.)
In addition to articles regarding U.S. macroeconomic conditions, you’ll also need macro data. Here are a few federal government web sites that provide various types of macro data:
– Federal Reserve Board of Governors (federalreserve.gov)– in addition to data, this web site also provides transcripts of speeches made recently by Federal Reserve officials. Some of those speeches deal with current/prospective U.S. economic conditions.
– U.S. Dept. of Labor,Bureau of Labor Statistics (bls.gov)
– U.S. Commerce Dept.,Bureau of Economic Analysis (bea.gov)
– ” ” ” , Economics & Statistics Admin. (economicindicators.gov)
– Fedstats (fedstats.gov)
In your paper be sure to provide appropriate recognition of your sources (see “Reference Format” at the end of this document). If you quote a source directly, verbatim or with minor changes, without enclosing the material in quotation marks, you are passing off someone else’s work as your own and are guilty of plagiarism. Further, even if you put another author’s idea into your own words, it is necessary to reference your source of information. Use source materials responsibly. Plagiarized papers result in a failing grade for the course.
Criteria for Grading
Organization. State your plan for the paper at the outset, then follow through on it.
Clarity. While use of economic terminology is desirable, make sure your friend follows your logic. Don’t go overboard in your use of jargon.
Appropriate mix of macroeconomic description and analysis. While, for background purposes, you must describe the U.S. economy’s performance in 2013 and the first quarter of 2014, emphasis should be placed on analyzing current trends and projecting the behavior of key macroeconomic variables (inflation, unemployment, economic growth, interest rates, etc.) in 2014.
Maintenance of macroeconomic focus. Don’t lose sight of the big picture. Discussing economic conditions in particular industries, such as housing or autos, is appropriate but your emphasis must be on the effects of conditions in those industries on the overall strength or weakness of the U.S. economy.
Consideration of international factors. U.S. economic performance is increasingly affected by occurrences external to the domestic economy such as the current strength/weakness of our major trading partners’ economies, fluctuations in the value of the U.S. dollar relative to other currencies, changes in world oil prices and, at present, the European debt crisis. Be sure to consider such factors in your paper, particularly as they relate to prospects for U.S. exports, U.S. GDP growth, and the U.S. rate of inflation over the next 9-12 months.
Spelling/grammar/writing. Spelling and grammatical errors, as well as awkward sentence construction, distract the reader from the main points you are trying to communicate and reduce the effectiveness of your paper (and your grade). Edit your work carefully to ensure that your ideas and major points are clearly stated. Individual assistance is available at The Writing Center (UH387, 537-5232) and the College of Social & Behavioral Sciences Writing Lab (SB-354; 537-7539; email@example.com.
Proper documentation of sources (see below).
Finally, if you have questions about this assignment in coming weeks, ask me about them. At first you may be unsure regarding how to proceed. The appropriate path, however, should become clear as you progress through the course material and become more familiar with current U.S. macroeconomic conditions via your weekly journal entries and library/online research for the paper. In any case I am available to answer your questions or to elaborate on the nature of the assignment.
Instead of using footnotes in your papers, list sources alphabetically in a section entitled “References” at the end of the paper, and number them sequentially. Here are some sample entries:
(1) Maria Anders, “The Fed Plans to Raise Interest Rates,” Fortune, June 13, 1996, pp. 12-16.
(2) Milton Friedman and Anna Schwartz, A Monetary History of the United States (Chicago: University of Chicago Press, 1963).
(3) Gregory Mankiw, “Aggregate Supply and Sticky Nominal Wages,” Quarterly Journal of Economics, April 1996, pp. 235-258.
(4) Crystal Patterson, “The Federal Reserve Is in Need of Reform,” Wall Street Journal, August 12, 1996, p. 22.
(5) Carl Stokes, “The Strategy of Monetary Policy,” Regional Focus, August 12, 1996 (fedwatch.com, accessed 12-10-09).
The first of these is the required format for references to magazine articles. The second shows the format for book references; the third and fourth are for academic journal articles and newspaper articles, respectively. (Magazine, journal, and newspaper article reference formats are essentially the same.) Internet citations are similar but must also include the web site address/on-line source as in (5), as well as the date you accessed the site.
Say, in the body of your paper, you quote p. 242 of Mankiw’s article. Your reference should appear, at the end of the quotation, as follows:
“… sticky nominal wages raised the unemployment rate about one percentage-point annually during the 1980s.” (3, p. 242)
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