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ECO 530 Final Project Guidelines and Grading Guide

Overview The final project for this macroeconomics course is an analysis of a country of your choice and the impact of a fiscal, monetary, or trade related policy, as well as an industry that is likely to be affected either positively or negatively by the policy. For example, raising personal income or payroll taxes cuts back on disposable personal income, which can lower the amount of discretionary funds available for consumer spending on cars or vacation travel. You will analyze and evaluate the costs, benefits, implications, and potential impacts of your selected policy for that context. As a result, you will develop conclusions about the overall value of the policy as a means of correcting the economic problem it was designed to address. Finally, you will draw “big-picture” conclusions about the importance of understanding macroeconomic conditions for companies to compete and remain profitable. The project is divided into two milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three and Six. The final submission will occur in Module Nine.

Outcomes This assignment will assess your mastery with respect to the following course outcomes:

 Evaluate contemporary global economic situations through the lenses of major economic schools of thought for their resulting implications to models and policies

 Evaluate the effectiveness of alternative approaches to fiscal, monetary, and trade policies for their impact on the economy

 Create short-run, qualitative macroeconomic forecasts based on the sound application of major macroeconomic models

 Communicate the effects of macroeconomic conditions and policies on industry and firm performance

 Determine the impacts of international comparative advantages on industry performance

Guidelines The final product represents an authentic demonstration of competency, because this project is designed to guide you through the process of macroeconomic analysis as introduced in this course. The following guidelines are comprehensive of the final project as presented throughout the course in Milestones One and Two along with an additional prompt that directs you through the final submission of the analysis. Specifically, the following critical elements must be addressed in your analysis:

I. Overview a. Which macro fiscal, monetary, or trade policy (i.e., marginal tax rates, reducing the rate of growth in the money supply, or signing a free trade

agreement with a key trading partner) have you chosen to evaluate? What is the goal and essential structure of the policy? In other words, what problem is it intended to correct? How will it be implemented?

b. What country and which industry have you chosen as the context for your review of this policy? Select cases that are likely to be affected either positively or negatively by the policy and for which you can find sufficient information and data for this assignment. What issues or debates have

been raised about your policy in this context? Be sure to provide all essential background information necessary for understanding your subsequent evaluation, forecast, and industry analysis.

II. Policy Evaluation a. Evaluate your given policy through the lens of each of the three major schools of economic thought listed below:

i. How would a New Keynesian view your selected policy in terms of its implications for your chosen context? Be sure to apply the New Keynesian model in your evaluation to determine the likely effects on major macroeconomic variables such as GDP, inflation, interest rates, employment, exports, and imports. Include charts and graphs to illustrate your claims where appropriate.

ii. How would a monetarist view your selected policy in terms of its implications for your chosen context? Be sure to apply the monetarist model in your evaluation to determine the likely effects on major macroeconomic variables such as GDP, inflation, interest rates, employment, exports, and imports. Include charts and graphs to illustrate your claims where appropriate.

iii. How would a neo-classicalist view your selected policy in terms of its implications for your chosen context? Be sure to apply the neo- classical model in your evaluation to determine the likely effects on major macroeconomic variables such as GDP, inflation, interest rates, employment, exports, and imports. Include charts and graphs to illustrate your claims where appropriate.

b. What are the differences and similarities among the models in terms of their predicted outcomes? How do the different assumptions of the models result in policy debates among their respective adherents?

c. Which of the three contemporary macroeconomic schools do you believe most appropriately captures the likely impacts of the policy on your given context? Why? Be sure to defend your answer with specific evidence from the course or other academic resources. You will use your selection in the following section (“Macroeconomic Forecast”).

III. Macroeconomic Forecast: Using the selected school of thought, create a qualitative, short-term (i.e., 12 to 24 months) forecast detailing the impacts of your chosen policy on the economy of your chosen country. For example, if your policy is raising the minimum wage, what is the expected direction of change for key macroeconomic variables like disposable personal income, labor costs, employment, prices, inflation, and GDP from a Keynesian perspective? a. Specifically, which macroeconomic variables (e.g., GDP, inflation, interest rates, employment, unemployment rate, consumer spending,

investment spending, exports, imports, labor costs, or exchange rates) should be considered? Address three to five variables and any uncertainty that exists with these variables.

b. What are the expected directions of change for your identified variables as a result of the policy? What uncertainty exists given these macroeconomic conditions?

IV. Industry Analysis a. What are the likely effects of the policy for your selected industry? Will the policy be beneficial to the industry? Will it cause costs to rise?

Reduce or increase demand? Consider including charts and graphs to illustrate your claims where appropriate. b. What are the likely impacts to your selected industry’s international competitiveness? Consider including charts and graphs to illustrate your

claims where appropriate. c. What is likely to happen to the profitability of a typical company in the industry? Consider including historical examples, charts, and graphs to

illustrate your claims where appropriate.

V. Conclusion a. As a result of your evaluations and analyses, what final determinations have you made about the policy? Would the benefits outweigh the costs

for your given country and industry? Are there unintended consequences that should be considered, and if so, what? Do you recommend the policy be enacted, continued, or repealed?

b. Finally, consider the “big picture.” Why is it important to understand the different macroeconomic models? In other words, why are they significant? If you were a business leader, how would you make better decisions as a result of your knowledge of the macro economy? How would you use this knowledge to improve your strategies?

Remember, your conclusions should be based on your analysis of I–IV. It should be a complete, polished artifact containing all of the main elements of the final product. It should reflect the incorporation of feedback gained throughout the course.

Milestones Milestone One: Overview and Policy Evaluation In task 3-2, you will submit Milestone One: Overview and Policy Evaluation. The format should be a 2–3 page paper with double spacing, 12-point Times New Roman font, one-inch margins, and citations in APA format. For further explanation of Milestone One, refer to the Milestone One Guidelines and Rubric document. Milestone Two: Macroeconomic Forecast and Industry Analysis In task 6-1, you will submit Milestone Two: Macroeconomic Forecast and Industry Analysis. The format should be a 3-4 page paper with double spacing, 12- point Times New Roman font, one-inch margins, and citations in APA format. For further explanation of Milestone Two, refer to the Milestone Two Guidelines and Rubric document.

Deliverable Milestones Milestone Deliverables Module Due Grading

One Final Project Milestone One: Overview and Policy Evaluation

Three Graded separately; Milestone One Guidelines and Rubric

Two Final Project Milestone Two: Macroeconomic Forecast and Industry

Analysis

Six Graded separately; Milestone Two Guidelines and Rubric

Final Final Project: Macroeconomic Environment and Conclusion

Nine Graded separately; Final Project Guidelines and Rubric

Final Project Rubric Requirements of Submission: Written components of projects must follow these formatting guidelines when applicable: double spacing, 12-point Times New Roman font, one-inch margins, and APA appropriate citations. The analysis should be approximately 10–12 pages in length, not including title and references pages. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions.

Critical Elements Exemplary (100%) Proficient (90%) Needs Improvement (70%) Not Evident (0%) Value

Overview Meets “Proficient” criteria and connects the goals of the policy to the overall macro economy of the country selected

Selects a relevant policy and establishes a context for review that includes the policy’s goals, intended effects for the selected country and industry, issues raised in debates over the policy, and the policy’s structure and implementation strategies

Selects an appropriate policy and context for review, but does not include all necessary information stipulated in the “Proficient” criteria

Selects an inappropriate policy or does not establish a context for review

5

Policy Evaluation: New Keynesian

Approach

Meets “Proficient” criteria and includes relevant and correctly structured graphs and charts to illustrate and support the analysis

Appropriately integrates New Keynesian principles and applies the model to determine reasonable implications of the policy for the given context

Integrates principles to determine implications of the policy for the given context, but there are gaps in the logic or the model is not appropriately applied

Does not address New Keynesian principles or does not apply the model

7.5

Policy Evaluation: Monetarist Approach

Meets “Proficient” criteria and includes relevant and correctly structured graphs and charts to illustrate and support the analysis

Appropriately integrates monetarist principles and applies the model to determine reasonable implications of the policy for the given context

Integrates principles to determine implications of the policy for the given context, but there are gaps in the logic or the model is not appropriately applied

Does not address monetarist principles or does not apply the model

7.5

Policy Evaluation: Neo-classical

Approach

Meets “Proficient” criteria and includes relevant and correctly structured graphs and charts to illustrate and support the analysis

Appropriately integrates neo- classical principles and applies the model to determine reasonable implications of the policy for the given context

Integrates principles to determine implications of the policy for the given context, but there are gaps in the logic or the model is not appropriately applied

Does not address neo- classicalist principles or does not apply the model

7.5

Policy Evaluation: Differences and

Similarities

Meets “Proficient” criteria and provides insights into the assumptions of the models that lead to areas of debate related to the policy

Accurately identifies differences and similarities among the schools of thought in terms of their predicted outcomes and illustrates how the differences result in policy debates

Identifies differences and similarities among the schools of thought in terms of their predicted outcomes and illustrates how the differences result in policy debates, but there are errors in the identification or the illustration is incomplete or lacking in detail

Does not identify the differences and similarities among schools of thought in terms of their predicted outcomes or does not illustrate how the differences result in policy debates

7.5

Policy Evaluation: Selection

Meets “Proficient” criteria and provides support for the selection through sources that are especially relevant to the defense

Selects a school of thought on which to base industry analysis and defends the choice with evidence from course materials or other academic resources

Selects a school of thought, but there are gaps in the defense or does not substantiate with appropriate evidence

Does not select a school of thought or does not defend the selection

7.5

Macroeconomic Forecast: Variables

Meets “Proficient” criteria and indicates potential areas of uncertainty in terms of the affected variables based on ability of the selected model to perform well under the macroeconomic conditions present

Creates a qualitative, short- term forecast detailing the impacts of the policy on the economy of the chosen country for at least three macro variables

Creates a forecast, but it is either not qualitative, not short term, or it does not appropriately address at least three macro variables for the economy of the chosen country

Does not create a forecast detailing the impacts of the policy on the economy of the chosen country

7.5

Macroeconomic Forecast:

Directions of Change

Meets “Proficient” criteria and indicates potential areas of uncertainty in terms of direction of change based on ability of the selected model to perform well under the macroeconomic conditions present

Proposes expected directions of change for each identified macro variable in the forecast, including the uncertainties

Proposes directions of change, but not all macro variables or uncertainties are addressed

Does not propose directions of change for macroeconomic variables

7.5

Industry Analysis: Effects

Meets “Proficient” criteria and provides supporting graphs or charts to illustrate the relationship between macroeconomic variables and industry performance

Determines likely effects of the policy for the selected industry based on the direction of change of key macro variables from the forecast, including addressing costs and demand

Determines likely effects of the policy for the selected industry, but there are gaps in the analysis or logic

Does not identify likely effects of the policy for the selected industry

7.5

Industry Analysis: International

Competitiveness

Meets “Proficient” criteria and supports the finding with additional qualitative analysis on the same industry in other countries

Determines reasonably likely impacts to the selected industry’s international competitiveness

Determines impacts to the selected industry’s international competitiveness, but there are gaps in the analysis or logic

Does not identify impacts to the selected industry’s international competitiveness

7.5

Industry Analysis: Typical Company

Meets “Proficient” criteria and provides graphs or examples that illustrate past effects of similar policies on the industry

Determines reasonably likely impacts to the profitability of a typical company in the selected industry

Determines impacts to the profitability of a typical company in the selected industry, but there are gaps in the analysis or logic

Does not identify impacts to the profitability of a typical company in the selected industry

7.5

Conclusion: Final Determinations

Meets “Proficient” criteria and provides additional insights into possible unintended consequences of the policy action that can affect its overall costs and benefits

Makes final determinations about the ability of the policy to achieve the intended outcomes, the net benefit or cost of the policy for the given country and industry, and recommends a logical future course of action

Makes final determinations and recommendations, but there are gaps in evaluation or logic

Does not make final determinations about the net benefit or cost of the policy for the given country and industry or does not recommend a future course of action

7.5

Conclusion: Big Picture

Meets “Proficient” criteria and illustrates the significant influence the different macroeconomic schools of thought can have on policymaking and resulting economic well-being

Reflects upon the “big picture” by making and defending a claim about the relevance of macroeconomic knowledge in relation to individuals and business leaders

Reflects upon the “big picture,” but fails to sufficiently defend claims about the relevance of macroeconomic knowledge in relation to individuals and business leaders

Does not reflect upon the “big picture”

7.5

Articulation of Response

Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format; tables and charts correctly formatted and referenced within the text

Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas

5

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