Macroeconomics 2 Assignment: Macroeconomic Forecasting and Analysis

This Macroeconomics 2 assignment requires students to forecast key macroeconomic variables like CPI, GDP, and the Straits Times Share Index, and the Singapore Dollar vs US Dollar before their official release. The assignment is split into two parts. Part A involves filling in the grey boxes with the forecasts. Part B requires a commentary and discussion piece, similar to those produced by economists from major banks or consultancies, outlining the student's opinion on the state of the economy. The commentary must address the recent data and developments, the global context, risks to the economy, and the long-run outlook for Singapore's economy. The assignment also provides historical data for the Singaporean economy. The assignment requires adherence to a 750-word limit and includes a marking rubric for assessment. Students are expected to use economic reasoning to justify their views and include specific analysis related to fiscal and monetary policy makers.

Macroeconomics 2 Assignment
Macroeconomic Forecasting and Analysis
Due dates: 8 August 2016 (7pm) e-submission via Blackboard
Weight:
This assignment makes up 25% of the total marks for the course.
General outline and Instructions:
In this assignment you will be asked to do two things.
 In Part A you need to forecast certain macroeconomic variables prior to their official
release.
 In Part B you need to discuss your forecasts, the significance of the data for the
economy and develop an opinion and commentate about certain economic issues.
Please take note of the due dates for each part of the assignment.
1. Part A: Macroeconomic Forecasting
Provide forecasts for the variables listed below by inserting a number in the grey boxes. In
submitting Part A of the assignment you must submit the entire document. Note that Part A of the
assignment will be marked in conjunction with Part B.
Data Data source or where the
data can be found
Release or
forecast date
Forecast
CPI (% change from a year earlier in
July 2016)
SingStat
(
www.singstat.gov.sg/statistics
/latest-data#1)
23 Aug 2016
Real GDP (Final, % change from a
year earlier in 2016Q2)
SingStat
(
www.singstat.gov.sg/statistics
/latest-data#1)
25 Aug 2016
(or earlier)
Straits Times Share Index (www.bloomberg.com/
quote/FSSTI:IND) 25 Aug 2016
Singapore Dollar vs US Dollar (www.bloomberg.com/
quote/USDSGD:CUR) 25 Aug 2016

2. Part B: Macroeconomic Analysis
Your task for Part B of the assignment is to write a commentary and discussion piece on the
economy similar in nature to that which would be written by a macroeconomist from a major bank
or consultancy. I would like you to outline your opinion on the state of the economy. Please
complete your assignment by writing in the grey box provided below. Some instructions on how to
go about completing Part B of the assignment are list below. Please follow these instructions.
General advice:
 Please have a look at the marking rubric below with regard to how the assignment will be
assessed. The idea of the assignment is for you to outline your views regarding the state of
the global and domestic economy and use economic reasoning to justify these views. The
focus is primarily on the reasoning path you follow.
 This is a written assignment. No diagrams, charts, graphs or pictures should be included.
Marks will be deducted for their inclusion.
 Note that the word limit for the assignment is 750 words. You are asked to include your
word count at the end of the assignment. This must be strictly adhered to. Marks will be
deducted if you exceed the word limit. Part of the challenge of the assignment is to write
clearly and succinctly in getting your point across.
Specific advice:
In your commentary piece I would like you to address four specific issues in each of four sections.
The topics of each section are discussed in below:
 1. Recent data and developments: Discuss how your forecasts for the CPI and GDP compared
with the actual numbers. You may want to outline why there were errors, if any, in your
forecasts. Outline the implications of the data for fiscal and monetary policy makers.
 2. The global context: Outline what you think are some of the key recent global economic
events which have impacted, or are impacting, on the domestic economy. These could be
events which occurred up to 5 years ago but are still influencing the domestic economy.
 3. Risks to the economy: Here discuss the most significant risks that the domestic economy
faces. Outline one risk that would move aggregate demand (AD) to the left and one that
would move aggregate supply (AS) to the left. Also, discuss your assessment of the
probability of each event occurring.
 4. Long-run outlook: Provide a forecast for Real GDP growth over the period 2016-2036 for
the economy. Outline your reasons for such a forecast with regard to the long run growth
drivers and the key factors which you think will influence growth in future. The table
contains some historical data on the economy which might be useful in your discussion.

1. Recent data and developments
2. The global context
3. Risks to the economy
4. Long-run outlook
Table: Historical Growth Statistics for the Singaporean Economy
Annual Average Growth
Rate: 1980-1999 2001-2011
Real GDP 8.1% 7.9%
Population 2.4% 2.6%
Employment 3.7% 4.1%
Human Capital 1.4% 0.7%
Physical Capital 9.2% 10.3%
Proportion:
Employment/Population 49.0% 54.4%
Source: Penn World Tables 8.0 (Feenstra, Inklaar and Timmer, 2013)
Word Count (all words above this line including data in the table): ___ words (max 750)
References
Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2013), "The Next Generation of the Penn
World Table" available for download at: www.ggdc.net/pwt.

3. Marking Rubric
The rubric below provides a basis for grading your responses to the questions in Part B. Note marks
will be deducted for answers that exceed the word limit.
Marks 0 1 2 3 4 5
Section 1 Poor forecasts
and
explanation.
No policy
insight.
Poor forecasts
and
explanation.
Some policy
insight.
Reasonable
forecasts and
limited
explanation.
Some policy
insight.
Reasonable
forecasts and
explanation.
Some policy
insight.
Reasonable
forecasts and
good
explanation.
Some useful
policy insight.
Reasonable
forecasts and
excellent
explanation.
Some keen
policy insight.
Section 2 Poor discussion
of the global
economic
context.
Limited
understanding
of impact on
the economy.
Limited
discussion of
the global
economic
context.
Limited
understandin
g of impact on
the domestic
economy.
Plausible
discussion of
the global
economic
context.
Limited
understanding
of impact on
the domestic
economy.
Good
discussion of
the global
economic
context.
Limited
understanding
of impact on
the domestic
economy.
Good
discussion of
the global
economic
context.
Reasonable
understanding
of impact on
the domestic
economy.
Comprehensive
discussion of
the global
economic
context.
Excellent
understanding
of impact on
the domestic
economy.
Section 3 Neither shocks
are plausible.
One shock is
somewhat
plausible.
Limited
discussion. No
probabilities.
One shock is
plausible the
other not.
Limited
discussion. No
probabilities.
Both shocks
are plausible.
Reasonable
discussion. No
probabilities.
Plausible
shocks. Good
discussion.
Some
probabilities.
Excellent choice
of shocks. Good
discussion with
insight.
Probabilities
plausible.
Section 4 Implausible
and poorly
considered
analysis.
Poor analysis.
Badly argued
projections.
Some
reasonable
analysis and
projections.
Good analysis.
Plausible
projections.
Good analysis.
Well-argued
projections.
Excellent
discussion and
analysis. Well-
argued
projections.
Follows
Instructions
Mostly does
not follow
instructions
(word limit,
diagrams,
submission
requirements).
Mostly
follows
instructions.
Follows all
instructions.
Referencing Poor or no
referencing.
Needs some
improvement.
Mostly
correct.
Entirely
correct.

4. Appendix: Useful Sources of Information
 Data sources and major institutions:
a) The Australian Bureau of Statistics (ABS) is the major source of economic data in
Australia. This can be accessed via their website: www.abs.gov.au. The release calendar
of economic data is here:
http://www.abs.gov.au/ausstats/abs@.nsf/webpages/ABS+Release+Calendar.
b) The Singaporean statistics department releases much of the state’s key national data.
These statistics can be accessed via the website: www.singstat.gov.sg/. The release
calendar of economic data is here: http://www.singstat.gov.sg/statistics/advance-
release-calendar.
c) There are a number of international agencies which collect data from various countries
and present it in a coherent format. In particular, the IMF, World Bank and OECD sites
will be very useful, especially because they also produce forecasts:
 IMF: data from the Oct 2015 IMF World Economic Outlook (WEO) is available
here: www.imf.org/external/pubs/ft/weo/2015/02/index.htm. There is an
audio-visual presentation which is quite interesting. The WEO itself may also be
very useful as it provides discussion and forecasts for most of the countries
around the world. The WEO is produced every 6 months so make sure you are
looking at the latest one.
 The World Bank: the World Bank produces a Global Economic Prospects
document (www.worldbank.org/en/publication/global-economic-prospects).
This contains forecasts and discussion of the prospects for a number of mainly
developing countries. This is also produced every 6 months.
 OECD: the OECD (Organization for Economic Cooperation and Development) is a
group of mainly rich countries. They have a secretariat which puts together
macroeconomic projections in their Economic Outlook every 6 months
(www.oecd.org/eco/outlook/economicoutlook.htm). They record the
presentation which is usually quite interesting.
 The ADB: the Asian Development Bank is another international agency which
does a lot of work in the macroeconomic area. There some useful resources on
the website (http://www.adb.org/) such as country-specific pages and also
detailed economic data (http://www.adb.org/publications/key-indicators-asia-
and-pacific-2015).
 Sources of commentary and analysis:
d) One of the best ways to stay informed of economic events is to watch the TV news and
read the newspaper. I would particularly recommend watching Alan Kohler who is a very
good business commentator that appears on the ABC News each night around 7.20pm.
His nightly report is also available here: www.abc.net.au/news/business/kohler-report/.
e) The website: www.dismal.com is useful as it provides a release calendar of economic
indicators (www.economy.com/dismal/indicators/calendar/monthly). The website
covers all the major economic data releases around the world though much of their
material is for paying subscribers. However, it is possible to see a few sentences about
some recently covered statistics (e.g.
www.economy.com/dismal/indicators/releases/aus_cpi/Australia-Consumer-Price-
Index).
f) Bloomberg runs a TV station and has a sophisticated data provision service also has a
very good website with a lot of commentary on economic issues. There is an Asian page

(www.bloomberg.com/asia) and one for the Americas and Europe too (see the drop
down menu in the top right hand corner). I particularly enjoy reading this fellow:
www.bloombergview.com/contributors/william-pesek.
g) Almost all the various newspapers in Australia and elsewhere in the world have
economic commentators and lots of interesting macroeconomic discussion. Many of the
commentators are excellent. I’ve included a list below. Each of these writers tend to
focus on their home country and the issues of the day:
 Paul Krugman in the New York Times: www.krugman.blogs.nytimes.com/
 Peter Martin in The Age (Melbourne, Australia): www.theage.com.au/federal-
politics/by/Peter-Martin
 Ross Gittins in the Sydney Morning Herald (Sydney, Australia):
www.smh.com.au/business/by/Ross-Gittins
 SCMP: the South China Morning Post has a pretty comprehensive business
section which can be viewed at: www.scmp.com/business/global-economy
 The Straits Times: the economy section of The Straits Times can be viewed here:
www.straitstimes.com/business/economy
h) There are many excellent economic-focused blogs around which provide useful
information:
 Macrobusiness: This is an excellent website which has a lot of very interesting
material about the Australian and global economy. It is undated daily and the
discussion is usually highly relevant to macroeconomic forecasting and thinking
about economic risks. However, some of the blogs are only for paying
subscribers. The website is here: http://www.macrobusiness.com.au/.
 Major US blogs: There are a large number of excellent economics bloggers in the
US. A comprehensive list (with some discussion of the flavour of the blog) can be
found here: www.bloombergview.com/articles/2015-02-18/econ-bloggers-take-
to-internet-to-hash-out-big-ideas-of-our-age. Some of the particularly influential
ones are listed below. But note these do often have a US focus:
i. www.economistsview.typepad.com/economistsview/
ii. www.marginalrevolution.com/
iii. www.bradford-delong.com/