ECON7001 Foundations in Macroeconomics Assessment - Balance of Payment Report (BoP Report)
Assessment Task: Balance of Payment Report (BoP Report)
Weighting: 20% (100 marks reweighted to 20%)
Word Limit: 1000 ± 100 words
CONTEXT
This report focuses on international macroeconomics and finance. It therefore focuses on a very different set of macroeconomic issues in comparison to the Country Report and Impact Report, which focus largely on domestic macroeconomies.
TASK
You are required to complete all four (4) sections (below) for the country you are allocated.
In doing so, you will deliver a structured BoP Report, which includes the following illustrative features: 🗹🗹 Up to two (2) figures (diagrams, graphs, or tables) in total. Here, you can use a mixture of diagrams, graphs and tables provided the total number is no more than 2. That is, you can use at most one figure additional to the graph required in Section 3.
🗹🗹 You can include more than one variable in a graph or table.
🗹🗹 You must produce your own figures, rather than cut and paste from other sources.
🗹🗹 You can use direct quotes provided the total number of quoted words sums to 20 words or less in the whole of the report. This rule is intended to prevent students from over relying on direct quotes without critically analysing the content of the source.
COUNTRY ALLOCATION The country you must use for this report is based on the last digit of your student number: For example, if your student number is 44194356, then you need to work on country number 6 – Sweden.
Last digit Country
0 or 1 Estonia
2 or 3 Latvia
4 or 5 Lithuania
6 or 7 Slovakia
8 or 9 Slovenia
1.Creating an alternative to the Big-Mac Index (~150 words)Choose a product other than a mobile phone to create your own alternative to the Big-Macindex. Use your index to calculate to what extent the currency of your (allocated) country isover- or under-valued relative to the US dollar for a single point in time that data is available.Show your working. For this part, you can use data from any period.
2.Discussion of your index (~350 words)
a.Discuss how well or poor your index satisfies each of the four assumptions behind the Law ofOne Price compared to the Raw Big-Mac Index.
b.Big-Mac Index has a GDP-adjusted version. Suppose, hypothetically, someone has theinformation to create a similar GDP(per capita)-adjusted version for your index. Do you expectthis GDP(per capita)-adjusted version of your index will indicate a larger or smaller or similardegree of over-/under-valuation as in Part (1)? Explain your answer.
3.Balance-of-Payment Account (~500 words)
For this part, do not consider the impact of the COVID-19 pandemic. Answer either (a) or (b),but not both:(a)Use a graph to show your country’s current account balance and its two main components
–net exports and net primary income – for the most recent 5 to 10 years before 2020 thatdata is available. Discuss what drives its current account balance. Discuss which countriesare the main trading partners of your country.(b)Use a graph to show your country’s financial account balance and its two components –foreign direct investment net inflows/outflows and foreign portfolio investment netinflows/outflows – for the most recent 5 to 10 years before 2020 that data is available.Discuss what drives its financial account balance. Discuss which countries are the maininvestment partners of your country.
4.References
References and citations must be in either APA 7th or UQ Harvard style.