Global Trade and Finance

Global Trade and Finance Short Analytical Essay Real GDP France All essays are to be submitted as hard copies, and must be handed in to the course coordinator on or before Friday, 1 June, 2018, at 5:00PM The main objective of this assignment is to assess the ability of a student to find, process and use publicly-available statistical data and other information to prepare a ‘question-answer-type essay’ that effectively analyses problems and issues in international trade and finance. In the case of present assignment, students are asked to examine the trade behaviour of a ‘selected country’ over a period of about 25 years extending back from the latest available data. For example, if 2017 data is the latest available, then the data or study period would be 1993-2017 or a shorter period if data are not available. The student is specifically asked to analyse the trade behaviour over the study period, including any impacts of three major financial crises, on the selected country’s trade flows (exports and imports). These crises include the East Asian financial crisis (1997-1998), the global financial crises (2007-2009) and the ongoing Euro debt crisis. To become familiar with data and global developments, students are asked to collect data for a selected country and other information from publicly available sources. The collected data need to be interpreted or linked to policy-relevant trends and issues and to appropriate trade theory or analytical approach. Word limit is 1000-1500 (approximate), excluding data, tables and figures. The student’s answers to suggested questions should be precise and to the point, so that all discussion is relevant to the issues concerned. Evidence-based analyses of the questions is the main criterion for assessment of this assignment. This project must closely follow the University of Newcastle’s standard guidelines for essays, especially with respect to “Plagiarism”. FULL COMPLIANCE WITH THE UNIVERSITY OF NEWCASTLE’S “NO PLAGIARISM” POLICY IS AN ABSOLUTE REQUIREMENT Students will select any country (or territory) whose name begins with the same letter as any one of the student’s names. For example, if your name is John, you can select Japan or Jordan. Your country must publish significant economic data. You must not select the United States of America. If you have any difficulty selecting an appropriate country, please contact the course coordinator for assistance. To compile the relevant data need for this essay, students should consult the IMF in the first instance. There is ample data and policy analysis of individual countries available at its website (www.imf.org). The University Library holds hardcopies of IMF (various years), International Financial Statistics (IFS) Yearbook, Call Nr. S338.905/1T) to 2013 and electronic copies to 2015. Other sources include the Asian Development Bank’s (ADB’s) Key Indicators of Developing Asian and Pacific Countries or Key Indicators for Asia and the Pacific (check websites and the University Library) and any statistical publications and reports of the World Trade Organisation. Using any of these publications, or any other relevant sources students can find, including the ECON3003 2018s1 Global Trade and Finance Page 2 of 4 Short Analytical Essay websites of the World Bank, European Central Bank (ECB), and the central bank of the student’s selected country, compile annual trade and other relevant data for the selected country over the two-decade period chosen based on availability of full annual data. Availability of data is crucial — see introductory paragraph above. Please note that demonstration of student ability to compile and process data from publicly-available sources is an important component of this assignment. In your data appendix please cite the appropriate data sources and any transformation that you have made for use. 1. Data Collection, Transformation and Display Collect, display in an orderly way, calculate and analyse the following annual data for the full 25-year study period. Use consistent data; i.e. calibrate your data to a single base-year as needed. Use as a starting-point only the Sample Data Appendix from Blackboard. Modify it as you process the Essay. The Sample Data template is likely to alter as you re-design it more than once so that it both processes your data and remains legible when printed. (Hint: You may make as many copies of the Data Appendix spreadsheet as you need to adapt the copies for different parts of the Essay). Attach the compiled data to the Essay as a legible, orderly Data Appendix or series of Appendixes. Your Data Appendixes are excluded from the word count. Real GDP of Selected Country (Source: IMF, International Financial Statistics [IFS] Yearbook) 1a Nominal GDP for the student’s selected country, i.e., GDPyc at current prices, expressed in domestic currency units. GDPyc denotes the GDP of “your country”. If your name begins with C and you select China then, for you, yc = China, with notation of GDPChina at current prices). 1b GDP-Deflator index series for the selected country (GDP Deflatoryc; e.g., GDP DeflatorChina). 1c Real GDP for the student’s selected country, expressed in domestic currency units. This is known as GDPyc at constant prices Use the abbreviation GDPRyc for this (e.g., GDPRChina). If an officially-recorded annual real-GDP series is unavailable (e.g. there is no series of GDP at constant prices), then students would need to use 1a and 1b to generate their own GDPRyc series. This is done by calculating GDPRyc = nominal GDPyc (from 1a) divided by GDP Deflatoryc (from 1b). (If your GDP Deflator series is expressed in 100s rather than units, then you must also multiply by 100). If there is no published GDP-deflator series, then use the published consumer price index (CPI) series to deflate your GDP at current prices. Real GDPs of the US and the World (Source: IMF, International Financial Statistics Yearbook) 1d Nominal GDP for the United States of America (GDPUS at current prices, expressed in US$). 1e GDP DeflatorUS index series. The base year of the US series (the year in which the index equals 100.0 or 1.0) may differ from the base year of your collected yc data. You may therefore need to convert the US data to the same base year as the yc data. See guide for this in Blackboard under “Short Analytical Essay”. 1f Real GDP series for the United States of America (GDPRUS). This is known as GDPUS at constant prices. If an official annual real-GDP series is unavailable, students may need to use 1d and 1e to generate their own GDPRUS series (i.e., GDPRUS = nominal GDPUS divided by GDP DeflatorUS. A similar procedure to 1c. 1g The data index of world real GDP (GDPRWorld) from the IMF’s IFS Yearbook. Real Exports and Real Imports of the Selected Country 1h Nominal exports (Xyc) (Exports at current prices in domestic currency). ECON3003 2018s1 Global Trade and Finance Page 3 of 4 Short Analytical Essay 1i Export price index (XPIyc) (expressed in domestic currency units), if such a series is published. 1j Real exports (XRyc). If this series is unavailable, then calculate one for your country (XRyc). Define real exports (XRyc) as nominal exports in domestic currency units, deflated by XPIyc (base year = 100.0 or 1.0). If an XPIyc series is unavailable, then use the Consumer Price Index (CPIyc) or GDP Deflatoryc to calculate XRyc by deflating Xyc from 1h above. 1k Follow the same procedure to generate real imports (MRyc) of the selected country. That is, first follow the procedure of 1h to produce a series for imports (Myc), then follow the procedure of 1i to produce an import-price index series (MPIyc) and finally use 1j to produce your MRyc series. Relative Export Prices and Relative Import Prices of the Selected Country 1l Consumer price index of the US (CPIUS). 1m Generate a series of relative export prices (XPRELyc) as the export price index of your selected country (XPIyc) deflated by product of the US consumer price index (CPIUS) and the nominal exchange rate (NER) of your country's currency against the US dollar (ERyccurrency/US$). That is, XPRELyc = ycUSyccurrency/US$XPICPINER•. XPI and CPI must be of the same order: 100s or 1. 1n Generate a series of relative import prices (MPRELyc) as the import price index of the selected country (MPIyc) deflated by the consumer price index of the selected country (CPIyc). That is, MPRELyc = ycycMPICPI. Express MPI and CPI at the same scale: both in hundreds or both in units. Real Exchange Rate (RER) of the Currency of the Selected Country 1o Generate: USyc/USyc/USycCPIRERNERCPI=•, where RERyc/US is the real exchange rate of the selected country’s domestic currency against the US dollar; NERyc/US is the nominal exchange rate of domestic currency against the US dollar; CPIUS is the CPI for the United States of America; and CPIyc is your selected country’s CPI. 2. Data Processing and Preliminary Analyses Using the collected data, prepare the following calculations and graphs and draw conclusions in the form of appropriate responses to the questions. Analysis of XRyc 2a Calculate total nominal exports (Xyc) as a percentage of nominal GDPyc and plot a graph of this export-GDP ratio. Does it show any trend(s)? If so, what is the nature of any apparent trend(s)? Comment on the fluctuations (volatility) of this ratio. 2b Calculate the growth-rates of GDPRyc; GDPRUS; and XRyc over the sample period. 2c Calculate the correlation coefficient between the growth rate of GDPRUS (%) (or growth rate of GDPRWorld (%)) and growth rate of XRyc (%). Calculate the ratio of the % change in XRyc to the % change in the growth rate of GDPRUS (or the growth rate of GDPRWorld). What does this ratio represent? Plot the ratio over the sample period and interpret any trend revealed. Analysis of MRyc 2d Repeat exercise 2a above but substituting nominal imports (Myc) for Xyc. 2e Calculate the growth-rate MRyc over the sample period. ECON3003 2018s1 Global Trade and Finance Page 4 of 4 Short Analytical Essay 2f Calculate the correlation coefficient between the growth rate of real GDP of your selected country (GDPRyc) (%) and growth rate of real imports of your selected country (MRyc) (%). Calculate the ratio of the % change in MRyc to the % change in GDPRyc. What does this ratio represent? Plot the ratio over the sample period and interpret any trend revealed. Plot a Graph of RERyc 2g Produce a graph of the RERyc for the study period (as calculated in question 1o above). 3. Analysis and Conclusions 3a Comment on the behaviour of RERyc against the US dollar (e.g., did it appreciate, depreciate, etc.). Did this behaviour (appreciation, depreciation, etc) affect your country’s rate of real export growth, or its rate of real import growth, or both? 3b Write a short note on the selected country’s trade policies, including export subsidies and export and import controls and regulations that might have affected trade flows. (Hint: See www.imf.org) 3c Analyse changes in the selected country’s trade composition (both exports and imports). Consider the changing product mix exported and the changing mix of major customer countries for the selected country’s exports. Do the same analysis for imports. 3d How did the East Asian financial crisis or the global financial crisis, or both, impact the trade behaviour of the selected country? What policies did the selected country implement that may protect it from any future financial crisis? 4. Presentation of Essay Students should not accept any assistance from others without noting the nature of assistance and an acknowledgement to the relevant persons or institutions. It is essential to attach a Data Appendix reporting the data set, data sources and the definitions used to calculate variables. While they are an essential component of the Essay, Data Appendixes are not counted in determining its word length. NO PLAGIARISM IS ACCEPTABLE AT THE UNIVERSITY OF NEWCASTLE Consult the Course Outline and the University policy documents on this issue. Guide to successfully submitting your Essay (a) Before beginning work on your Essay, see the link to help with Turnitin on Blackboard, in the "Research Essay" content area. (b) If your main document is in Microsoft Word format, you can select and copy charts, cell data or other output from Excel or EViews and paste them to the main document as pictures using “Paste Special…”. N.B.: Turnitin cannot receive a multiple-document upload from a student. (c) You may convert your completed Essay from a mix of Word with embedded pictures (or other formats) to a single PDF document. Within the "Save As ..." dialog box, in the "Save as type" drop-down menu, find "PDF". (d) All students must hand in hardcopies to the lecturer on or before Friday, 1 June, 5 pm (in class).