Group Assignment #1

Remember: The report should be no longer than two pages.

The main objective of this assignment is to collect data for the country assigned
to your group during the first four sessions of the course and then produce a
report at the end that summarizes the key macroeconomic conditions of your
economy. I provide below a possible structure for the report, that follows very
closely the data that needs to be collected session after session.

When presenting the numbers, you need to add some text interpreting how the
numbers help you understand economic conditions in your economy. For
example, when you present GDP per capita, do not simply write the number, but
also comment on the level of development of the economy (advanced, emerging,
etc.).

Section 1. Overall assessment of macroeconomic conditions (most recent year).

Provide an overview of the basic macroeconomic variables for your country in

the most recent year. In particular:

1. GDP per capita (current US$)

2. GDP per capita, PPP (current international $)
3. Population
4. Total GDP in current US$

Section 2. Understand the components of GDP (most recent year).

1. General Government Final Consumption Expenditure (% of GDP)

2. Gross Capital Formation (% of GDP)
3. Household Final Consumption Expenditure, etc. (% of GDP)
4. Exports of Goods and Services (% of GDP)
5. Imports of Goods and Services (% of GDP).

What do you learn about your country in this year?

Section 3. Understand the saving/investment imbalance (most recent year)

1. Current Account Balance (% of GDP)

 2. General Government Net Lending/Borrowing (% of GDP)
3. Subtract the General Government Net Lending/Borrowing number (this is
the government balance) from the current account number (i.e. Variable #1
- Variable #2). This is the private sector balance or the difference between
private saving and investment.

What do you learn about this country/year?

Section 4. Apply the 4I’s framework to your country

Using GDP per capita, PPP (constant International $) assess whether your
economy is today closer to the US economy than what it was in the first year for
which you have data. Plot the ratio of your country’s GDP per capita to US GDP
per capita to see if there is any convergence.

Now use the following steps to apply the 4I’s framework to your economy and
forecast future growth rates:

1. Start with GDP per capita in the first year where data is available. This
will give you a sense of "Initial Conditions". How much potential does the
country have to grow?
2. Look at the investment in physical capital as % of GDP (this is what is
listed in Section 2 above as Gross Capital Formation as % of GDP). You
can also use this interactive tool to see investment in previous years.
3. Given what we saw in Sessions 3 and 4, what type of growth rates would
you expect if investment remained at this level?
4. Use the interactive tool we used in class in order to get a measure of the
quality of institutions (and you can speculate, if you want, about whether
reform will follow in the years to come).

Given all the information you have, what do you expect the growth rate of GDP
per capita be over the next 2 or 3 decades?