Group Assignment #2

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

The main objective of this assignment is to understand the cyclical position of the
country assigned to your group and assess the role played by fiscal and
monetary policy. Same as we did in assignment #1, when presenting the
numbers you need to add some text interpreting how the numbers help you
understand economic conditions in your economy.

Section 1. Business Cycles

Use the data collected in Session 6 and Session 10 (GDP Growth, Unemployment
and Inflation). Address the following issues:

- Was there a recession in 2008-09?

- How does that episode compare to 2020-22?
- How was the behavior of inflation in the recovery that happened after
2009 and how it compares to the most recent recovery?

Understand the behavior of inflation during the last business cycles (since 2000)
using the analysis of the Philips Curve (Session 8). Answer the following
questions:
- Is there a relationship between inflation and unemployment?
- Do you think inflation is anchored around a given level? Which level?

Section 2. Monetary Policy.

Using the analysis of Session 8:

- What are the objectives of monetary policy in your country?
- Is there an inflation target?
- Does it coincide with the anchor of the Phillips Curve that you identified
in the previous section?

Using the analysis of Session 9:

- What is the size of the balance sheet of your central bank measured as %
of the GDP (use the 2022 number for GDP provided on the Canvas site).
- What are the largest liabilities and assets in local currency?
 - Is there any evidence that the central bank in your country has used
quantitative easing in the past?

Using the analysis of Session 7 and Session 10

- Compare the response of monetary policy (interest rates) to the last two
crises (2008-09 and 2020-21).
- Is there any significant difference in the way monetary policy behaves
after each of these crises?

Section 3. Fiscal Policy.

Using the data collected in Session 9, use the difference between the government
overall balance and the primary balance to calculate the interest payments that
the government pays on its debt.
- What is the average interest rate that the government is paying on its
debt?
- Do you think that given current levels of debt as well as its current
primary balance the government will be able to keep the debt stable?

Using the data provided in Sessions 7 and Session 10 (the government balance)
assess the types of fiscal policies implemented in the last two crises (2008-09 and
2020-2021). Do you see any difference between the two episodes?