Research Essay 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 report that effectively analyses a problem. In this case, students will examine the trade behaviour of a selected country over a period of 20 years extending back from the latest available data. For example, if 2016 data is the latest available, then your data period will be 1997-2016; if 2014 data is the latest published, then your study period will be 1995-2014; and so on. The student is specifically asked to analyse the impacts of three recent major financial crises on a 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. Students should use collected data for a selected country and other information, to identify policy-relevant trends and interpret them using an appropriate trade theory or analytical approach. Word limit is 2,500 (approximate). The student’s answers to the suggested questions should be precise and to the point, so that all discussion is highly relevant to the issues concerned. Evidence based analysis is the main criterion for assessment of this assignment. This project must closely follow the University of Newcastle’s standard guidelines for essays. “NO PLAGIARISM” POLICY IS AN ABSOLUTE REQUIREMENT Students will select any country whose name begins with the same letter as the student’s first name or surname. For example, if someone’s last name is Johnson, he/she can select Japan or Jordan. Do not select the United States of America. To compile relevant data, 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). Auchmuty Library holds hardcopies of IMF (various years), International Financial Statistics (IFS) Yearbook, Call Nr. S338.905 1T). Volumes 65 (2012) and 66 (2013) have been placed in the Short Loans section for the purposes of this Assignment. They can be borrowed for 2 hours at a time and the loan renewed if no reservations are lodged during the 2 hours. Other sources include 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 Auchmuty) 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 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. 1. Data Collection, Generation and Display Collect, display in an orderly way, calculate and analyse the following annual data for the full 20-year study period. Use consistent data; i.e. calibrate your data to a single base-year as needed. Use as a starting-point only Research Essay 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, where GDPYC denotes the GDP of “your country”. For example, if you happen to have selected Malaysia then, for you, "YC" is Malaysia). 1b GDP-Deflator index series for the selected country (GDP Deflator YC). 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 RGDPYC for this. If an officially-recorded annual realGDP series is unavailable, students may need to use 1a and 1b to generate their own RGDPYC series. This is done by calculating RGDPYC = nominal GDPYC (from 1a) divided by GDP Deflator YC (from 1b). (If your GDP Deflator series is expressed in 100s rather than units, then you must also multiply by 100). Real GDPs of the US and the World (Source: IMF, International Financial Statistics Yearbook) 1d Nominal GDP for the United States (i.e. GDPUS at current prices expressed in US$). 1e GDP Deflator US 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 “Research Essay”. 1f Real GDP series for the United States of America (RGDPUS ). 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 RGDPUS series (i.e., RGDPUS = nominal GDPUS divided by GDP Deflator US . A similar procedure to 1c. 1g The data index of world real GDP (RGDPworld ) 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). 1i Export price index (EPI YC) (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 EPI YC (base year = 100.0 or 1.0). If an EPI YC series is unavailable, then obtain the Consumer Price Index (CPI YC) or GDP Deflator YC and use one of these series 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 (MPI YC) 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 (CPI US ). 1m Generate a series of relative export prices (XPRELYC) as the export price index of the selected country (EPI YC) deflated by product of the consumer price index of the US (CPI US ) and the nominal exchange rate of the selected country currency against US dollar (ERYCcurrency/US$ ). That is, XPRELYC = CPIUS •EPIERYCcurrency/US$ YC . EPI 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 Research Essay (MPI YC) deflated by the consumer price index of the selected country (CPI YC). That is, MPRELYC = MPICPIYCYC . 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: RERYC/US = NERYC/US • CPI CPI YCUS , 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; CPI US is the CPI for the United States of America; and CPI YC 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 exportGDP ratio. Does it show any trend(s)? If so, what is the nature of any apparent trend(s)? 2b Calculate the growth-rates of RGDPYC; RGDPUS ; and XRYC over the sample period. 2c Calculate the correlation coefficient between the growth rate of real GDPUS (%) (or growth rate of real GDPWorld (%)) and growth rate of XRYC (%). Calculate the ratio of the % change in XRYC to the % change in the growth rate of real GDPUS (or the growth rate of real GDPWorld ). 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. 2f Calculate the correlation coefficient between the growth rate of real GDP of your selected country (RGDPYC) (%) and growth rate of real imports of your selected country (MRYC) (%). Calculate the ratio of the % change in MRYC to the % change in RGDPYC. 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. Research Essay 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? 3e Comment on the impact of the European debt crisis on the export behaviour of the selected country. What policies did this country adopt in response to the Euro debt crisis? Were any of these policies implemented in time to reduce the damage caused by the Euro debt crisis? To answer this question, please focus on the selected country’s trade with European countries and identify any change in the trends. If you are dealing with a European country, your main focus should be the responses of the country to get out of the crisis. 3f Identify some policy initiatives of the new United States Presidential administration with the potential to affect US economic links with the rest of the world. Assuming they are ultimately implemented, analyze their potential effects on both the international and domestic sectors of your selected country. 4. Presentation of Research 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. Guide to successfully submitting your Research Essay (a) Before beginning work on your Essay, see the link to help with Turnitin here in "Research Essay". (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…”. (c) You may convert your completed Essay from a mix of Word, 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 upload the completed Essay to Turnitin by the deadline. As an addition to this, you may elect to hand-in a hard (paper) copy to the lecturer by advance arrangement directly with him.