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ECON3011: Essay Assignment
Choose one of the topics below on contemporary issues, research it widely in journal,
ooks, professional magazines, etc and write a reasoned essay about the issue and
its implications for macroeconomic outcomes and policy. Some suggested sub-
questions to address are given under each topic; you may address some or all of
these sub-questions.
· XXXXXXXXXXFormat: Maximum 1500 words. You may use any number of figures and
diagrams and tables. Use 12 point font, 1.5 line spaces and A4 page size.
· XXXXXXXXXXRemember to cite any writing that is not your own, and you must use
quotation marks for text written by another author. The essays will be submitted
online on iLearn through TURNITIN that can detect copied material from anywhere at
any time globally. Put everything in your words or cite it explicitly.
· XXXXXXXXXXLate submissions that have not been supported by the University with a Special
Consideration application will incur a penalty.
CHOOSE ONE OF THE FOLLOWING POSSIBLE TOPICS
XXXXXXXXXXWhy are interest rates generally so low at present?
Focus on nominal versus real interest rates, on saving-investment equili
ium models,
on demographic trends, on technology trends, on globalization. Consider negative
interest rates and their implications. What are the effects of COVID-19 on interest
ates? When, why and how far might interest rates rise?
XXXXXXXXXXWhy are real wages growing so slowly? Is the Phillips curve still relevant?
Focus on the changing nature of jobs – technology, globalization; effect on
underemployment. What has happened to the modern Phillips curve? If it does not
work empirically, does this mean the New Keynesian macro model is dead? How has
the COVID-19 shock and the policy responses affected wage growth?
XXXXXXXXXXShould central banks always conduct both conventional and unconventional
monetary policies?
Explain how each works. Focus on the effectiveness and limitations of forward guidance
and longer-term asset purchases by major central banks after 2008. What is the RBA’s
cu
ent approach to unconventional policy in XXXXXXXXXX? What are the economic activity
enefits and risks of these policies? Should we be concerned about the large expansion
of central banks' balance sheets?
XXXXXXXXXXEvaluate the performance of inflation targeting by the RBA. How can it be
improved?
Compare with some of the possible alternatives like nominal income targeting. Should
the RBA be concerned about asset price inflation? Is inflation targeting still relevant in
2021 with such low inflation and almost zero short rates? Is fiscal policy now more
elevant? With fiscal policy effectively targeting the unemployment rate, how does this
affect monetary policy?
XXXXXXXXXXWhat is the most likely cause of the next major financial crisis? Will it be
different to previous crises?
Refer to the most recent financial crisis and its aftermath, including policy responses.
Consider financial imbalances in, for example, housing markets, sovereign debt
markets. Is financial regulation in Australia effective enough to avoid a financial crisis
here?
XXXXXXXXXXFacebook plans to introduce a digital cu
ency LIBRA, and many central banks
are considering their own digital cu
encies or have begun experimenting with them
(eg China).
How will these cu
encies work? Compare them to existing crypto- and digital-
cu
encies (like BITCOIN). What are the monetary, financial, macroeconomic and policy
implications of digital cu
encies? Should the RBA introduce a digital cu
ency?
XXXXXXXXXXWhat are the most promising technological innovations now? How will they
affect/disrupt the economies of the world?
Focus on artificial intelligence, machine learning, ITC, robotics. What are the likely
macroeconomic implications of these innovations? Relate your answer to endogenous
growth modelling. How will the extended lockdown and distancing caused by
governments' responses to COVID-19 affect future productivity?
XXXXXXXXXXDiscuss the trends in inequality in rich countries? What are the macroeconomic
policy implications?
Compare trends in income and wealth inequality. Explain how these are measured.
What are the main causes of the trends? Why should we care? What are governments
doing to combat these trends? Are they doing enough? How does Australia compare
with other rich countries?
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