代写ECON4033 Government Debt and the Macroeconomy 2024/2025代做回归

Assessment Brief 2024/2025

Assignment Information

Course Code	ECON4033
Course Title	Government Debt and the Macroeconomy
Weighting	50%
Question release date	23 Sep 2024
Submission date:	25 Oct 2024
Grades and Feedback to be released on:	15 Nov 2024

Word limit	No word limit, except for Q1.ii. The  word limit of 300 words is strict and includes everything except list of references.
Action to be taken if word limit is exceeded	Material beyond 300 words will be ignored.

1. QUESTION/ DESCRIPTION OF ACTIVITY

This is an individual written assignment consisting of two questions, which are weighted equally.

Question 1:

For a country of your choice (but NOT the UK):

i.Present fiscal data from 2000 to the present day for the primary surplus and net government debt, both as a share of GDP.

ii.Provide a narrative of the economic events driving the patterns seen in the data in 1 (max 300 words).

iii.Use the Debt Dynamics Spreadsheet on Moodle to generate a 50-year projection of the debt-to-GDP ratio for your economy. Justify your underlying assumptions in making the projection.

Question 2:

Consider a single period bond which has a face value of £100 and pays no coupon i.e. we buy the bond at time t=1 and it pays no coupon in t=1 rt=2, but the investor receives £100   in t=3. An investor has a per-period utility function,

where σ is the inverse of the intertemporal elasticity of substitution. Assume a value for σ

according to the following table, depending on which month you were born in. [Note after marking is complete I will be able to double check your date of birth, so no cheating!]

Assume the following value for their discount factor, β=0.98.

Consider two possible scenarios.

Scenario 1: The investor enjoys consumption of 100 in periods 1, 2 and 3, and there is no inflation or risk of default.

Scenario 2: The investor is worried about losing their job in period 3. If that were to happen their consumption would fall to 80 in period 3. If they keep their job it remains at 100. There is a 50% chance they lose their job.

For both scenarios calculate how much the investor would be prepared to pay for the bond  and, assuming that that is the price which prevails in the market, what would be the Yield to Maturity(YTM) of the bond reported in the financial press? Give an intuitive explanation of why the prices and YTMs differ across the two scenarios.

2. ASSESSMENT RUBRIC/ CRITERIA

Marking Criteria:

The top priority in answering these questions is to actually answer the questions! The

most common way of losing marks is to not address the question asked. This happens

especially when students find the question difficult and so attempt to answer the question

they wished had been asked. Or people rely on parts of the lecture notes which are close to the material asked about, but aren't exactly the same (doing so suggests they haven't

understood the differences). These questions attempt to push you to apply what we have learned in class in preparation for doing just this as a working economist.

For question 1, marks will be awarded for the successful collection and clear presentation of data. Mislabelling data/graphs, failing to accurately describe units of measurement, and

generally sloppy presentation which could potentially confuse the reader will be penalised. Demonstrating a depth of understanding of what the data implies when providing the

narrative is desirable i.e. simply saying variable x rose, then fell is not very informative.

Explaining why it rose then fell is preferable. As in all academic work, you must also correctly cite the sources used. Respect the word limits. If a part of the question has no word limit

attached you are free to write as much as you want, although not being able to answer the question clearly and concisely will count against you.

For question 2, marks will be awarded for the accuracy of your calculations, as well as

how clearly the calculations are explained. Simply stating the answer without explaining how it was calculated will lead to marks being deducted. Explaining the economics underpinning  the calculations is also important.

This assignment contributes 50% to the overall grade for this course.

Warning:

∙ Don't be tempted to use a different value for σ from that implied by your date of birth as this will be viewed as a failure to answer the question.