Monetary and Fiscal authorities - Current Macroeconomic position

Country: Greece.


“Choose any one country, assess its current macroeconomic position and discuss what policies have been adopted by the monetary and fiscal authorities in the past year. What should the monetary and fiscal authorities be doing over the next year or so?”

This can be done alone or in groups of up to four people.

A note giving further guidance is attached below.

Be very careful not to copy chunks of material from internet sites or other publications as this will constitute plagiarism. Quotations from other material are fine as long as they are marked as such and the source is clearly stated.

Do not use sites on the internet that have no obvious quality control. This includes Wikipedia. Official sources (such as governments and central banks) and international agencies, as well as academic journals and working papers can be assumed to have good quality control.

Notes for guidance on Macroeconomics coursework Term 2

Coursework should be submitted on Moodle by Tuesday 17th March 2020 (exact deadline will be communicated later).

The work should be typed and around 1500 words in length, and certainly not longer than 2000 words. Charts, references, and tables may be included in addition to this word limit.

References should be given to data sources and any other material used. Any direct quotes from source material should be clearly indicated and the source attributed

The central focus should be on real GDP and its recent history. Is GDP below trend, is there a significant GDP gap? [For major countries, estimates of the GDP gap are available from the IMF, but for others you would have to compare actual GDP with its trend.] Is it positive or negative? If negative, why is demand weak…..is it C, I, G or net trade?

Look for other indicators of slack or overheating, what is happening, for example, to inflation and unemployment?

If inflation is high the economy may be overheating, but if unemployment is high and rising then the economy may need some stimulus.

What is the state of the balance of payments?

Does the economy need some stimulus or some slowing down?


In most countries the dominant issue of the past decade has been after-effects of the 2008/9 global financial crisis (or the Eurozone debt crisis of 2011/12). This cut demand and led to output falls and higher unemployment.

Most economies have now recovered from this, but does your economy still have slack or is it starting to overheat?

What else should now be done? Are things yet back to normal?

What have monetary and fiscal policy makers been doing recently?

Have there been announcements of tax or spending changes from the government?

If so, what reasons were given?

Have official interest rates been rising or falling?

What is quantitative easing (QE) aimed to achieve and how well has it done? Is QE now being reversed? Based on your analysis, what would you recommend that policy makers should do next?

The answer may be “nothing” but that would mean that you think things are as good as they can be.

For information about UK monetary policy you can access the Inflation Report via www.bankofengland.co.uk and you can search on “monetary policy” on the Bank’s home page. UK fiscal policy links can be found via the Treasury web site: http://www.hm-treasury.gov.uk/ Look also at the lates OBR Economic and Fiscal Outlook (obr.uk) and the lates Budget from HM Treasury.

Data for other countries can be found from the IMF on www.imf.org. Search for World Economic Outlook (WEO) and this will lead you both to IMF assessments and to annual data since 1980 plus latest IMF projections (via WEO database).

Monetary and Fiscal authorities - Current Macroeconomic position

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