MODEL OF GROWTH AND THE BUSINESS CYCLE

  III- MODEL OF GROWTH AND THE BUSINESS CYCLE a- Plot and describe the evolution of GDP growth, inflation and unemployment for the 1980s, 1990s and 2000s (up to today). What do you see? (comment on the business cycle … volatility, length etc) b- Check if the Phillips curve holds for each of the periods? What can you infer about the model of growth? Check Okun´s law … has potential GDP changed? What is its current level? c- At the Balance of Payments data for each of the decades … what problems or strengths do you identify in each period? Has policy, monetary or fiscal, caused the changes? d- Look at the evolution of the exchange rate, does it evolve as you would expect given the business cycle and the balance of payments data? Is it undervalued or overvalued? e- What do you expect to happen to the economy from in 2018?