I. Theoretical Analysis

1. Each team (two students max) or individual student must find an article from the New York Times, The Economist, The Wall Street Journal, or The Financial Times (or a pre-approved alternate reputable news source) that addresses a concept we have covered in class and interests you. You will need to do a theoretical analysis for a news article, so choose one that is sufficiently in depth and has some material to discuss.

2. Each team will have to turn in a typed analysis of their article (double-spaced, three pages maximum). You must also turn in a copy of the article you have chosen.

3. Each analysis should include at a minimum:

    i) One paragraph summarizing the article (Be brief!)

    ii) One paragraph relating the article to theories we have discussed in class (Please accompany relevant graphs or equations here.)

    iii) One paragraph of interpretation

– provide your explanation if the open-economy macroeconomic theory learned in class does not fit into your article. Is it due to the particular assumption(s) of the model? Can you think of any way to extend or improve the model so that it may explain the events in your article better?

II. Empirical Analysis

1. Alternatively, you may write a short empirical paper using actual macroeconomic data. For example, you may test a negative theoretical relationship between variables X and Y by showing their empirical relationship based on the data. The time-series information for X and Y may be available from the public sources (see syllabus pg. 3 for reference databases). You should try to draw the graph illustrating the relationship using Excel, or (if you can) perform a regression analysis using Excel Data Analysis Tools (see below for relevant file) or any other software of your choice. And then try to link your empirical observation with the theory we learned in class, and evaluate your finding. Again, if you find any gap between theory prediction and empirical evidence, try to explain what may lead to such result.

2. Each analysis should include at a minimum:

    i) One paragraph summarizing your hypothesis and theoretical prediction from the model we learned in class 

    ii) One paragraph about empirical finding (e.g., what you find from a graph). You must also include the information about the data source (i.e., where you obtained the data).

    iii) One paragraph of interpretation

– Answer the following questions: Does the open-economy macroeconomic theory from class well represent the actual world? If there is any discrepancy, can you provide any explanations?

III. Grading

Your paper will be graded based on:

1. Writing structure as instructed above

2. Appropriateness of analytical methodolgy

3. Clarity of model implication and your interpretation

4. Contribution (Please provide a brief description of how each member contributed in a separate page) 

I have attached the article for The Wall Street Journal to be used in this paper.  

“Chinese Consumer Prices Show First Annual Decline Since 2009”