Research Essay Structure

Please note:

•    You must use the essay template on Assessment > Assignment 2 > Template

•    You must include the cover page (in the template) in your submission. Do not write your answer on the cover page.

Formatting Requirements:

•    Font: Arial or Calibri

•    Font Size: 11

• Line Space: 1.5

Word Count:

•    1500 words + 100 words buffer

o  Penalties apply for word count >1600 words.

•    Word count limit does not include:

o  Coversheet

o  Bibliography (Reference List)

o Section Headings

o Figures, including Figure headings and short notes underneath figures (e.g. Source: RBA (2021)

Referencing Style:APA 7th Referencing Style

•    Direct quotes or paraphrased quotes must be referenced.

• Quotes cannot exceed 10% of the word count.

Figures

•    You can include up to eight (8) figures (diagrams, graphs or tables) in this assignment.

o You can use a mixture of diagrams, graphs or tables, so long as the total number is no more than eight.

•    You can combine two or more diagrams into a single figure if doing so makes sense, or if such combinations have appeared in the teaching material.

•    You can use more than one variable in a graph of table – but please keep the number of variables limited with an eye to legibility,

o  No extra marks will be provided for irrelevant information.

•    You must produce your own figures from data.

o You must keep a copy of your data file/spreadsheet for verification.

•    Copied figures will be penalised.

Similarity Report

•    Your essay should have a Turnitin similarity index value of 15% or less.

•    Penalties may apply for similarity index values >15%.

•    Please refer to thislinkfor more information on the Turnitin similarity report.

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Penalties

Late Submission:

•    1PM 20 May  is the submission deadline.

o You should to start the uploading process at least 60 minutes before the deadline (i.e. at 12:00NN) to ensure that your assignment is successfully uploaded by the   deadline.

•    When an extension has not been previously approved, a penalty of 10 marks (out of 100) will be deducted for every 24-hour block (up to 7 calendar days, after which no marks will be        awarded for a submission).

o 10 marks penalty if submitted within 24 hours after the deadline. (i.e. 1:01PM 22 May to 1:00PM 23 May)

o 20 marks penalty if submitted between 24 and 48 hours after the deadline. (i.e. 1:01PM 23 May to 1:00PM 24 May)

o …

o After 168 hours  (7×24 hours) after the deadline, 0 marks will be recorded. (i.e. after 1:00PM 29 May)

High TurnItIn Similarity Index:

•    15%-20%: as much as 5 marks (out of 100) may be deducted.

•    20%-25%: as much as 10 marks (out of 100) may be deducted.

•    >25%: as much as 100 marks (out of 100) may be deducted.

•    Besides marks deducted, cases of suspected plagiarism will be reported to the School’s Integrity Officer for investigation, in accordance with the school’s plagiarism policy.

•    Please refer to thislinkfor the UQ School of Economics’ plagiarism policy.

•    Similarity index values change slightly over time as Turnitin continuously add new materials  into its database, e.g., as more students have submitted their assignments. The best strategy is to keep your similarity index value sufficiently low, e.g., below 12, so that even though it    goes up a little bit after submission it will not exceed 15.

•   Turnitin will ignore a small amount of unavoidable similarity (e.g., commonly used terms).

• Turnitin will not include references in its similar score calculation.

Copying Figures

•    For each copied figure (diagrams, graphs, or tables): 15 marks (out of 100) will be deducted.

o The penalty applies even if references are provided for the copied figures.

•    Besides marks deducted, cases of suspected plagiarism will be reported to the School’s

Integrity Officer for investigation, in accordance with the school’s plagiarism policy.

Exceeding Word Count Limit (>1600 words)

•    100 additional words is allocated as a buffer to the 1500 word limit.

•     5 marks for every 50 words exceeding 1600 words.

o E.g. 5 mark penalty for 1602 words, 10 mark penalty for 1651 words.

• No marks deducted for <1500 words.

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Context

Figure 1: Source: Reserve Bank of Australia (2023), Consumer Price Index (Link).

In 2022, Australia experienced CPI inflation of 7.8% p.a., much higher than the Reserve Bank of    Australia’s (RBA) inflation target of between 2 to 3%, and far exceeding 2020’s 0.9% CPI inflation.

In particular, the Australian CPI inflation spiked in Q1 2022 (i.e. 1 Jan 2022 – 31 March 2022),      recording a quarterly CPI inflation rate of 2.1% relative to 1.3% quarterly growth in the CPI index recorded in Q4 of 2021.

Part of this acceleration of CPI inflation could be explained in terms of domestic factors driven by the recovery of the Australian economy from the COVID-19 pandemic.

However, the Russian invasion of Ukraine that started on the 24th  of February 2022 (and subsequent economic sanctions imposed on Russia) could also be an important external shock contributing to     the high rate of inflation experienced by Australia in 2022.

Report Structure

Your main task in this assignment is to explain whether and how external factors (in particular the    Russian invasion of Ukraine) contributed to the high rate of Australian inflation experienced in 2022. You must do so with the Mundell-Fleming model (i.e. IS-LM model for a small open economy) and    AD-AS model.

You may make the simplifying assumption that Australia is a small open economy with a pure floating exchange rate regime.

Part 1: What impact did the Russian invasion of Ukraine and subsequent economic sanctions    imposed on Russia have on demand for Australian exports in 2022? (10% of assignment marks)

−   Your discussion should be substantiated with reference to specific “real world”economic    shocks, economic sanctions and/or trade disruptions resulting from the invasion. You must provide references for the specific economic shocks, sanctions and/or trade disruptions.

−   You should also refer to trade data and commodity price data to justify your arguments in this section. (E.g. changes in Australia exports in 2022, changes in energy and agricultural commodity prices etc.)

−   Hint: You should consider what types of goods Australia, Russian (and perhaps Ukraine) exported prior to the invasion.

Part 2: Use the Mundell-Fleming model to analyse how the change in Australian export demand affected the Australian economy in 2022. (20% of assignment marks)

−   For this section, the focus is on the theoretical predictions generated by Mundell-Fleming model.

−   Your analysis must include discussion of the predicted changes to the real exchange rate, domestic interest rate, net capital flows, net exports and real output.

−   What does the Mundell-Fleming model predict was the immediate impact to the Australian economy? (I.e. before the Australian economy returns to equilibrium along the balance of  payments schedule in the Mundell-Fleming model.)

−   What about the theoretically predicted overall impact to the Australian economy after it returns to equilibrium along balance of payment schedule?

−   Hint: You should differentiate between immediate and overall impacts as we have done in Tutorial 7 Question 3.

−   Appropriate diagrams will be very useful for your explanation.

Part 3: What impacts did the Russian invasion of Ukraine have on Australian cost of material inputs and short-run aggregate supply (SRAS) in 2022? (10% of assignment marks)

−   Your discussion of Australian material input costs should be substantiated (at the very least) by reference to the Producer Price Index (PPI).

−   You should also consider the types of goods driving the change in material input costs and how they are related to the invasion.

−   You should provide an intuitive explanation (i.e. without having to refer to the full AS       equation as in Tutorial 8 Question 3) of how the change in material cost shifted the SRAS

curve.

Part 4: Use the AD-AS model to discuss how the Russian invasion of Ukraine contribute to Australian inflation in 2022. (20% of assignment marks)

−   Use your discussion from Part 2 to consider both the immediate and overall impact of the  invasion on Australian aggregate demand, your analysis from Part 3 to consider the impact on short-run aggregate supply.

−   Use the AD-AS diagram to discuss both the immediate and overall impact of the invasion on the quarterly rates of inflation experience in Australia in 2022.

−   Discuss whether the impacts on Australian aggregate demand or short run aggregate supply is likely to have a more persistent impact on inflation.

−   Hint: Consider your discussion from Part 2.

Part 5: Does the empirical data support your analysis in Part 2? (10% of assignment marks)

−   Does the data from 2022 on the Australian real exchange rate, interest rate, net exports and real output support the theoretical predictions from the Mundell-Fleming model?

−   If the data deviates from the theoretical predictions, what assumptions for the Mundell-       Fleming model (IS-LM model for a small open economy) doesn’t hold in the real world when it comes to the Australian economy?

References and Quality of Writing (10% of assignment marks each)