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    Assignment 1 Macro

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    Manya
    The document discusses the economic impact of the COVID-19 pandemic on Australia, the UK, and the US based on graphs and data of nominal GDP, real GDP, unemployment rates, and employment population ratios. It notes that Australia, the UK, and the US all experienced sharp declines in economic growth and rises in unemployment during the initial outbreak of the pandemic, with Australia's GDP declining 7% and the UK declining 9.9% in the second quarter of 2020. While the UK managed to keep unemployment and employment stable, the US saw unemployment spike to nearly 15%. The document also analyzes differences in the economic recoveries across countries in the second half of 2020.

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    Assignment 1 Macro

    Uploaded by

    Manya
    46 views9 pages
    The document discusses the economic impact of the COVID-19 pandemic on Australia, the UK, and the US based on graphs and data of nominal GDP, real GDP, unemployment rates, and employment population ratios. It notes that Australia, the UK, and the US all experienced sharp declines in economic growth and rises in unemployment during the initial outbreak of the pandemic, with Australia's GDP declining 7% and the UK declining 9.9% in the second quarter of 2020. While the UK managed to keep unemployment and employment stable, the US saw unemployment spike to nearly 15%. The document also analyzes differences in the economic recoveries across countries in the second half of 2020.

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    Macroeconomics Assignment

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    Assignment 1 Macro (1)

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    The document discusses the economic impact of the COVID-19 pandemic on Australia, the UK, and the US based on graphs and data of nominal GDP, real GDP, unemployment rates, and employment population ratios. It notes that Australia, the UK, and the US all experienced sharp declines in economic growth and rises in unemployment during the initial outbreak of the pandemic, with Australia's GDP declining 7% and the UK declining 9.9% in the second quarter of 2020. While the UK managed to keep unemployment and employment stable, the US saw unemployment spike to nearly 15%. The document also analyzes differences in the economic recoveries across countries in the second half of 2020.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    46 views9 pages

    Assignment 1 Macro

    Uploaded by

    Manya
    The document discusses the economic impact of the COVID-19 pandemic on Australia, the UK, and the US based on graphs and data of nominal GDP, real GDP, unemployment rates, and employment population ratios. It notes that Australia, the UK, and the US all experienced sharp declines in economic growth and rises in unemployment during the initial outbreak of the pandemic, with Australia's GDP declining 7% and the UK declining 9.9% in the second quarter of 2020. While the UK managed to keep unemployment and employment stable, the US saw unemployment spike to nearly 15%. The document also analyzes differences in the economic recoveries across countries in the second half of 2020.

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    of 9

    INTRODUCTORY MACROECONOMICS (ECON 10003)

    ASSIGNMENT-1

    ANANYA GOEL (1199370), AAYUSH JAIN (1189625), MANYA JAIN (1190964)

    Task #1 Australia

    i. Graph 1.1 (Nominal GDP)

    ii. Graph 1.2 (Real GDP)


    iii. Graph 1.3 (Unemployment Rate)

    iv. Graph 1.4 (Employment to Population Rate)

    In the March of 2020, due to the outbreak of coronavirus, entire Australia went into a

    countrywide lockdown resulting in significant changes in the macroeconomic features.

    During the second quarter of 2020, the GDP dipped by 7% leading to a massive contraction

    in the economy. Australia’s continuous period of growth ended when the economy went into

    a recession after 29 years. Lockdowns, closure of international and inter-state borders and

    implementation of social distancing norms were the main factors contributing to this fall with

    an increase in the unemployment rate throughout the country. Even though the economy
    contracted in the first half of 2020, the Australian government was able to revive it through

    simultaneous effects of fiscal and monetary policies and an increase in household expenditure

    in the second half. In the September quarter, the economy rose by 3.3% with a significant

    increase in the employment rate (Lim et al., 2021). The most important feature during the

    pandemic was how fast and effectively the Australian economy revived after facing massive

    falls in the first two quarters.

    Following the national lockdown, the unemployment rate jumped from 5.2% in

    March to 6.4% in April. As expected, the employment to population ratio fell sharply to

    nearly 7% below the pre-pandemic level. However, we believe that these labour market

    variables are only able to capture a limited effect of the pandemic on the Australian labour

    market. The employment ratio and unemployment rate do not represent the increase in

    underemployment that may have occurred. Due to the pandemic, workers worked for limited

    hours; supermarkets were only open for a certain duration during the lockdowns. The

    headline underemployment rate increased sharply, from 8.6% in February to 13.6% in April,

    the highest rate in the history of this series (Chambers et al., 2021). Economic policies, such

    as the Job Keeper scheme introduced by the government have played an important role in

    keeping the labour market variables stable (Lim et al., 2021). Hence, we feel that these

    variables are not independently sufficient in determining economic contraction.


    Task # 2 International Experiences

    1. United Kingdom (UK)

    i. Graph 2.1.1 (Nominal GDP)

    ii. Graph 2.1.2 (Real GDP)


    iii. Graph 2.1.3 (Unemployment Rate)

    iv. Graph 2.1.4 (Employment to Population Rate)

    As the Covid-19 pandemic continues, the UK economy continues to stutter. During

    the pandemic, UK’s GDP declined by a record of 9.9% with real GDP falling over 20% in the

    second quarter of 2020. The economy is dependent on the service sector, which was greatly

    affected in the pandemic; being one of the driving factors for the decline in GDP (BBC,

    2021). The labour market of the UK remained relatively stable with unemployment peaking

    at 5.2% in October 2020 and employment to population ratio averaging at 75%. Reopening of

    businesses and loosening up the covid restrictions helped to avoid the double recession and

    continued the growth of the economy (The Guardian, 2021).


    2. United States of America (USA)

    i. Graph 2.2.1 (Nominal GDP)

    ii. Graph 2.2.2 ( Real GDP)


    iii. Graph 2.2.3 ( Unemployment Rate)

    iv. Graph 2.2.4 (Employment to Population Rate)

    USA’s consistent growth came to an end at the beginning of 2020. The country faced a

    severe negative demand shock resulting from these lockdowns, social distancing norms and

    closure of businesses. The economy’s reduced capacity to produce goods and services impacted

    consumer spending behaviour negatively (O’Donnell et al. 2020) This led to a sharp increase

    in the unemployment rate with a corresponding decrease in the employment to population ratio.

    The unemployment climbed from 4.4% to 14.8%(Mar20-Apr20) immediately after the covid

    restrictions(graph2.2.3). This fall in output and employment resulted in a decrease in GDP: the
    first quarter of 2020 reported a decline of around 1% and thereafter a massive decline in the

    next quarter of around 10% for both nominal and real GDP (graph2.2.1 & 2.2.2).

    Improvement in employment and unemployment rates was observed earlier May 20 and has

    been improving steadily since. The effect of these improvements was observed in GDP indexes

    from the third quarter. Even after the recession, the USA’s GDP indexes have managed to

    surpass the trendlines (graph 2.2.1 & 2.2.2).

    The US and the UK both are developed economies which suffered severely in the

    initial phase of the pandemic just like the rest of the world. These countries had quite

    different macroeconomic experiences amidst the covid pandemic except for a few

    similarities. Both the countries had a similar nominal, real GDP Index and unemployment

    rate in the pre-covid period. After the pandemic, only Nominal GDP indexes had a similar

    trend but this time, the US had a higher nominal GDP index as compared to the UK. USA’s

    GDP indexes had a slight decline but managed to keep up with the trendline whereas UK’s

    GDP indexes covered slightly but remained below the trend line. The UK's real GDP Index

    fell drastically more than its nominal GDP. As far as labour market variables are concerned,

    the UK had an advantage. The UK managed to keep its unemployment rates and employment

    to population ratio stable throughout the pandemic while the US unemployment rates spiked

    to nearly 15% and the employment to population ratio sank to almost 50%.
    REFERENCES

    BBC News. (2021, February 12). UK economy suffered record annual slump in 2020.

    https://www.bbc.com/news/business-56037123

    Chambers, M., Chapman, B., & Rogerson, E. (2021). Underemployment in the Australian

    labour market | bulletin – June quarter 2021. Bulletin, June.

    https://www.rba.gov.au/publications/bulletin/2021/jun/underemployment-in-the-

    australian-labour-market.html

    Lim, G., Nguyen, V., Robinson, T., Tsiaplias, S., & Wang, J. (2021). The Australian

    Economy in 2020–21: The covid-19 pandemic and prospects for economic recovery.

    Australian Economic Review, 54(1), 5–18. https://doi.org/10.1111/1467-8462.12405

    O’Donnell, L. B., Kristen E. Broady, Wendy Edelberg, and Jimmy. (2020, September 17).

    Ten facts about COVID-19 and the U.S. economy. Brookings.

    https://www.brookings.edu/research/ten-facts-about-covid-19-and-the-u-s-economy/

    The Guardian. (2021, February 12). UK economy hit by record slump in 2020 but double-dip

    recession avoided. https://www.theguardian.com/business/2021/feb/12/uk-avoided-

    double-dip-recession-despite-covid-slump-in-2020-ons-gdp

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