Objective: The purpose of this project is to (1) apply core macroeconomic concepts by making fiscal and monetary decisions, and (2) analyze the consequences of those decisions on a country’s economy.
Task: You will play as simulation game called Econland. In this game, you will be managing the economy of Econland, which is a medium-sized country, for seven rounds or years. Each round, you have to make economic decisions about interest rate, income tax rate, corporate tax rate and government spending. After each round, you will receive an approval rating from the population of Econland. The objective is to make the population happy and to maximize the approval rating. The population cares about GDP growth, unemployment rate, inflation rate and budget surplus.
You will be presented with three scenarios: 1) base case with medium economic growth and volatility, 2) rollercoaster with high economic growth and volatility and 3) stagnation with low economic growth and volatility. You will play each scenario twice.
Each student is required to write a report explaining the decisions made in each round and their impact on the economy while relating these to the macroeconomic concepts learned in class using appropriate sources.
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