ASSIGNMENT: Business cycle development and development in the balance of payments in Denmark.
The development of the current accounts of the balance of payments is influenced by domestic economic cycles and economic cycles in other countries. In the presence of economic cycles, fiscal policies should be adapted to take into account amongst others the balance of payments and foreign debts.
In this assignment you amongst others have to describe, analyze and comment on the interaction between economic cycles and the development in the balance of payments in Denmark over the most recent years.
The hand-in is required to contain:
1) A short conceptual presentation of the balance of payments including a short conceptual description of the types of transactions above the line and below the line and how these transactions above and below the line depend mutually. Specifically, also explain how this relates to the development of external debt of Denmark to other countries.
2) A short theoretical presentation of the relationship between economic cycles and the development in the balance of payments. Include an explanation of the importance of the competitiveness of a country as measured by the real exchange rate for the balance of payments. Also, explain the relationship between savings, investments, the trade balance and a public deficit or surplus.
3) A quantitative description - through tables and figures - showing the development of the current account in Denmark for the period 2000-2015 including specific types of transactions under the current account based on publicly available data sources (e.g. Statistic Denmark, OECD, IMF or Eurostat).
4) A quantitative description - through tables and figures - of the economic cycle in the period 2000-2015 for Denmark based on publicly available data sources. Also, given Germany is the largest economic neighbor to Denmark, include a quantitative description - through tables and figures - of the economic cycle in the period 2000-2015 for Germany based on publicly available data sources.
5) A discussion of the importance of economic cycles for the development in the current account for Denmark, which must include an analysis of the importance of economic cycles in Denmark and abroad for Danish import and exports.
6) A quantitative description of the development of the external debt of Denmark in the period 2000- 2015.
The hand-in may furthermore comprise:
7) A quantitative description of the development in the exports and imports of Denmark to specific countries or of specific types of goods in the period 2000-2015.
The hand-in must furthermore contain:
8) A conclusion which builds on the answers to 1)-7). This should draw on the concepts of the balance of payments (e.g. the current account and the external debt), the theories discussed as well as the description of the actual data. Also comment on how these findings influence the scope of undertaking different policies.
Attachment:- Balance of payments in Denmark.rar