ECON1061

profileMSC Math
ECON1061_Assignment_Semester22019.pdf

ECON1061 – Group Assignment, Semester 2, 2019 Page 1 of 9

SCHOOL OF ECONOMICS, FINANCE AND MARKETING

ECON1061 – QUANTITATIVE ANALYSIS

SEMESTER 2 2019

Authentic Assignment

Marks: 40

Due: Friday, Week 11, 11.59 PM

INITIAL INSTRUCTIONS:

1. This assignment consists of one practical application with seven aspects to your report.

2. Ensure this assignment, and the related dataset corresponds to your enrolled lecture class

(Tuesday, Wednesday or Friday).

3. You must submit this assignment online via the Canvas link

a. Do not include the Excel document in your submission

b. Only the written report is required.

4. Before beginning work read both Appendix 1 and Appendix 2 (the marking rubric) for important

information. Appendix 3 is important to the work you will need to do.

This is a group assignment. The minimum group size is one and the maximum is five. You must submit the following table completed with your agreed percentage of contribution for each group member. All group members will receive marks according to the percentage of contribution mutually agreed by the whole group. If it is decided that everyone contributed equally, indicate the contribution % as 100% for each group member.

Any issues in regard to this must be resolved before submission.

Group Members: First name Last name Student ID Contribution

% Signature

ECON1061 – Group Assignment, Semester 2, 2019 Page 2 of 9

1 Introduction and Overview

In this assessment task you will take the role of an expert Quantitative Analyst employed by a

government organization in Singapore. Government decision makers heavily rely on the advice

of experts like you when formulating policy or making important developmental decisions.

You are to conduct an in-depth industry analysis, as outlined in Section 2.

As you write the report, keep in mind that the audience is other expert economists. Employ the

correct economic terminology and assume the readers have an understanding of the underlying

economic theory. Your report must be short but comprehensive, including all key facts and

details. Your report should not exceed six pages of A4 (including references and any Appendix).

The font used should be Arial 12pt. Margins should be set at 2.54cm and header & footer at

1.25cm, include page numbers in either the header or footer.

2 Task

The Australian coal mining industry plays a significant role in the Australian economy.

You are tasked to produce an Economic Impact Assessment of Australia’s coal mining industry.

In addition, you need to assess in general terms how China’s changing coal imports impacts

Australia’s coal mining Industry.

Economic impact assessment is about how one industry sector (or a project or activity within

that sector) affects other sectors in the economy. Input-output tables are often used to identify

relationships between sectors within an economy.

The data required for this task can be found in the ‘Assignment Data’ Excel file1. This data

consists of 32 Australian industries, including the coal mining industry. The external demand (e.g.

from the government, exports, etc.) of the dollar amounts for each industry is also provided.

3 Benchmark Report and Expectations

For the expected report style see Appendix 1. You should treat the KPMG2 2015 Economic

Impact Assessment of the Tasmanian Aquaculture Industry as the benchmark for your report

writing style. This report is available on Canvas under “Assignments”.

If you need any additional statistics about the designated industry, please use the following link:

http://www.abs.gov.au. Some other useful references are given in Appendix 1.

1 If you are interested, the full and original data can be found using the following link: http://www.abs.gov.au/Ausstats/[email protected]/0/65123D449688A658CA2576470014F947?OpenDocument 2 KPMG is a global professional service company, one of the Big Four, https://home.kpmg.com/au/en/home.html

ECON1061 – Group Assignment, Semester 2, 2019 Page 3 of 9

It is expected that your report should cover:

a) The significance of the Australian coal mining Industry to the Australian economy in general

(note: only a discussion similar to Section 2 (including Table 1) of the KPMG report is expected).

b) Discuss the challenges the Australian coal mining industry faces now and the impact these

challenges may have on the Australian coal mining industry in the long term (note: only a

discussion is expected).

c) i. Calculate and report the Type I multipliers for all 32 industries.

(To equip you for calculating the technology matrix, first watch the video podcast on calculating

a technology matrix for a larger economy, that is available under “Assignment help” on Canvas.

Also refer to Appendix 3 for a simple explanation using a three-sector economy)3.

ii. Explain the coal mining industry’s Type I multiplier.

iii. Name two other Australian industries that are important to the coal mining industry. Discuss

why they are important to the Australian coal mining industry (note: only a discussion is

expected).

d) Suppose in the latest budget that the Australian Government has declared significant cuts to

the transport and support services industry and to the oil and gas extraction industry. In fact, it

has decided to cut the external demand for transport and support services by 25% and for the oil

and gas extraction industry by 30%. Discuss the impact of this on the Australian coal mining

industry. Discuss which industry outside transport and support services and oil and gas

extraction and coal will be most heavily impacted by these budget cuts and possible reasons for

why this other industry would be affected. Express the change in the other industry’s output in

percentage (note: Leontief Input-Output analysis is expected (please refer to tutorial or lecture

examples), you can use the same   1

I M 

 matrix developed in part c(i)).

e) Recently the BHP CEO Andrew Mackenzie commented “We see a Chinese economy gradually shifting from construction to consumption” (see reference (c) under “useful references” in Appendix 1). Discuss how this shift would impact Australian exports in general. Applying your knowledge of economics, discuss two factors (not covered above) that would make Australian exports attractive to China. Explain your choice using economic theory, reports you have seen in the media, and information from academic journal articles and reference appropriately.

f) Provide a brief literature review (similar to Table (2) of the KPMG Report) explaining the main

findings of at least two research papers relevant to your research report. More references, where

appropriate, are welcome.

3 A similar type of analysis is carried out in the KPMG report, page 11. The formula the KPMG report used is suitable for calculating the individual multiplier for each individual industry, whereas the one explained in Appendix 3 is suitable for collectively calculating multipliers for all industries at once.

ECON1061 – Group Assignment, Semester 2, 2019 Page 4 of 9

g) Based on your analysis on the Australian coal mining industry, provide recommendation(s) to

the Australian government (if any).

ECON1061 – Group Assignment, Semester 2, 2019 Page 5 of 9

Appendix 1

1. Finding the inverse

There are a couple of options to find the inverse of a matrix. The simplest is through Excel.

Please use the following website as a rough guide:

http://www.excelfunctions.net/Excel-Minverse-Function.html

Important note:

The numbers in the table that you wish to find the inverse of must be rounded to 2 decimal

places before using the inverse formula. You will need to use the round formula

[=round(array,2)] to achieve this outcome (where array is the range of cells containing the

numbers you want to round).

Do not use the ‘increasing/decreasing the number of place’ command (the function as

shown in the picture below) as this will only ‘visually’ round the solutions to the number

chosen. You may, however, use this command when presenting solutions.

2. Excel tips

You will be performing most (if not all) of your calculations in Excel.

- Various skills in Excel that may be useful to you can be found in this video:

o https://www.youtube.com/watch?v=1naiWCWfSt4

- You may also want to freeze certain cells when dragging formulas down:

o https://www.youtube.com/watch?v=mvwmNxuiXO8

3. Some useful research links:

a) http://theconversation.com/coal-does-not-have-an-economic-future-in-australia-102718

b) reneweconomy.com.au/coalition-tips-funds-into-battery-electric-vehicle-to-cut-

pollution-at-coal-mines-45874/

c) http://www.austmine.com.au/Events/category/articles-editorials/mining-and-

geopolitical-risk-a-global-breakdown

d) https://environmentvictoria.org.au/campaign/cleaning-up-our-power/

e) http://www.tai.org.au/content/coal-and-gas-mining-australia

ECON1061 – Group Assignment, Semester 2, 2019 Page 6 of 9

4. Expected format of the report:

i) Abstract: a brief outline of the report and the main findings

ii) Introduction: you can answer questions (a) – (e) here. Please include question numbers for

marking purposes.

iii) Literature Review: you can answer part (f) here

iv) Methodology: you can give a brief introduction to input-output analysis

v) Conclusions: a brief summary of your findings

vi) Recommendations: you can answer part(g) here

Note: ideally, we prefer 6 pages in total or less. However, a little over (say 7 or 8 pages) is also

fine.

ECON1061 – Group Assignment, Semester 2, 2019 Page 7 of 9

Appendix 2: Marking Rubric

Criteria (refer Section 3

above)

Unsatisfactory Satisfactory Good Excellent

Task (a) Does not adequately discuss (a) (0 – 1 marks)

Partially discusses (a), without providing adequate details (1.5 – 2 marks)

Somewhat acceptable, but could have discussed more and provided more details (2.5 – 3 marks)

(a) is discussed adequately (3.5 – 6 marks)

Task (b) Does not adequately discuss (b) (0 – 1 mark)

Partially discusses (b), (1.5 – 2.5 marks)

Somewhat acceptable, but could have discussed more (3 – 4.5 marks)

(b) is discussed adequately (5 – 7 marks)

Task (c) Calculations and discussions were wrong (0 - 0.5 mark)

Calculations correct but the discussions were wrong (1 – 1.5 marks)

Calculations correct but could have discussed more (2 to 3.5 marks)

Calculations and discussions are accurate (4 to 6 marks)

Task (d) Calculations and discussions were wrong (0 - 0.5 mark)

Calculations correct but the discussions were wrong (1 – 1.5 marks)

Calculations correct but could have discussed more (2 to 3 marks)

Calculations and discussions are accurate (3.5 to 6 marks)

Task (e) Does not adequately discuss (e) (0 – 0.5 marks)

Partially discusses (e), (1 – 2.5 marks)

Somewhat acceptable, but could have discussed more (3 – 3.5 marks)

Discussed (e) well providing references/reports /economic theory to support (4 – 5 marks)

Task (f) Literature Review is not done/does not provide any references (0 marks)

Literature Review is not meaningful/only one relevant reference provided throughout the report (0.5 – 1 mark)

Literature Review is somewhat acceptable/only two relevant references provided throughout the report (1.5 – 2 marks)

Excellent Literature Review/more relevant references provided throughout the report (2.5 - 3 marks)

Task (g) No recommendation provided (0 mark)

Meaningless recommendation is provided (0.5 – 1 mark)

Recommendation is inadequate (1.5 – 2 marks)

Solid recommendation provided with reasoning (2.5 – 3 marks)

Overall business report style and presentation (compared to the benchmark report)

Not impressive (0 – 0.5 mark)

Somewhat acceptable (1 – 1.5 marks)

Good effort (2 – 3 marks)

Excellent (3.5 - 4 marks)

ECON1061 – Group Assignment, Semester 2, 2019 Page 8 of 9

Appendix 3

Explaining Type I multiplier calculation using a three-sector economy

Multipliers measure total change throughout the economy from a one unit change for a given

sector. In economics, three types of multipliers are calculated from model 1] output, 2] income

and 3] employment and these are referred to as the Type I multiplier, Type II multiplier and Type

III multiplier, respectively.

Your assignment task covers only Type I multiplier which is calculated as follows:

Type I multiplier calculation and Interpretation:

Type I multiplier includes direct or initial spending + indirect spending or businesses buying and

spending to each other. Consider the input/output table for the three-sector economy:

Input to ($million)

Agric. Health Services Other demands Total output

Output from ($million) Agric. 150 225 125 100 600

Health 210 250 140 300 900 Services 170 0 30 100 300

Step 1: Use the underlying assumption total input = total output to complete the following

input/output table

Input to Agric. Health Services Other demands Total output

Output from

Agric. 150 225 125 100 600 Health 210 250 140 300 900

Services 170 0 30 100 300

Other inputs 70 425 5 Total input 600 900 300

Step 2: Calculate the technology matrix, M, by dividing each column of inputs by total input

Input to

Agric. Health Services Other demands Total output

Output from

Agric. 150/600 225/900 125/300 100 600

Health 210/600 250/900 140/300 300 900

Services 170/600 0/900 30/300 100 300

Total input 600/600 900/900 300/300

ECON1061 – Group Assignment, Semester 2, 2019 Page 9 of 9

Thus � = �

150/600 225/900 125/300 210/600 250/900 140/300 170/600 0/900 30/300

� = � 0.25 0.25 0.42 0.35 0.28 0.47 0.28 0.00 0.10

Step 3: Determine the inverse of (� – �)

� – � = � 1 0 0 0 1 0 0 0 1

� − � 0.25 0.25 0.42 0.35 0.28 0.47 0.28 0.00 0.10

� = � 0.75 −0.25 −0.42 −0.35 0.72 −0.47 −0.28 0.00 0.90

(� − �)�� = � 2.24 0.78 1.45 1.54 1.92 1.72 0.70 0.24 1.56

Note: You can use the Excel minverse function to calculate above inverse (please refer to

Appendix 1 for more detail). Remember to press ctrl, shift and enter together to get the

inverse.

Step 4: Total requirements table and interpretation

Input to

Agriculture Health Services

Output from Agriculture 2.24 0.78 1.45

Health 1.54 1.92 1.72

Services 0.70 0.24 1.56

Total 4.48 2.94 4.73

The output multipliers are simply the column totals for each industry.

Interpretation: For example, agriculture Type I multiplier = 4.48. For a $1 change in final demand

sales in the local economy, the total direct and indirect impacts on the Agriculture sector is

$4.48.