Explain why monetary authority is able or not able to maintain price stability.

Choose any country from the world (not the USA).

Collect data for the period 1980 -2018 on the following variables:

M1
The velocity of Money (you can calculate the velocity of money by using the equation of change: V = PY/M, also you have to know that the inverse of the velocity of money ( 1/V ) resembles the demand on money).
Real GDP & Nominal GDP (You can calculate the general level of price by using equation: P = Nominal GDP / Real GDP ).
Analyze the macroeconomic state of the country with respect to the country’s ability to maintain stable prices (P) through monetary policy in the future. (You should state in your analysis: what is the appropriate target for the monetary policy: Is it Money growth, or Interest rate? You have to justify your answer.

Each paper should consist of the following paragraphs:

Introduction: In your introduction state the theoretical explanation of the quantity theory of money. Then in this introduction, you have to mention that you want to use the equation of exchange on the specific country that you have chosen with the goal to analyze the ability of monetary authority ( central bank) to maintain price stability through monetary policy. (15 points)

Data Analysis: After you have collected data on the variables, and the quantity of change, graph them in one or multiple graphs. Write a paragraph on the observed behavior and trends of the variables with implications for the ability of monetary authority ( central bank) to maintain stable prices through monetary policy ( changes in the money supply ). Evaluate the current monetary policy implemented by the Central Bank in the context of your analysis for the selected period.
Also, in this paragraph, you should explain why monetary authority is able or not able to maintain price stability. (40 points)

Conclusions: Summarize your findings and provide your suggestion about what is the best monetary policy to maintain price stability. (15 points).

The central banks of most countries provide key economic data. International organizations such as the IMF (Links to an external site.) (Links to an external site.), World Bank (Links to an external site.) (Links to an external site.), OECD (Links to an external site.) (Links to an external site.), ASEAN (Links to an external site.) (Links to an external site.), and EU (Links to an external site.) (Links to an external site.) and also provide economic data on their web sites. The U.S. Central Intelligence Agency provides current data for all countries in the World Factbook (Links to an external site.) (Links to an external site.). Wikipedia is NOT an acceptable source. Evaluate sources carefully. Sources from .org and .gov are preferred to sources from .com.

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