30054 International and Monetary Economics (Spring, 2022)

Group Assignment
Instructions
When? The deadline to submit your work is May 13, 2022 (23:59 Milan time).

Where? Upload your solution to the bboard webpage of our class.

What? Submit your solution in either PDF or DOC format. When drawing diagrams or
writing formulas, you can either use build-in word processing tools or you can
draw and write by hand, take pictures, and insert them in your solution.

Who? This is a group assignment. You can form groups of one to five students. Groups
can contain students from both classes 31 and 32. Indicate clearly the names,
emails, and student id’s of the group members. Pick one group representative
and make her or him submit your solution.

How long? Limit your response to a maximum of 5 pages with a 12-point font, and a 1.5-line
spacing. Your report can (and is encouraged to) be less than this limit. You can
have an appendix of any size with tables, formal derivations, etc.

How much? You can get a maximum of 30 points for this project. The weight is 10% of your
final grade provided it is better than your final exam grade (see the new formula
in the updated syllabus)

Assignment
We all have to make predictions in our lives. In the morning, we try to predict the
weather during the day to decide what to wear to feel comfortable. When in high
school, we try to predict which professions and skills will be in demand when we
enter the job market to decide whether and what to study after our high schools. Busi-
nesses and governments have to also make predictions to invest and choose policies.
This project asks you to make a prediction related to the topics of our class.1

Choose and answer one of the following three questions.

1. Will the Eurozone adopt a digital Euro by the end of 2027? 2032? 2037?2

2. Will Italian gross public debt as a share of Italian GDP exceed 200 percent by the
end of 2027? 2032? 2037? 2037?

3. According to the BIS triennial survey of foreign exchange markets released in

2019, the US dollar was on one side of 88% of all foreign exchange trades. Will

1 If you have not done much forecasting before, Tetlock and Gardner (2016) is a good starting point.
However, note that neither this reference nor the references in the other footnotes are necessary for the completion
of this assignment. They are only useful starting points if you want to read more on the topic.
2 The references from Lecture 6 can be useful in answering this question.

1
 the US dollar lose its dominant role according to the BIS triennial report metric
in 2028? 2037? 2046?3

Justify your answer.4

References
E ICHENGREEN , B., M EHL , A. and C HITU , L. (2017). How global currencies work. Prince-
ton University Press.

FARHI , E. and M AGGIORI , M. (2018). A model of the international monetary system.

The Quarterly Journal of Economics, 133 (1), 295–355.

T ETLOCK , P. E. and G ARDNER , D. (2016). Superforecasting: The art and science of predic-
tion. Random House.

3 In addition to the material covered in class, the following references can be useful (but not neces-
sary) to answering this question: Eichengreen et al. (2017); Farhi and Maggiori (2018).
4 Your response will be evaluated based on your justification, such as the analytic framework, pos-

sible scenarios, assumptions, data sources, etc.

2