Capstone Project — Part 2: Macroeconomic Analysis of Your City

Instructions

Apply Parts V–VII of the textbook to your chosen city. This section should be 5–7 pages and cover the following:

1. Your City in the National Economy (2–3 pages)

  • What is your city's industrial mix? Is it dominated by one sector (manufacturing, services, government, agriculture, tech)?
  • How sensitive is your city to national economic conditions? (A city dominated by manufacturing is more sensitive to recessions than one dominated by government employment.)
  • What is your city's exposure to international trade? Does it have major export industries? Import-competing industries?

Use data from: - BLS Quarterly Census of Employment and Wages (QCEW) for your county/metro - BEA Regional Economic Accounts for GDP by metro area - Census County Business Patterns for industry composition

2. How Your City Experienced Two Recessions (2–3 pages)

The 2008 Great Recession: - How did your city's unemployment rate change? (Look up your metro area on FRED or BLS) - Which industries were hit hardest? - How long did the recovery take?

The COVID Recession: - How did your city experience the shutdown? - Which workers were most affected? - How quickly did your city recover? - Was the recovery K-shaped in your city?

For each recession, apply the AS-AD framework (Chapter 31): was the shock primarily a demand shock, a supply shock, or both?

3. Macro Policy Effects on Your City (1–2 pages)

  • How did the 2021–23 inflation affect your city? (Look up local CPI data or use the national CPI as a proxy. Check housing costs, food costs, gas costs.)
  • How did the Fed's 2022–23 rate hikes affect your city? (Impact on housing market, business investment, construction activity.)
  • Did your city receive significant fiscal stimulus (CARES Act, ARP, state/local aid)? How was it used?

Data sources

  • FRED — local/metro unemployment (search "[your metro] unemployment rate")
  • BLS — local area employment statistics (bls.gov/lau)
  • BEA — GDP by metropolitan area (bea.gov/data/gdp/gdp-metropolitan-area)
  • Your city's annual budget document (usually on the city government website)

Grading criteria

  • Correct identification of your city's economic structure
  • Accurate comparison of the 2008 and COVID recessions using local data
  • Application of the AS-AD and fiscal/monetary frameworks to your city
  • Real data, properly cited

Millbrook model

Review the Millbrook examples from Chapters 22–25 (GDP, inflation, unemployment, growth) and Chapters 30–32 (business cycle, AS-AD, fiscal policy) for the analytical framework.