We also saw that those sectors as in fact interconnected, as imbalances in the fiscal sector (a large fiscal deficit), in the banking sector (reckless lending) or in the external sector (over-borrowing from abroad) may ultimately impact the real economy (economic crisis spike in unemployment...). Please focus on a given sector - or sub-sector - and explore its links with the other sectors. I provide below an example for GDP and you may choose any other sectors.

• Sectors&subsectors
  • Unemployment
  • Aging & population
  • Long-term growth
  • External sector
  • Fiscal sector
  • Monetary sector
  • Financial sector

Sample write-up for Part II : "The role of GDP in a Stylized Macroeconomic Framework"

Gross Domestic Product (GDP), the basic measure of a country's output, is a convenient entry point to study the linkages between the real sector and the rest of the economy. The national account identity of GDP by expenditure allows to explore the role of each institutional sector. Instead of the traditional identity (GDP as the sum of consumption, investment, and net exports), I classify below expenditures by whether they are more stable or more volatile. 5 Consumption tends to be the largest and the least volatile of the components of GDP. Private consumption depends on households income, itself affected positively by wage earnings of households and negatively by the unemployment rate. Household disposable income is a measure of household income with wage earnings increased by social security transfers but decreased by social contributions and taxes paid to the government. In normal times, government consumption also tends to be fairly stable, as it relates to basic political and economic functions of the state (e.g. justice and police, 10 education, social security). By contrast, both investment and foreign trade are much more volatile as they are related to financial variables. Household and corporate investment depends on the anticipations about future economic prospects and on the availability of financing, itself reflected in the interest rate. As it is easier to postpone an investment decision than to cut on consumption during a financial crisis, the volatility of investment is much larger. In the same way, foreign trade is 15 influenced by a key financial variable, the exchange rate, as well as by the availability of foreign financing in the case of a current account deficit. While it is difficult to reduce some essential imports (such as oil for an oil-importing countries), a small change in the exchange rate may lead one country to loose an export market to the benefit of another competitor. Being at the center of the economic framework linking different sectors, GDP is a key indicator allowing to quickly grasp the structure of a given economy. It is also essential to derive GDP growth, to scale a number of fundamental 20 variables, and to compute GDP per capita, allowing meaningful cross-country comparisons.