When creating an outline for your macroeconomic model, the first thing you should do is to identify the macroeconomic indicators that you will use. This means that you have to determine what these are. The five most common are interest rates, gross domestic product (GDP), unemployment rate, inflation and durable goods orders. You can also consider gross value added, price level index, balance of trade, international trade flows and other such macroeconomic indicators. The idea here is that all these things are essential to determine the health of a country's economy.
After you have all these macroeconomic indicators in hand, then the next step in your outline assignment is to create a grading rubric to compare the performances of the indicators in the past week. What is important here is that you have differentiated the indicators based on their values. This will make it easier for you to compare the performances of the indicators. Most often, a simple grading rubric will be sufficient. However, if you find it difficult to come up with your own grading rubric, then you may consider creating one based on the following criteria:
Your outline assignments will most likely not be accepted by the Journal of Economic Analysis since there has to be some rigorousness when it comes to evaluating the performance of the macroeconomic indicators. You will not be given much time to discuss your model in this case. However, when you grade your model according to this week's grading rubric, then you will have something concrete to work with. You can then start giving more weight to the items that you believe contribute most to the health of the economy.
You may also want to use the week 8 grading rubric as a guide when assigning probabilities. The concept here is to assign a certain value to all the macroeconomic indicators that you have used in your analysis. This way, you will know what kind of probability you should assign each indicator. If for instance, your analysis gave you the week's average of the unemployment rate, then you might want to assign a higher probability to the worst recession since it seems like the worse the economic situation is going, the higher the unemployment rate tends to be. On the other hand, if you are still in the early stages of your analysis and you notice a relatively high correlation between various macroeconomic indicators, then it would probably be best to leave it out.
Your assignment descriptions should at least mention the importance of certain macroeconomic indicators. These should also give you the signal as to how much emphasis you should give to the indicator you have chosen. This can actually be the most important part of your model, since it will tell you the importance of another indicator. For example, if the unemployment rate is the main index that you are looking at, then you should definitely pay attention to the employment rate. The description of the . . . . . . indicator should also indicate whether or not the data come from all or only a selected range of the macroeconomic indicators that you have chosen.
Make sure that you understand how the macroeconomic indicators are derived. How do you arrive at them? You must carefully examine the historical performances of the economies of different countries. There should be some kind of consistency in these performances. You also have to check on the quality of the indicators that you use. As such, don't settle for the first thing that looks good in your tables; you should rather spend time looking into all the available indicators to ensure that you get the right picture about the economy.