It is hard to overstate how important it is to find a good topic. It is crucial, essential, make or break. So spend time on it.
A good topic poses a specific question. If you cannot state your topic as a question, you are in trouble.
A good topic: “What fraction of cross-country income variation is due to human capital?”
A bad topic: “What are the effects of more schooling on a country’s outcomes?”
This is too broad (effects on what?).
This is too vague (how does the “more schooling” come about?).
A very bad topic: “I explore the implications of banking regulations in Europe.”
How to find a specific question? Start with a broad area that interests you. This should be narrower than a field (narrower than “monetary economics”, for example), but broader than a specific question (such as “What are the effects of Quantitative Easing on long-term bond yields?”). More like: “Unconventional monetary policy” or “College dropouts” or “the role of institutions for cross-country income differences”.
In order to narrow this down to a specific question, you need to read a lot.
Start with surveys (Journal of Economic Perspectives, Journal of Economic Literature, Handbooks in Economics). See writing a literature review for more help on finding references.
Don’t read papers in detail at this stage. You want to get the big picture.
You need to understand the literature before you can identify a topic.
You need to know what questions have been answered. What do experts agree and disagree on?
You need to understand appropriate methods and datasets.