NVCC

Macroeconomics FALL 2008

Proposed List Of Research Projects In International

Macroeconomics
Please note that these listed economic issues /challenges as well as the related study
questions are non exhaustive. As a group you need to select one macroeconomic issue
either from this list or any other macroeconomic issue that interests you. I have also given
a few study questions to assist you to critically think about the issues. The study
questions (the bulleted text) should only be used as helpful reference points for your
further research on the economic subject of your interest.

A. Economic Management Related Issues

The Great Depression: Causes and Impact

Economists' fascination with the description and interpretation of the severity and
duration of the Great Depression has not flagged in over seven decades since its onset.
What began as an investigation centering on the U.S. Depression experience has
broadened in recent years to cover the experience of countries around the world.

• What were the causes of the Great Depression, what were the mistakes, how did
we get out of it?
• What are the lessons learnt for countries around the globe?
• What would you do, today, in the U.S. (to get out of the recession)?

The Reagan Plan

In 1981, Ronald Reagan confronted a set of economic problems that seem intractable.
The case study would be an analysis of Reagan's program, and especially the assumptions
that underlie his policy measures.

• Evaluate the situation facing Reagan in 1981.

• How does fiscal and monetary policy work?
• How was Reagan's strategy supposed to work in theory?
• Did it successfully address the causes of the U.S. economic problems?
• What assumptions (economic, social, political and international) did the President
make in his policy? Are they still valid?

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B. Alternative Economic Development Growth Strategies

Japan

For more than 50 years, Japan had one of the most impressive performances in the world.
This case study sould highlight how Japan achieved the high rates of growth.

• What was the strategy Japan followed?

• What failed them?
• What are lessons learnt for other countries? Is the economic strategy still feasible
today?

Singapore

For more than 25 years, Singapore has achieved virtually unprecedented levels of real
economic growth. In the early 1990's, however, the island nation faced apparent
diminishing returns to its previous strategy, with new competitive pressures, changing
social issues, and new leadership.
• How do you explain Singapore's performance since 1965?
• Why has GDP growth been faster than most developing countries?
• What is the role of saving and investment is Singapore's development?
• How has productivity growth been attained and how has it contributed to the
economy?
• Should the Singaporean government be changing its strategy?

Chile: The Latin American Tiger?

Is Chile clearly in the wrong continent? But it wasn't like the current situation 20 years
ago. What are the sources of Chile's incredible performance?

• What was Chile's strategy for growth? Why it has stopped?

• What can Chile do next?
• Would a free trade agreement with the U.S. help?
• What are the lessons learnt for other economies?

C. Emerging Market Crises

The 1994-95 Mexican Peso Crisis

By the late 1980's the policies of de la Madrid and Salinas were widely regarded as
showcases of stabilization and reform. However, by the end of Salinas' term, Rudiger
Dornbusch tells the Mexican government that the Peso must be devalued. A devaluation
at the end of 1994 results in chaos.

• Was the peso overvalued in 1994? Why or why not?

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 • What caused the exchange rate crisis of 1995?
• Was the United States right in lending to Mexico during the crisis?
• What are the lessons learnt from this crisis?

Menem and the Populist Tradition in Argentina

Don't cry for me Argentina.; The peso... really sucks; The unemployment,
the fiscal problems; Presidents failing; Now we're submerging….
(Can you hear the music on the background?)

• What caused the Argentinean problems?

• What can be done?
• Was the currency board a good option?
• What about dollarization?

The Asian Crises

By the end of 1997, it was clear that the Asian tigers had done something wrong? Well
before the crises several economists predicted that, but were their timing clearly wrong?
A lot has been said using the obvious wisdom, but really little has been fully understood.
• What were the reasons behind the financial crises? Self-fulfilling or
Fundamentals?
• What can be learned from them?
• What is the role of the IMF and the WB?

D. Economic Issues related to the Transition Economies

China: Facing the 21st Century

China is without doubt currently the most dynamic force in Asia; it may be the most
dynamic force in the world. Moreover, if China continues along its present trajectory, its
growth will inevitably change the face of Asia. How did China do this? Where is China
heading? What is happening in China? How did China do this?

• What are the problems facing Zhu in 1993? What were his options?
• What is the impact of China's growth on other Asian countries?
• What are the critical next steps for China in terms of its currency? What are
their problems?

India: Facing the 21st Century

Some say we need to talk about “Chindia” as the new dynamic growth economy. India
alone has shown growth of over 9 percent and is one of the fastest growing nations in
Asia.

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 • What are India’s economic strengths and challenges? How did India achieve its
growth? Where is India heading with regards to China?
• What is the impact of India's growth on other Asian countries?

E. Trade Issues and the Debate on Globalization

Is it always true that:

Poor countries are exploited by the powerful-evil-driven multinationals.

Poor countries are exploited by the powerful-evil-driven IMF and WB.
Poor countries are exploited by the powerful-evil-driven environmentalists.

• Are Rich countries being exploited too?

• Are the workers in U.S. hurt by foreign cheap labor? Why is this the case?
• Should we do something about it? What are the choices?

F. Challenges of the Developed Economies

Unemployment in France

Whereas unemployment in France was very low before 1975, it has been extremely high
since 1985. The government's response to this high level of unemployment is widely
regarded as the principle issue. Why is double-digit unemployment of such great concern
in France?

• What are the primary causes of French unemployment?

• What are the Government’s best options for dealing with the problem?
• What are the prospects in Europe?

Japan: Free, Fair and Global?

The Japan of the 1980's differs dramatically from the "developmental state" it was earlier.
The new Japan is a rich country with unprecedented current account surpluses, and a very
high level of GDP per capita. However, GDP growth rates have declined and some
observers feel that the economic strategy used by Japan is no longer appropriate.

• Are Japan's problems in the 1990's cyclical or structural? Is this permanent or

transitory?
• If they are cyclical, why does output stay so low for so long?
• How, if at all, should Japan change the role of government in its economy?
• What is the role of monetary and fiscal policies in this context?
• What can we do with Japan?
• Is Japan trying to become more like an emerging market everyday?