DEVELOPING COUNTRIES

• What do we mean when we say a country is "developing"?
• Explain the "convergence" thesis.
• Why do developing countries tend to rely heavily on foreign lending?
• What can happen if foreign lenders begin to worry that the developing country will not be able to service its debt?
• Given output, a country can improve its current account by cutting investment and/or consumption. Are these strategies likely to improve the country’s ability to pay? Explain.
• What is a currency board? If a country that operates under this type of arrangement finds its economy in a deep recession, what kinds of policies options does it have? Explain.
• What is dollarization?
• What options to policymakers have under a system of dollarization?
• Why does Krugman favor dollarization over a currency board arrangement for countries that are too unstable to operate a flexible exchange rate system successfully?

 KREGEL

• What two institutional features did Minsky think would prevent "It" (i.e. another debt deflation) from occurring again?
• Were these two features present among the Asian economies?
• What does Kregel believe were the sources of the financial fragility that led to the Asian crisis? Explain carefully.
• What distinction does Kregel make between exogenous and endogenous factors?
• Which does he believe was responsible for the Asian crisis?
• How did the crisis turn into a debt deflation?
• What does Kregel think could have been done to prevent a massive debt crisis?
• How does Kregel argue that the IMF misread the source(s) of the crisis, and how did their recommendations make things worse?

GRABEL

• What is the "neoliberal" agenda
• List and explain the five kinds of risk associated with neoliberal financial integration
• Give examples of at least three kinds of "heterodox" financial policies that are designed to mitigate risks and prevent financial crises
• Would Davidson consider Grabel’s proposal(s) "plumbing" or "architectural" solutions? Explain.

DAVIDSON

• Explain the efficient market theory (EMT).
• What policy implications follow from the EMT?
• Explain the liquidity preference theory (LPT).
• What policy implications follow from the LPT?
• Which theory does Davidson argue conforms best to the facts? Explain.
• What is the ergodic axiom and how does it relate to the EMT?
• Compare the "plumbing" solutions with the "architectural" solutions? Which does Davidson favor? Why?

 TAYLOR

• How does the performance of the world’s largest, industrialized economies (G7) in the 1980s and 1990s compare with their performance in the 1960s?
• How does Taylor account for the differential performance? Explain carefully.
• Taylor discusses several (four) benefits of liberalization. List and discuss them.
• According to Taylor, the Lender of Last Resort function can lead to moral hazard. Carefully explain his argument.
• Taylor proposes the establishment of a World Financial Authority (WFA). Describe the structure and operational functions of this organization, as envisioned by Taylor.
• Would Davidson consider Taylor’s proposal a "plumbing" solution or an "architectural" one? Explain.