economic questions

Project Description:

question 1
stephen cecchetti, economic adviser at the bank for international settlements (bis) and head of its monetary and economic development, writes:
turning to some facts, consider the relationship between the size of a country’s financial system and growth. we [economists] teach that, because it allocates scarce resources to their most efficient uses, one of the best ways to promote long-run growth is to promote financial development.
cecchetti goes on to state that this has not always been borne out empirically. what are facts you remember—either from his article or from other sources, including class lectures and discussions—that show that the financial system seemed to not always have allocated scarce resources to their most efficient uses and has not always promoted long-run growth? why hasn’t financial sector development always been appositive thing?


question 2
if a country has a major financial (banking) crisis, empirically, in the 20th and 21st centuries, what happens to its sovereign (government) debt? why?
pretend you are a financial decision-maker in a neighboring state (perhaps you are a high official at an fi or in the government) and have the opportunity to buy the debt (in the form of sovereign bonds) of the country that is in crisis. discuss why this might be attractive and also discuss the risks.

question 3
ignorance, writes:
subprime lending has no official start date, but three eventspaved the way for the industry’s formation. first, the depository institutions deregulation and money control act (didmca) of 1980 made the subprime business legal by allowing lenders to charge higher rates and fees to borrowers. second, the alternative mortgage transaction parity act (ampta) of 1982 allowed the use of variable interest rates (arms) and balloon payments. finally, the tax reform act (tra) of 1986 prohibited the deduction of interest for consumer loans but allowed it for mortgages on a primary residence, increasing the demand for mortgage debt. when deductibility was factored in, even high-cost mortgage debt was a better option than consumer debt.
beyond changes in the laws, however, bitner points to a change in financial technology as allowing the subprime industry to grow. he says
arguably, securitization could be the single greatest innovation to mortgage lending.
how did the securitization of subprime loans contribute to the financial crisis of 2007-2009? make sure in your answer that you explain briefly what securitization is.

question 4
jeffrey chwieroth argues that the imf exercises a significant amount of autonomy despite the influence of member states. discuss his argument. include in your discussion what he thinks the imf’s sources of influence are and how its influence is manifest.


question 5
the imf has become, among other things, a bail-out specialist and an innovator in structuring deals. discuss some of. both mark copelovitch in his book the international monetary fund in the global economy: banks, bonds and bailouts and the assigned imf publication on the mexican bail-out, “the mexican crisis: no mountain too high?” discuss these innovations.
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Price Type: Fixed

Project Budget: $20 to $50
Completed
Total Proposals: 1
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