​​Message : research projects on Review of Fiscal and Monetary Policies, 1970-2014 ​​ ​Focus economy is China "Basic Macroeconomic Theory for Developing Countries" The Mundell-Fleming Open Economy Model •Required Readings: Bird, Graham (2007) An Introduction to International Macroeconomics (Houndmills, Basingstoke: Palgrave MacMillan), Chapter 2 (including Annex), pp. 7-34. 1. In the upper figure on page 27 of Bird (2007), an increase in I moves the IS curve to the right. However, in the lower figure on page 27, the IS curves moves to the right due to a decrease of S. Explain why this makes sense. 2. What does the basic IS-LM model assume about prices and what does this imply for the usefulness of the model? 3. How realistic is the Foreign Trade Multiplier in today's world economy? Balance of Payments (BP) Theory • Required Readings: Bird, Graham (2007) An Introduction to International Macroeconomics (Houndmills, Basingstoke: Palgrave MacMillan), Chapter 4, pp. 46-59. 1. Do you think it is realistic to assume that people will a) anticipate a future tax increase to cover a current fiscal deficit, and b) will therefore cut current expenditures? 2. Which one of the three approaches of the BP do you favor most and why? Theories of Exchange Rate Determination • Required Readings: Bird, Graham (2007) An Introduction to International Macroeconomics (Houndmills, Basingstoke: Palgrave MacMillan), Chapter 5, pp. 60-74. 1. Make a case for your most favorite explanation for why not even relative purchasing power parity (PPP) holds in the short run. 2. Assume that PPP holds in the long run, which of the eight assumptions for PPP to hold do you consider to be reasonable assumptions for long-run analysis? ​ disregard last message and follow this message please...China economy is country of subject: Fiscal and Monetary Policies in Developing Countries  Fiscal and Monetary Policies in the MF Model  • Required Readings: Bird, Graham (2007) An Introduction to International Macroeconomics (Houndmills, Basingstoke: Palgrave MacMillan):  ? Policy Analysis Within the IS-LM_BP Model: With Fixed Exchange Rates (pp. 108-113).  ? Policy Analysis Within the IS-LM_BP Model: With Flexible Exchange Rates (pp. 113-120).  Learning Objectives:  o The effectiveness of fiscal and monetary policies with fixed exchange rates.  o The effectiveness of fiscal and monetary policies with flexible exchange rates.  Discussion Questions:  1. What are the advantages of using the MF model to illustrate the implications of fiscal and monetary policies?  2. What are the main constraints of using the MF model to illustrate the implications of fiscal and monetary policies?  Fiscal Policies for Development  • Required Readings: Adam, Christopher S. and David L. Bevan (2001) "Fiscal Policy Design in Low-Income Countries", UNU/WIDER Discussion Paper No. 2001/67 (August); available at: http://economics.ouls.ox.ac.uk/13638/1/uuida34892c1-3663- 40e5-9b6a- 0537d3b39a3a-ATTACHMENT01.pdf  Learning Objectives:  o How fiscal policies have been used over the last 30 years.  o Why fiscal policies failed to provide long-term growth.  Discussion Questions:  1. What are the main reasons for the increased focus on fiscal policy since 2000?  2. Do you expect expansionary fiscal policy to be effective in the current macroeconomic environment?  3. How would you summarize the key points of Feldstein (2009) in three bullet points (max. 50 words)?  Monetary Policies for Development  • Required Readings: Pollin, Robert, Gerald Epstein and James Heintz (2008) "Pro-Growth Alternatives for Monetary and Financial Policies in Sub-Saharan Africa", Brasilia, Brazil: International Poverty Centre, Policy Research Brief No. 6 (January); available at:  http://www.ipc-undp.org/pub/IPCPolicyResearchBrief6.pdf  •Learning Objectives:  o The relationships between monetary policy, interest rates and inflation.  o Implications of inflation on current and capital account.  o Implications of high interest rates on capital flows and the exchange rate.  •Discussion Questions:  1. Does expansionary monetary policy cause inflation?  2. Despite the positive impact of high interest rates on capital flows, what is the key problem of high interest rates?  3. How would you summarize the key points of Huang and Wei (2006) in three bullet points (max. 50 words)?