Reference no: EM131034304

Problem Set I

Problem 1-

Mishkin and Rogoff both have ideas about the costs and benefits of financial globalization. Furthermore, you may be able to make some inferences about what Kling would think of financial globalization. Given that, consider the following Problems:

• Why, according to the authors, might an international institution succeed when domestic institutions cannot?

• What would an international institution do in a crisis?

• What benefits would an international institution provide to the global financial community?

• What are the disadvantages of creating a strong international financial institution to help with financial crises?

Read Mishkin's article about global financial instability.

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.13.4.3

Read Rogoff's article about global financial instability.

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.13.4.21

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.13.4.21

Arnold kings

https://mercatus.org/publication/not-what-they-had-mind-history-policies-produced-financial-crisis-2008

Problem 2-

Munger discussed the nature of the firm, while Kling discussed the nature of progress. First, carefully discuss Munger's view on why firms exist. Then discuss Kling's view on progress.

Then discuss how these two fit together. How, in other words, have firms been able to keep up with progress? (In other words, how has managing a firm (especially it personnel) changed in the last 100 years.)
Economics and Entrepreneurship (also great for MBA students)

https://www.econtalk.org/archives/2009/12/kling_on_prospe.html

https://www.econtalk.org/archives/2008/01/munger_on_the_n.html

Problem 3-

Tyler Cowen and Joel Mokyr take (at least in some ways) different views of the future of the economy.

What is Cowen's hypothesis in the Great Stagnation? What evidence does he cite that supports his claim?

What is Mokyr's hypothesis about the medium term future of the US economy? What evidence does he cite that supports his claim?

What are the main similarities and differences in Cowen and Mokyr?

The future of the US economy:

https://www.econtalk.org/archives/2013/11/joel_mokyr_on_g.html

https://www.econtalk.org/archives/2011/02/cowen_on_the_gr.html

Problem 4-

Consider the podcasts about the Oregon Medicaid experiment. What are the weaknesses of empirical research in social sciences? Now, reaching a bit beyond the topic of the podcasts, why is applied research so risky for society when applied to government programs but not so risky when used by private businesses? (This is a tough Problem, but I don't think it is a rhetorical one: there really is an (are) answer(s).

Healthcare and the role of empirical research on policy:

https://www.econtalk.org/archives/2013/05/jim_manzi_on_th.html

https://www.econtalk.org/archives/2013/05/frakt_on_medica.html

Problem 5-

Consider Google, Yahoo, Frito Lay, etc. Using those companies (and the podcasts) as examples, explain how cost structure influences industry structure AND explain how consumer demand influences the behavior of companies.

PROBLEM SET II: Answer the two problems of following three problems.

Problem 1-

Both Lucas and Taylor believe that monetary stimulus can influence the real economy in the short run. However, they explain the way that money achieves this in very different ways. What is similar and different about Lucas and Taylor's transmission mechanism?

Read John Taylor's article about monetary transmission mechanisms.

https://web.econ.unito.it/bagliano/ecmon_readings/taylor_jep95.pdf

Also, to understand traditional monetary policy, listen to this:

https://www.econtalk.org/archives/2008/08/john_taylor_on.html

Read Lucas' Noble lecture on monetary neutrality.

https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1995/lucas-lecture.pdf

Problem 2-

What, in your opinion, do you think Kling's main point was in his essay "Not What They Had in Mind?"

What evidence does he present that supports his main point?

Kling's most basic policy suggestion is that we should have policies that support more equity finance as opposed to more debt finance. Why does he think that? What policies can you envision that would support that policy goal.

Read Arnold Kling's history of the policies that created the great recession

https://mercatus.org/publication/not-what-they-had-mind-history-policies-produced-financial-crisis-2008

Problem 3-

Mishkin gives a good explanation of what banks do. So, what do banks do? (Bank=financial system.) What happens when banks can't do what they do? In your answer, be sure to discuss asymmetric information.

Read Mishkin's article about global financial instability.

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.13.4.3