SN	PS1/40	PS1EXCred/10	PS2/30	PS2EXCred/10
803553	34	10	27	6
333832	30	0	26	6
520993	39	0	32	2
436208	37	0	25	4
441511	32	4	28	0
426857	36	6	29	0
444081	30	6	27	4
345725	30	6	27	4
820571	31	2	28	8
814881	36	2	25	4
433934	34	6	25	0
355259	32	6	25	0
434566	30	2	25	0
439576	34	0	25	0
803464	36	10	32	0
810908	30	4	25	4
9909737	34	0	28	4
451967	36	0	24	4
365459	34	0	25	0
105821	38	6	30	2
819638	32	0
451223	36	4	26	0
435023	36	0	24	2
446386	34	0	20	3
22985	28	4	26	6
825824	28	0	27	4
439886	28	4	26	4
819794	28	4	26	4
433349	34	10	30	0
529559	39	10	28	4
817562	30	4	22	6
442372	36	0	24	4
445797	28	4	28	6
446033	32	2	27	0
442097	30	0	28	4
451134	32	0	26	6
821837	36	6	20	2
821446	30	8	25	6
374672	34	8	24	0

SN	PS1	PS1Ex.Cred.
803553	34	10
333832	26	0
520993	39	0
436208	37	0
441511	28	4
426857	36	6
444081	26	6
345725	26	6
820571	31	2
814881	32	2
433934	34	6
355259	28	6
434566	26	2
439576	30	0
803464	36	10
810908	26	4
9909737	32	0
451967	32	0
365459	30	0
105821	38	6
819638	32	0
451223	32	4
435023	36	0
446386	30	0
22985	24	4
825824	24	0
439886	24	4
819794	24	4
433349	30	10
529559	39	10
817562	26	4
442372	32	0
445797	24	4
446033	28	2
442097	26	0
451134	28	0
821837	32	6
821446	30	8
374672	34	8

The IMF released it’s World Economic Outlook report, which has some interesting things to say about the international economic situation. Pay particular attention to page 105, where they contrast today’s economic outlook with the Great Depression. This report resonates well with the recent work of O’Rourke and Eichengreen, too.  

She asked me:

What does the economy do?

In your opinion, what does the economy do? Answers either by email or in the comments.

Typo: For question 2, equation (2) has all + signs, the i on the deposit side of the eqn should be negative. Cheers for spotting the typo!

Readings & Helpful Papers

Bernanke & Blinder, 1988

Drazen & Helpman, 1988 (updated with the right link, thanks to Desi & Conor, here’s a (.pdf)

Kinsella’s Notes from Nell, 1992. Scan of Nell, 1992.

Measures of the Money Supply [1], [2], [3]

Here’s the sample exam, and here’s a good reading for Question 3.

[Update: Ze Links, Zey Live!]

A 3 slide handout is here, and the slides are below

Readings:

Keynes, General Theory, Chapters 11 and 12

And here is the presentation Wealth Effects, Government Budget Constraints, and Ben Bernanke – EC6012 Lecture 8

The main papers you should read are here and here.

“One of the reasons this is so outrageous is that the promise of such bonuses was in fact one of the very factors that caused our current problems, creating incentives for managers of AIG to get out of solid insurance underwriting and into hedge fund gambling. If anyone had supposed that AIG had “learned its lesson”, this report seemed to dash that hope against the wall like a plate of china.”
On a slightly lighter note, here’s MIT’s Ricardo Caballero on more constructive solutions to the crisis.

Here are the lecture notes:EC6012_2009_MD.pdf  EC6012 Lecture 7 – Models of Money Demand , and here are the slides: EC6012 Lecture 7 – Models of Money Demand

• First, the deadline is now next Friday, 13th of March, at the same time as before.

• Second, question 2, on the Goodwin model, will be an extra credit question, where marks gained in the question go towards any marks one might lose in the final exam. Thus if a student has worked hard on the problem, I will still reward that work.

Some students are finding this module hard. That is a good thing. The module will remain as hard, if not harder, in the coming weeks. International Monetary Economics is a technical subject. Mastery of this subject to a postgraduate requires a technical facility, which I expect each student to demonstrate over the course of the module if they wish to see a good grade at the end of it.

I’m very much looking forward to the rest of the course, and I’ll see everybody on Monday, where I’ll answer more questions if students have them.

There are two schools of thought on how to get credit flowing again. One suggests buying the toxic assets, the other says to recapitalise banks. This column says that both approaches are necessary, though the right balance will vary across nations. The real difficulty is aligning incentives – in both pricing assets and recapitalising banks, bank managers’ interests may thwart governments’ objectives.

Buying assets, recapitalising banks, and getting incentives right

[Update, this link works now, I think. Thanks to Emer for the comment.]

[Update, this link should work now, thanks Emer!]

Cool readings are:

Nell, E. The General Theory of Transformational Growth, CUP, 1998, chapter 13, especially.

Johnson, H. G. The Neo-Classical One-Sector Growth Model: A Geometrical Exposition and Extension to a
Monetary Economy, Economica, New Series, Vol. 33, No. 131 (Aug., 1966), pp. 265-287

Godley, W and Lavoie, M. Comprehensive accounting in simple open economy macroeconomics with endogenous sterilisation or flexible exchange rates, Journal of Post Keynesian Economics Vol 28/2, pp 277-312.

This problem set is worth 10% of your final mark. All questions carry equal marks, and the date for submission is Friday, March 6th, to the departmental office, KB 3-22a, by 4pm. Work in groups, but submit alone.

Email me if you’ve questions on the problem set. It is a mix of theoretical, data work, and applied policy analysis, exactly the stuff we want you to learn in this course.

Update: Some sensible emails suggest I help you prepare for these questions a bit more, in order that I not break the class , so here are some hints.

For question 1, read any introductory textbook, this and this.

For question 2, read the notes, and work through to the final equation with the term included, then just see what happens to things when goes up.

For question 3, plug values of 1, 2, 3, 4, etc, into and , and graph it. You’ll find interesting equilibrium values. Helpful notes on the maths are here, here, and here. I’m not looking for an algebraic solution though, just the graph will do.

For question 4, use your data skills from the trading floor and the notes from lecture 2.

For question 5, read the paper, tell me what you think.

I’ll be on hand by email at any time to answer questions about the problem sets. Promise.

ec6012_2009_PS1.pdf

Fine Gael has put forward a very positive proposal regarding the banking crisis; and once teased out (and implemented) could see us jump free of this particular crisis and back on the road to economic activity (one crisis down, 99 to go).

The Recession Diaries