Core Macroeconomics, Hilary Term 2012

Week 6: The open economy II

This week we use the medium term model of a small open economy you studied last week to analyse shocks and policy responses. C&S Ch. 11 elaborates further on the model, while Ch. 17 - which might likely be one focus for discussion in tutorial - offers some case studies, notably of the effects of German reunification on the ERM.

Readings

Carlin & Soskice Chapters 11, 17

Assignment

Please write an essay on the following topic.

Compare and contrast how a loss of confidence among international lenders affected the economies of Thailand (1997) and Ireland (2007), and how policy makers responded. You should make explicit use of the medium term model of a small open economy first, then address any further issues (if any) that you consider important but cannot be accommodated in that framework. You should present data on some relevant variables in support of your interpretation.