ECO 403

RHODES UNIVERSITY DEPARTMENT OF ECONOMICS AND ECONOMIC HISTORY EXAMINATION: JANUARY/FEBRUARY 2009 (Special paper) ECONOMICS 403 (MACROECONOMICS HONOURS) Examiners: Professor M Holden MARKS: Mr D Fryer DURATION 300 3 hours

ANSWER QUESTION 1 AND ANY OTHER TWO QUESTIONS. EACH QUESTIONS IS WORTH 100 MARKS UNLESS OTHERWISE STATED Question 1
(answer a, b, and c) a) Briefly explain Murphys (2009: 157) observation that [t]he central flaw in the [Bretton Woods] system was visible almost immediately (30 marks). b) Assess the claim that new classical economics merely reasserted old doctrines (35 marks). c) Explain, using appropriate equations, the convergence prediction of neoclassical growth theory (35 marks).

Question 2
Focussing your argument on the so-called monetarist counter-revolution and the financialisation that occurred at the end of the 20th Century, explain the similarities and major differences between Arrighis (2003) and Brenners (2004; 2002; 1998) assessments of global capitalism.

Question 3
a) Use an ISLM framework to explain Keynes argument that Says law and Walrasian adjustment are only valid in the classical special case (65 marks) b) Building on your answer from (a) explain how a flexible-wage economy experiencing aggregate demand unemployment might not adjust back to the full employment level (35 marks).

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Question 4
Referring to the growth histories of the United Kingdom, Germany, and the USA, critically examine Crafts (1998) concept of endogenisation.

Question 5
We agree with this line of argument [i.e. Keynesian criticisms of IMF policy during the East Asia crisis], as far as it goes. We go further, however, arguing that the long-term damage to Asian economies of the IMFs prescriptions is likely to be even greater than the critics have recognized. The reason has to do with a neglected dimension of the crisisthe financial structure of East and Southeast Asian economies, that differs from the kind of case the IMF usually deals with (Wade and Veneroso, 1997: 5).

Explain Wade and Venerosos point about financial structure and extend it to the broader question of development by referring to Huangs (2002) concepts of coordination failure I and coordination failure II.

Question 6
Referring inter alia to Mishkin (1999) and (OHara, 2003) assess the similarities and differences between new Keynesian and regulationist approaches.

Question 7
Either 7.1 Discuss Aokis (2001) assessment of the similarities and differences between Keynes and Marx. Or 7.2 [N]o account of contemporary capitalist development can ignore the scale of the financial sectors recent expansion (Blackburn, 2006: 39). Discuss, referring to what Blackburn calls vulture capitalists, grey capitalism and the multi-tentacled investment banks. .

END OF THE EXAMINATION PAPER

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