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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: 300

Mr D Fryer DURATION 3 hours

ANSWER QUESTION 1 AND ANY OTHER TWO QUESTIONS. EACH

QUESTIONS IS WORTH 100 MARKS UNLESS OTHERWISE STATED

Question 1(answera, 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 2Focussing your argument on the so-called monetarist counter-revolution and the

financialisation that occurred at the end of the 20th

Century, explain the similarities andmajor differences between Arrighis (2003) and Brenners (2004; 2002; 1998)assessments of global capitalism.

Question 3a) 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 economyexperiencing aggregate demand unemployment might notadjust back to the full

employment level (35 marks).

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ECO 403

Question 4

Referring to the growth histories of the United Kingdom, Germany, and the USA,

critically examine Crafts (1998) concept of endogenisation.

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

Explain Wade and Venerosos point aboutfinancial 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 6Referring inter alia to Mishkin (1999) and (OHara, 2003) assess the similarities and

differencesbetween 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 thefinancial 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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