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EC2503 Resit Assessment 2021-22

Resit essay 1 (50%)

Derive fully the Mundell-Fleming model, assuming there is a flexible exchange rate, capital mobility is high but imperfect and an absence of inflation. Using this model, explain in detail the effect of a policy of monetary contraction. Explain whether your results are robust to these and other assumptions underlying the model.

(For detailed guidance, please refer to the rubric for - the very similar - essay 1 in the main diet in the course guide.)

Resit essay 2 (50%)

Derive in full the neoclassical growth model in effective labour terms and hence construct the Solow diagram. Prove that the long run per capita growth rate is equal to the rate of technological progress. Using the Solow diagram, explain the short run effect of a fall in the population growth rate. Explain what is meant by time-inconsistency and use an AD-AS diagram to show how political business cycles may thus be generated.

(For detailed guidance, please refer to the rubric for – the very similar - essay 2 in the main diet in the course guide.)