Essay questions

These are essay questions that you should be prepared to answer on Test2 or on subsequent assignments.

1. Describe the Latin American debt crisis. What were the background factors that made the countries vulnerable to a crisis? What triggered the crisis? Why was the crisis so damaging to the countries affected?

2. What are the policy lessons of the Latin American Debt Crisis? What are the lessons for the LA countries themselves? What could they have done to avoid the crisis, or to make it less damaging to their economies? What are the policy lessons for the IMF and the rich-country governments?

3. Describe the Asian financial crisis. What were the background factors that made the countries vulnerable to a crisis? What triggered the crisis?  Why did the economies suffer recessions?

4. What are the policy lessons of the Asian financial crisis? What are the lessons for the emerging markets themselves? What could they have done to avoid the crisis, or to make it less damaging to their economies?  What are the lessons for the IMF and the rich-country governments?

5. Describe the subprime crisis. What were the background factors that made the crisis more likely? What triggered the crisis? Why did the economy suffer a recession?  Why was the recovery so slow?

6. What are the policy lessons for the United States of the subprime crisis? What could the Federal Reserve or other government agencies have done to avoid the crisis? What could the Federal Reserve or the Treasury have done to make the crisis less damaging to the economy?

7. What reforms have been enacted in the United States in the wake of the subprime crisis? Do you think these reforms will be effective in reducing the fragility of the financial system? Why might they not be effective?

8. In the context of the Bretton Woods system, what was the case for flexible exchange rates against the adjustable-peg system? What was the case against flexible exchange rates? You should take one side and make the best case you can.