You will find below the list of topics that you will include in your coursework. Please select only TWO topics. If you analyse more than two, you will be marked for the first two topics.
1. Economic Growth: Consider a general Solow economy and explain the balanced growth path. How can you use the Solow’s model to explain the growth potentials for your selected country? Critically discuss the role of technology, labour force growth, capital accumulation and savings in the catching up process for your selected country. Explain the limitations of the model. What are the conditions, according to the Solow model, for convergence of the growth rates in your selected country with respect to the EU? Is the country on the path of convergence or divergence? Discuss. (Macroeconomic variables of interest may include economic growth, technological progress, population growth, savings, capital accumulation, investment)
2. Financial markets: How does the Efficient Market Hypothesis explain the behaviour of investors and the fluctuations of asset prices? Critically discuss the validity of EMH and its approach to explain the causes asset price bubbles? What are the likely consequences of asset price booms and busts? Investigate whether there are any asset price bubbles in financial markets in your selected country for the selected period. To what level the financial markets are efficient in your country? What kind of monetary and fiscal policies are implemented for the selected period and what are the impacts on its financial markets. (Macroeconomic variables of interest may include short and long run interest rates, bond yields, housing prices, money supply, budget deficit)
3. Role of expectations. How does the theory of rational expectations relate future economic outcomes to the behaviour consumers and investors? Critically discuss the consumption and investment behaviours for your selected country. How does the monetary policy affect expectations about future inflation and future interest rates? Give some examples from your selected country. What is the role of fiscal policy on expectations about future interest rate and future expected income? Does the IS-LM model useful in explaining movements in interest rates and income? Give some examples from your selected country. What are the limitations? Discuss. (Macroeconomic variables of interest may include consumption, investment, interest rate, inflation rate, budget deficit and money supply)
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