Define link between volatility and growth

Assignment Help Microeconomics

Reference no: EM131834659

Question: Nobel Laureate Amartya Sen has pointed out that one way to prevent starvation during droughts in the poorest countries is to just pay peasants to build roads, sewer lines, and other public goods during these droughts. In the poorest countries, these peasants have no savings accounts, and almost no way to borrow money. In rich countries by contrast, most people have savings accounts and credit cards.

a. Is the poor-country "multiplier" probably bigger or smaller than the rich-country multiplier, based on these facts?

b. All countries get hit by shocks, but not all countries have the same automatic stabilizers. Based on these facts, which countries probably have smoother GDP growth: poor countries or rich countries? (Note: The answer that is true in theory is also true in practice, a point emphasized in a 1995 paper in the American Economic Review by Garey and Valerie Ramey, "Cross-Country Evidence on the Link between Volatility and Growth."

Reference no: EM131834659

Questions Cloud

What was the companys total cash flow from financing : What was the company's total cash flow from financing activities? If a net cash outflow, be certain to place a negative sign in front of your answer.

Test the hypothesis : Test the hypothesis that the 25 values in Table 9.25 form a random sample from a uniform distribution on the interval (0, 1).

How will the average bank behavior change : How will the average bank's behavior change as a result of this tax cut, taking your response to part a into account?

Identify premises listed under either the pro or con section : From the Procon Website, identify three premises (reasons) listed under either the Pro or Con section - whichever section opposesyour position.

Define link between volatility and growth : All countries get hit by shocks, but not all countries have the same automatic stabilizers. Based on these facts, which countries probably have smoother GDP.

Investigate the randomness of the table of random : Investigate the "randomness" of the table of random digits given at the end of this book by regarding the 200 digits in the first five rows of the table

Carrying out a x2 test of goodness-of-fit : Investigate whether the simple genetic principle is correct by carrying out a X2 test of goodness-of-fit.

Explain the definition of GDP : If the U.S. government wanted to, it could just say that everyone who is unemployed is "employed in the job search" and receiving a paycheck.

Old process by carrying out a x2 test of goodness-of-fit : Investigate the hypothesis that the breakage rate for the new process is the same as the rate for the old process by carrying out a X2 test of goodness-of-fit.

User Account

All Pages