Debt Crisis

Two seemingly disparate cases, Nigeria and Brazil, have experienced similar macroeconomic trends over the past 10 years. This might suggest the two countries have more in common that might be apparent at first.
1- Explain how both countries might be looked at as similar in terms of their role and status in the world economy.
2- Explain what their macroeconomic trends have been in the last 10 years with respect to external balance, fiscal balance, inflation and unemployment.
3-What critical factor explains their recent performance over the past year?
4-Given the above, does explaining their recent performance by a lack of fiscal and monetary discipline make sense? Explain.
5-Based on your analysis in this question, discuss the appropriateness of a standard IMF stabilization policy for these countries.
Part II: Answer two of the following three questions. All questions are equally weighted. You should be able to answer these questions in approximately 750 words each.
1. Explain the origins and development of the Debt Crisis of the late 1970’s and early 1980’s. To what degree were the problems a consequence of bad borrowing, bad lending and exogenous shocks? How was the crisis “resolved” and what role was played by International Institutions such as the IMF? How would it have been possible for debt to have played a positive role in economic development? What has been the long term consequence of the debt crisis?

2. Explain the difference between poverty and income inequality. To what extent is poverty culturally relative? How is absolute poverty currently defined? Does it succeed in providing a culturally invariant measure of poverty? Explain. Will economic growth be sufficient to eliminate poverty? Explain.

3. Explain what a “common resource” is and why neo-liberal economists generally view common resources as inefficient. How does this view shape policy towards water in the developing world? Is privatization of water necessarily the best way to manage growing shortages of water? Explain.

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