Iyer/knight

Question 1

Development

Answer 1

GNP per capita and a decrease in poverty and inequality

Question 2

Budget deficit

Answer 2

Difference between income and spending over a period of time

Question 3

Debt

Answer 3

Total amount of money government owes at a point in time

Question 4

New liberal argument for reducing debtRelationship between debt and bond yields

Answer 4

Bond yields will rise and cause default

Interest rates will rise causing higher cost of financing so private investment will be reduced

Question 5

Keynes Argument for running deficit

Answer 5

Need to create full employment so higher tax receipt. Budget deficit rectify itself

Question 6

Moral hazard

Answer 6

Individuals have incentives to out of their behaviour when the risk that decision-making is formed by others

Question 7

Adverse selection

Answer 7

Occurs when buyers have better information than sellers and this can distort usual market process. it can lead to missing market as firms do not find it profitable to sell the good. Eg a company selling life insurance will find out people at higher risk of death will be more willing to take out life insurance. If insurance company charges an average price but only high risk consumers buy, they will make a loss

Question 8

Legal origins (history of a means to enable the court to enforce contracts) Glaeser and Shleifer

Answer 8

State is the only inst that has military power to fight bullies

Question 9

Arguments to undermine civil law counties’ efficiency in protecting property rights

Answer 9

Procedure formalism Djankov et al
No judicial indi and constitutional review, eco and pol freedom
EG conséquence , especially financial development, additional evidence by Rajan and Zingales on stock market ratio. Neo- l outcomes. La Porta et al (also an empirical not categorical

Question 10

Take home message of legal institution

Answer 10

Empirically worse EG
But France demonstrates to be a success. Explanation; transplanted to bad political institutions

Legal origins important for growth but not when human K controlled

Question 11

corporatism

Answer 11

A tripartite relationship between gov business and TU. Government would invite business representatives To set important economic matters through formal negotiation and agreement with the government