Spring 2016Economics 115B: Macroeconomic DevelopmentWing Thye Woo, XXXXXXXXXX Liu, XXXXXXXXXX Lovell, XXXXXXXXXX No. 3Due by 12 noon of Monday, May 9, 2016 in Tao Liu’s mail box in the Economic...

Spring 2016Economics 115B: Macroeconomic DevelopmentWing Thye Woo, [email protected] Liu, [email protected] Lovell, [email protected] No. 3Due by 12 noon of Monday, May 9, 2016 in Tao Liu’s mail box in the Economic DepartmentQuestions 1: The information on four countries’ trade policy is given in the following• Country A: tax for importable is 10%, and subsidy for exportable 15%• Country B: tax for importable is 10%, and subsidy for exportable 10%• Country C: tax for importable is 15%, and subsidy for exportable 10%• Country D: tax for importable is 0, and subsidy for exportable also 01.1) Which country has Import-Substitution Industrialization (ISI) policy?1.2) Which country has Export-Promoting Industrialization (EPI) policy?1.3) Which country has free trade policy?1.4) From the empirical evidence of Latin America and East Asia, which country has betterprospect of economic growth?Question 2: Read Chapter 5 to 9 in The age of sustainable development by Jeffrey Sachs and answer thefollowing question.• In Chapter 5, what are the forces that result in widening inequality in US and many emergingeconomies?• From Chapter 9, list ten recommended steps to Health for All in the poorest countriesQuestion 3: Explain about the reform cycles in USSR.Question 4: Read Jeffrey Sachs’ and Wing Thye Woo’s “Structural factors in the economic reforms ofChina, Eastern Europe, and the Former Soviet Union”, and answer the following questions:a. While Chinese gradual reform was successful, the gradual reform in EEFSU failed although itwas similar to the reform in China. Explain the reasons why the economic reform in EEFSUfailed in terms of the structural point of view.b. What is the mechanism by which the government subsidy slowed down the economic reform inEEFSU?Question 5: Read Wing Thye Woo’s “The Art of Reforming Centrally Planned Economics: ComparingChina, Poland, and Russia”, and answer the following questions:a. List three lessons which are in support of the conclusion that the Chinese case proves thatgradualism is better than a big bang, and discuss briefly the validity for each lesson.b. Jan Winiecki (1991) claimed that in the early stages of transition to a market economy, the fall inoutput has no impact on the welfare of the population. Give three reasons for this claim.