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(20 percent) Provide two examples each of (a) coordination failures, (b) institu

by | Sep 30, 2021 | Economics | 0 comments

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(20 percent) Provide two examples each of (a) coordination failures, (b) institutions, and (c) multiple equilibrium. The examples should not be the ones mentioned in class.<
(20 percent) The Government of a poor country in Sub-Saharan Africa has just found oil in large quantities. The recently elected President has decided that her priority during her five-year term will be to eradicate poverty, currently standing at 50 percent. To do so, she is planning to give subsidies to families below the poverty line in order to lift them out of poverty. Five years later, at the end of her term, the households below the poverty line have decreased to 25 percent; she is wildly popular and wins easy re-election with 70 percent of the vote. Just after the elections the country faced an exogenous decrease in international prices of nearly 80 percent. Do you think her subsidy plan was a sensible development strategy? Why or why not<
(20 percent) Economists keep saying that the quality of institutions is important for economic growth, but when you look at countries all around you, it is unclear what economists mean by “quality of institutions”. China, a very corrupt country with an autocratic political system is among the fastest growing countries in the world. Isn’t this country growing in spite of its lousy institutions? Are economists wrong? Why?<
(20 percent) Think of an institutional arrangement where land property rights are not assigned to individuals, but to communities. In this arrangement, implicit and explicit rules are clearly established and everyone knows the rules, which are accepted by all. Assume that everything else is equal (wealth, education, household composition, the situation of the economy, etc). In relation to a system where property rights are assigned to individuals (or legally married couples), which system do you think is more conducive to faster economic development?<
How can you apply the Coase Theorem in a ‘real world’ setting in a developing country? Provide an example and analyze it in depth.<

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