Thursday, February 13, 2014
The micro consequences of macro shocks
Today we will discuss in my Macroeconomic class for MA students, the impact of shocks in an open economy and the options in terms of fiscal and monetary policy. One thing that is particularly important but that we don´t always highlight enough is the micro implications of shocks like crisis in the balance of payments or large recessions. Who suffers from them? How do people respond? A series of articles from the Washington Post in 1998 constitute a great illustration of some of these impacts. See, in particular, this one on the middle class. Of course, the crisis ended up being less difficult than initially expected... but this is only because the East Asian economies have always proved very resilient.