Economic lecture by Dr. Kim from Usyd (1 Viewer)

[Andii92]

Okay, so today at Usyd, Dr. Kim was lecturing about balance and payments and the relationships between capital account and current account and etc etc.

Anyways, I've got a question based on today's lecture that I couldn't figure out so help out please! =)


You know how Dr. Kim said that macroeconomic policy, such as fiscal and monetary policy only temporary relieves the current account deficit and that the only way to truly combat a CAD is by undergoing structural reforms, i.e. microeconomic policy. Then, why did he contradict himself when he said Greece is in major complications as it uses the Euro currency and that it cannot perform monetary policy (to increase savings, and inflation) because only the Euro Bank controls this. According to Dr. Kim, I thought macroeconomic policies only relieve the “temporary” problems caused by current account deficit. Why doesn’t the Greece government just implement structural reforms, as said by him, to combat the large public debt that Greece owes?

Please explain and thanks in advance.

 

[b00m]

Why doesn’t the Greece government just implement structural reforms, as said by him, to combat the large public debt that Greece owes?

Please explain and thanks in advance.

I didn't go.. but structural reforms aren't all that simple. Taking a long amount of time to implement, take effect etc

It's not all that simple.. with other complications which i dno, as i cbf following the situation in greece

hence, disregard my opinion lol

 

[bouncing]

Well, I think its just the fact that you cannot hope to implement a structural reform and see the changes instantaneously as b00m said. The structural changes that were undertaken in Australia have benefits only arising recently.

I guess what Dr. Kim meant was that the macroeconmic policies are used to help "mask" or "reduce" the negative effects of the CAD.

 

[babysnow]

yeah i agree with what b00m and bouncing said as well with the lengthy process of structural reform. but greece is also confronted with high debt levels which have very high risk premiums. in such a situation they could hit a refinancing crisis if market and consumer confidence is not restored asap.

and i suppose all the rescue packages initiated by the IMF and EU fund would be subjected to stringent conditions? which would complicate the long term process...

just some things i picked up reading articles and what not

 

[Deathless]

Yes.

Structural reforms take a long time, often even up to a decade or more.

Macro and micro have less of an implementation and impact lag

 

[babysnow]

Yes.

Structural reforms take a long time, often even up to a decade or more.

Macro and micro have less of an implementation and impact lag

micro IS structural reform.... unless you're talking about something else?

 

[meilz92]

Don't do it guys

 

[assiduous]

Don't do it guys

Hey, i was at this lecture.
I was the tall white girl who didn't stop giggling through his lecture, sorry to those who had to put up with me.
Well, structural reforms don't have an instantaneous effect on the economy. Also, he mentioned if Greece were to change their currency system from the Euro and adopt their own form of currency then, market confidence would decrease and therefore Greece are in a catch-22 sort of a situation.

Anyone else, who went to the lecture care to expand or discuss what was said?
Just reply here or PM for my email.