Select a country from the World Penn Tables data (provided on Canvas) and use the Solow, Human Capital, and/or endogenous growth models to help explain what is observed in the data. Are the predictions of the model(s) in line with the observed evidence? Why or why not? What lessons can be learned for policy makers of similar economies?
Or:
The Shapiro-Stiglitz model suggests efficiency wages are paid to workers depending on the incentives for them to give effort on the job, however search and matching theory may provide alternative explanations that take into account the time taken to find a job, and that being in a good match has value to both sides.
Choose a specific country and comment on what is likely to happen to wages and unemployment in the long run as the result of COVID-19 (assuming this is increased remote working and a prolonged recession) by applying these theories of unemployment, taking into account the flexibility of the labour market of your country.
Part B: Short Run Application
The Bank of England’s (BofE) Monetary Policy Committee (MPC) have requested a report by an economist to help guide their future monetary policy.
“Given the uncertainty surrounding the suppression of COVID-19 through vaccination, the possibility of virus mutation, and the extent to which the supply side of the economy has been impacted, what are your recommendations for monetary policy, given the current state of the UK economy and your forecast for 2022-23?”
