alternative BoP theories

In relation to the alternative BoP theories, evaluate the policy options for EITHER (i) the European Union as a whole OR (ii) an individual eurozone country to resolve BoP disequilibria with the rest of the world.

This encompasses the first major section of the course and requires:
o understanding of the alternative policy options advanced by the alternative approaches
(i.e. Keynesian, Monetarist and Structuralist)
o to apply and evaluate these policy options with being EITHER the EU overall OR an
individual eurozone country in terms of how this would impact on the ability to use price
and/or income changes to adjust a BoP position with the rest of the world
&#61623; The key to a good answer is:
o to be able to differentiate which policies are available to EITHER the EU overall OR an
individual eurozone country
o to discuss and evaluate the policy options thematically (i.e. in terms of price and/or
income adjustment) rather than by one approach at a time
o to evaluate the relative desirability / optimality of the policy options for the BoP scenario
of your choice
&#61623; How to start to address the question:
1. You need to decide which BoP policies (e.g. expenditure changing, expenditure
switching, direct controls, control of money supply, investment etc.) are available to
EITHER the European Union OR an individual eurozone country
2. You will find that not all of the policy options are available for EITHER the European
Union OR an individual eurozone country
3. Once you have decided which policies are feasible for EITHER the European Union OR an
individual eurozone country, then you need to consider the optimality of the policy
options, i.e. which are likely to be the most efficient in resolving BoP disequilibria with
minimal negative externalities
4. You may wish to supplement the discussion with tables/graphs to show the BoP situation
for EITHER the European Union OR an individual eurozone country
5. If you choose to discuss the individual eurozone country option, then this can be kept at
a general level of a ?eurozone country?, or you could pick one specific country and focus
the ?applied? discussion around its particular circumstances. However, remember the
question is not about the country per se, but how it can address BoP disequilibria with
the rest of the world.
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