1. Explain the marginal productivity equalization test and discuss the role of the total factor productivity (the parameter A in the production function) to solve the seeming puzzle presented in the data. How big are these productivity cross-country differences and what explains them?
2. Why do we say that exchange rate risk has not been a major cause of home bias in Europe?
3. Based on actual data, is it true that households save but do not invest and businesses invest but do not save?
4. Why do financially open countries that have adopted the dollar or the euro as legal tender still display interest rates that are above those in the U.S. or Germany?
5. If a country running current account deficits and diminishing reserves introduces a fixed exchange rate, should we say that this policy move will reduce the interest rate by eliminating the expected devaluation component of the interest rate?
6. Why do some analysts argue that emerging countries may be investing heavily in physical capital but still run current account?
7. Is it true that "FDI reaps huge returns in host countries and profits are fully repatriated to headquarters"?
8. Is is true that "Emerging countries mostly receive short-term, volatile capital flows, not much FDI"?
9. What is the typical stock and flow measures of capital mobility and why do they tell quite a different story about the degree of capital mobility around the world? And what difference makes, in terms of perception, referring to dollar volumes or GDP-scaled values?
10. What do we mean by convergence and what does the data say about it?