In thinking of protectionism, the Great Depression, the Great Recession, and what might come next, here are two interesting angles.Governments with their backs against the wall Ideally, stabilisation using monetary and fiscal policy, alongside actions by the private sector, should restrain the decline in consumption, and yield conditions which are not too harsh for households. At the time of the Great Depression, much less was known of economics. Pegging the currency to gold meant giving up monetary policy autonomy; the US Fed...
Monday, 28 December 2009
Saturday, 26 December 2009
Howard Davies was a deputy governor of the Bank of England, and the first head of the UK FSA. He is one of the world's leading thinkers on financial regulation and monetary policy, and one of the people who combines skills in both finance and monetary economics. In a recent article, he focuses on the five interesting questions about central banks and asset prices. Everyone interested in monetary policy today needs to ask themselves these five questions.Q1: Should central banks target asset prices? Davies points out that the...
Tuesday, 22 December 2009
Tim Harford in the Financial Times on the skepticism about the extent to which microfinance matters. London's attempts at turning away international finance: from the Economist, and Mint. Also see this piece from the Economist. M. R. Madhavan in Financial Express on the ineffectiveness of the UPA in translating Parliament time into economic reform. Michael Pomerleano on financial stability reform proposals. An idea from Ila Patnaik has popped up again. Sabrina Tavernise in the New York Times, on Syed...
Monday, 21 December 2009
The 13th finance commission has released the report of the task force on the GST. Here are some responses: Let's design a good GST, an editorial in the Economic Times. The Economist. M. K. Venu in Indian Express. Satya Poddar and Sukumar Mukhopadhyay in Business Standard. Anil Padmanabhan and S. Narayan in Mint. Editorial in Financial Express. Tina Edwin and Gautam Ray in the Economic Times. There are three huge and complex projects which are afoot in India today, each of which is of critical importance...
Sunday, 20 December 2009
by Radhika Pandey and Rudrani Bhattacharya.This appeared in Financial Express today.In India, many people look at year-on-year changes to track the state of the economy. This indicator has important weaknesses. It is the moving average of the change seen in the latest twelve months and is hence a sluggish indicator of the changes in the economy. In order to monitor current developments in the economy, it is preferable to look at month-on-month changes.However,...
Shifting away from central planning Traditionally, Indian socialism has involved government control of all aspects of financial products or processes. As an example, government specified the time of day at which trading starts and the time of day where it stops. The RBI committee process on currency futures and interest rate futures specified that trading must start at 9 AM and stop at 5 PM.In most areas of the Indian economy, goverment no longer controls the economy in such fashion. The government does not specify what time a shop opens or...
Saturday, 19 December 2009
There is a lot of concern about inflation. Most of it is based on perusing the following numbers of the year-on-year changes in price indexes: Jul Aug Sep OctCPI (IW) 11.9 11.7 11.6 11.5WPI -0.7 -0.2 0.5 1.3WPI Food 13.3 14.0 15.7 13.4WPI fruits,vegs15.5 12.0 24.6 11.1 True inflation in India is somewhere between the CPI-IW (which overstates the importance of food) and the WPI (which overstates the importance of tradeables and thus the exchange rate). YOY CPI changes are stubbornly above 10\%, and the yoy WPI inflation...
Friday, 18 December 2009
Andhra Pradesh was once seen as a state with good governance by Indian standards. In recent years, the problems seen with Satyam, attempts to harass Nimesh Kampani, etc. have led many to question the quality of governance in Andhra Pradesh. Today, John Elliott has an important article in the Financial Times on the difficulties of Andhra Pradesh.I took a look at the CMIE data on investment projects outstanding to measure the share in the investment projects at hand in India. I found that the action was strongest in state-wise data for projects which...
Monday, 14 December 2009
I wrote two columns on trade liberalisation in Financial Express: Where did the Bombay Club go wrong? Trade liberalisation: Looking beyond the WTO Also see: Protectionism by India, as seen at Global Trade Alert. The Unrelenting Pressure of Protectionism: The Global Trade Alert's Third Report by Simon J. Evenett, on voxEU yesterday. Praveen Kumar Singh has an article in Indian Express, via yahoo about an egregious piece of protectionism that's proposed by the Indian government: banning foreign...
Sunday, 13 December 2009
Marginal Revolution pointed me to a paper by Edward Miguel, Sebastian Saiegh, and Shanker Satyanath (of UCB, UCSD, NYU) titled Civil war exposure and violence. Their key result is: Football players from countries which have experienced civil wars are more violent on the field (after controlling for a host of things). This supports the idea that exposure to violence coarsens human sensibilities.The authors mention the World Values Survey, and I dug out a small table out of this about responses to the proposition:...
Tuesday, 1 December 2009
T. N. Ninan in Business Standard on the decline of Bombay. I think of the establishment of ISB in Hyderabad as an important lost opportunity, and a prominent contribution of the Shiv Sena to India's backwardness. ISB near Hyderabad is an impressive achievement, but it's a shadow of what it would be if it were on the outskirts of Bombay. G. N. Bajpai, Mr. Bhave's predecessor's predecessor, argues in favour of legislation that defines the role of HLCC and makes it more effective. (This was an opinion piece in the Economic Times)....
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