The Ministry of Finance has released the Report of the Working Group on Foreign Investment, led by U. K. Sin...
Monday, 30 August 2010
Thursday, 26 August 2010
Tuesday, 17 August 2010
Tom Wright and Siobhan Gorman in the Wall Street Journal on new thinking by Pakistan's ISI about who is enemy #1.Tamal Bandyopadhyay in the Mint on the campaign against C. B. Bhave. Also see Ashok Desai and Mahesh Vyas on these issues.A. K. Bhattacharya in the Business Standard on the crisis of project management in government. This is what animates Nandan Nilekani's TAGUP group and I hope this induces fundamental change in Indian public administration. Also see.Fascinating new research by Devesh Kapur, Chandra...
Saturday, 14 August 2010
RBI has a discussion paper on opening up banking for entry by private banks. See responses by Jayanth Varma in the Financial Express and by Ila Patnaik in the Indian Express. Also, a less coherent response from me on TV.A nice feature of the above RBI URL is that it also links to the January 1993 guidelines on entry of new private banks and the January 2001 guidelines.Striking a balance between avoiding crooks and theft, and ensuring competition, is hard. It's easy to go to either extreme, but the puzzle lies in finding...
by Viral Acharya.Raghuram Rajan's book Fault Lines (Princeton University Press for the international edition, and Harper Collins for an Indian edition with a special chapter on India) is possibly the most thought-provoking contribution in the aftermath of the economic and financial crisis that has engulfed the West after 2007 with significant global repercussions.The epilogue of the book summarizes its punch line:The crisis has resulted from a confusion about the appropriate roles of the government and the market. We need to find the right balance...
In the Financial Express today, I have a piece on India's middle income trap: Don't take growth for granted. Coincidentally, on the same day, T. N. Ninan in the Business Standard had a piece on a similar theme, and in the Indian Express, Shekhar Gupta ponders where UPA-II went astray.My thinking about these questions in recent weeks has been prodded by questions about entry of private banks, and by the campaign against C. B. Bha...
Friday, 13 August 2010
by Bindu Ananth and Nachiket Mor.Much has been said about the astronomical SKS valuations and the personal fortunes of the original investors. Speaking for ourselves personally, we are not at all disturbed by how much money was made by whom. On the contrary, we are very excited that an area that was once thought to be the exclusive turf of, as Monika Halan (http://bit.ly/SquidorDevta) puts it so graphically in Mint, `the nexus of political doles and the rural bank branch system rotting under the weight of corruption and dysfunction' thanks to pioneers...
Tuesday, 10 August 2010
On 5 August, the RBI Governor did a speech in Hyderabad. I was disappointed in reading this speech; it suggests little learning of monetary economics amongst RBI staff after the 1960s. See this response by Ila Patnaik.A few recent papers look at these things very differently: John Taylor (June 2010), Takatoshi Ito (July 2010) and Asli Demirgüç-Kunt and Luis Servén (February 2010). We continue to be in a situation where RBI's thinking on monetary policy is quaint and out of touch with world class knowledge of economi...
Monday, 9 August 2010
In recent years, many economists have been attracted by the possibility of obtaining better knowledge using randomised experiments, which are termed the `gold standard' for empirical analysis. I have long been skeptical about this approach, for three reasons: Reality is a complicated nonlinear relationship in many dimensions. Each randomised experiment illuminates the gradient vector in one small region. It's hard to generalise the results (i.e. low external validity). I am quite worried about the bang for the buck obtained through this...
The 7th research meeting of the NIPFP DEA Research ProgramThis is 31 August and 1 September; here is the program.A pair of mini-coursesFrom 6 to 10 September, we have a pair of mini courses: Sanjay Banerji will teach on financial crises, and Sourafel Girma will teach on the new quasi-experimental econometrics.NIPFP Macroeconomics SymposiumOn 14 September 2010, we have the NIPFP Macroeconomics Symposi...
Wednesday, 4 August 2010
Understanding the ADR premium under market segmentation by Matthieu Stigler, Ajay Shah and Ila Patnaik.The abstract reads: Capital controls can induce large and persistent deviations from the Law of One Price for cross-listed stocks in international capital markets. A considerable literature has explored firm-specific factors which influence ADR pricing when LOP is violated. In this paper, we examine the interlinkages between Indian ADR premiums and macro economic time-series. We construct an ADR premium index,...
Monetary policy in an uncertain world: Probability models and the design of robust monetary rules by Paul Levine.The abstract reads: The past forty years or so has seen a remarkable transformation in macro-models used by central banks, policymakers and forecasting bodies. This paper describes this transformation from reduced-form behavioural equations estimated separately, through contemporary micro-founded dynamic stochastic general equilibrium (DSGE) models estimated by systems methods. In particular by treating DSGE models...
Two striking stories in India's crisis of governance: Sadanand Dhume in the Wall Street Journal on the Commonwealth Games, and Nilanjana S. Roy in the New York Times on the personal safety of women.The deep determinants of the problems of India's economy lie in the political system, and the deep determinants of the problems of Indian politics lie in the way elections work. One of the many blunders of our Constitution was the use of first-past-the-post in elections. See Anthony Gottlieb in the New Yorker magazine.Ila Patnaik has four recent...
Tuesday, 3 August 2010
Milan Kumar Biswas, General Manager of Keggfarms Pvt. Ltd. knows something about inflation. In a note addressed to his customers, stuffed in a box of eggs, he announced an increase in the unit price of his eggs.P = (1+markup) MC. To justify the change in P, of course not due to his own greed (the "markup"), Mr. Kumar blames various "exogenous" factors for the price increase, all bunched in what economists call "marginal cost". He tells us about...
Monday, 2 August 2010
For many years, India has been in a slow processes of evolving towards a dual centre-state GST. The rough picture is one with two distinct but harmonised taxes, which have an integrated IT system so as to sharply reduce compliance costs. A key dimension is that of properly integrating domestic taxation with international trade in goods and services, by zero-rating exports (thus exempting non-residents) and by charging the GST upon imports (thus taxing the full consumption of residents).This process has faced two challenges: politics...
Sunday, 1 August 2010
The Indian authorities are in the process of pushing listedcompanies to have atleast 25% shareholding with outside shareholders.I wrote a column in the Financial Express,titled Outsideshareholding and market liquidity: Indian empiricalregularities where I look at how size and outside shareholdingcome together to matter for stock market liquidi...
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