Ben Bernanke's statementEveryone interested in the world economy should watch Bernanke's recent speech and the press conference: (Switch to full screen, it works well).Here is the base URL which collects together all the materials about the Fed's announcement. The `exit strategy principles' are in the June 21-22, 2011 meeting.The announcement reinforces the sense that the US economy is healing. The US Fed is keen to have inflation of 2% and believes the NAIRU is around 6.5%. Hence, once they come into the range where unemployment has achieved a...
Thursday, 27 June 2013
College and knowledge continued
Posted on 02:51 by Unknown
In continuation to Let's not confuse college with knowledge :See the comments on that post.Is the labour market return to higher education finally dropping? by Tyler Cowen.Rasheeda Bhagat in the Hindu Business Line (ht: K. Satyanarayan).Dale and Krueger, QJE, 2002. (ht: Aditya Kuvalekar).Some people wrote me email asking: What should I be doing in an undergraduate degree in economics to make sure I actually get the knowledge? I feel that an economics education in college should bring you to the point where you get the stuff on this b...
Tuesday, 25 June 2013
Let's not confuse college with knowledge
Posted on 05:25 by Unknown
The cost-benefit analysis of a college education in the USI was fascinated by this interview in the New York Times with Laszlo Block, Senior VP of People Operations at Google. They seem to be doing instrumentation and analytics in the HR function, giving new insights into how things work (as opposed to preconceptions or conventional wisdom). In this, he says:One of the things we’ve seen from all our data crunching is that G.P.A.’s are worthless as a criteria for hiring, and test scores are worthless — no correlation at all except for brand-new...
Wednesday, 19 June 2013
State capacity in India, vs. the early 1990s
Posted on 09:45 by Unknown
The problem of State capacityA defining theme of India's challenge today is capacityconstraints. Even when an objective is sound (a public good is soughtto be created), and when the resourcing is adequate, the Indian policylandscape is littered with failure. We are very bad at achieving thedesired objective. To get to sensible outcomes, we need to push onthree things: Focusing the government upon the small class of problemswhich are public goods (i.e. doing fewer things), ensuring adequateresources, and achieving better State capacity.There is...
Saturday, 15 June 2013
Dr. Subbarao's comments about FSLRC's treatment of systemic risk
Posted on 10:59 by Unknown
On 5 June, Dr. Subbarao did a speech at the Indian Merchants Chamber, which expressed views about the FSLRC treatment of systemic risk, which has spawned an interesting discussion: Speech by Dr. Subbarao, 5 June A pointwise response to the material on systemic risk in this speech, by Sowmya Rao. Why the RBI Governor D. Subbarao is wrong on regulating systemic risk, a column in the Economic Times by K. P. Krishnan.A column in Mint by Sowmya Rao and Sumathi Chandrashekharan.A helicopter tour of systemic risk regulation in the draft Indian Financial...
A helicopter tour of systemic risk regulation in the draft Indian Financial Code
Posted on 10:57 by Unknown
The field of financial regulation has traditionally focused onconsumer protection, microprudential regulation andresolution. However, the 2008 financial crisis highlighted systemicrisk as another important dimension of financial regulatorygovernance. Subsequently, governments and lawmakers worldwide havepursued regulatory strategies to avoid systemic crises and provide forsystemic oversight.At present, Indian law is silent on the subject of systemicrisk. RBI often implies that it has been doing work on `financialstability', however at present,...
A response to Dr. Subbarao's comments on systemic risk regulation in the draft Indian Financial Code
Posted on 10:56 by Unknown
by Sowmya Rao.At a recent conference organised by the Indian Merchants Chamber,the Reserve Bank of India (RBI) Governor, Mr. Duvvuri Subbarao, sharedhis views on lessons learnt from the global financial crisis. The fulltext of his speech is available ahref="http://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/IMCCON05062013.pdf">here.While discussing financial stability, Mr. Subbarao discussed therecommendations of the Financial Sector Legislative Reforms Commission(FSLRC) on the Financial Stability and Development Council(FSDC). This post is a pointwise...
The saga of criminalising and then decriminalising cheque bouncing
Posted on 06:13 by Unknown
by Shubho Roy.The criminalisation of writing cheques without a sufficient balance was introduced in India in 1988. It was an addition to a much older British law called the Negotiable Instruments Act, made in 1881. The reason for the amendment was the endemic problem of cheques being dishonoured. This had made it difficult to do transactions where payment and delivery don't happen instantaneously. Mistrust of cheques was encouraging cash transactions, with consequent problems of counterfeiting, costs of storing and moving cash,...
Wednesday, 12 June 2013
FSLRC ki ABC
Posted on 19:22 by Unknown
We worked with CNBC Awaaz to make simple video content, in Hindi, about FSLRC. The overall 24 minutes of this video is composed of six self-contained capsules of 4 minutes ea...
Monday, 10 June 2013
Fluctuations of the rupee
Posted on 19:08 by Unknown
I have a column in the Economic Times today titled Do not mourn rupee fluctuations.The methodology for identifying dates of structural change in the exchange rate regime is from Zeileis, Shah, Patnaik, 2010.You may find The rupee: Frequently asked questions, 1 December 2011, to be of intere...
The demise of Rupee Cooperative Bank: A malady
Posted on 05:02 by Unknown
by Radhika Pandey and Sumathi ChandrashekaranThe facts: A troubled decade for the Rupee Cooperative Bank (2002-2013)It was a little over a decade ago whenRupee Cooperative Bank (RCB)beganto show signs of distress. In 2002, the bank faced a liquidity crisisdue to non-recovery of loans, prompting RBI to appoint an administratorfor the bank. This involves the bank coming underthe supervision of the administrator, and is usually accompanied withthe bank losing the freedom to carry on certain basic functions, suchas accepting deposits or giving out...
Sunday, 9 June 2013
Author: Suyash Rai
Posted on 18:56 by Unknown
Taking a stand on the equity risk premium in India, 17 July 2013.Identifying each individual in financial firms that performs customer-facing functions, 8 June 2013. Regulatory strategy for savings/investment schemes, that would address ponzi schemes, 30 April 2013. Correctly defining the scope of financial regulation so as to block ponzi schemes, 30 April 2013. RBI vision document on payments: An evaluation, 5 July 20...
Saturday, 8 June 2013
Identifying each individual in financial firms that performs customer-facing functions
Posted on 09:41 by Unknown
by Suyash Rai.The growth of the Indian financial system has generated opportunities for individuals to get jobs in sales and distribution roles. It is easy for individuals to switch jobs, and with that it has become easier to indulge in abusive practices, enjoy the financial benefits that accrue, and leave the firm before the consequences become visible. There is ample anecdotal evidence about sales persons and agents who have got away scot free after doing the wrong things. These individual stories add up to the overall evidence at the level of...
Friday, 7 June 2013
Iran may have developed offensive cyberwar capabilities
Posted on 10:45 by Unknown
After Stuxnet, Iran seems to have developed offensive cyberwar capabilities, possibly with Russian help.Catnip, organised by me in chronological order. First, the Stuxnet story:Israeli test on worm called crucial in Iran nuclear delay, by William J. Broad, John Markoff, David E. Sanger, in the New York Times, 15 January 2011.A declaration of cyber war, by Michael Joseph Gross in Vanity Fair, April 2011.Obama order sped up wave of cyberattacks against Iran, David E. Sanger, New York Times, 1 June 2012.Confront and conceal by David E. Sanger, 5 June...
Thursday, 6 June 2013
Interesting readings
Posted on 11:01 by Unknown
Indian historical linguistics in the Economist.A lecture by Lant Pritchett titled Folk and the formula - Pathways to capable states.Anil Padmanabhan on Myanmar in Mint.A great travel story from Nagaland.Trampling on the individual in India: a href="http://www.epw.in/web-exclusives/browbeating-free-speech.html?ip_login_no_cache=ceee4f698452b532827f78f87f4615b3">SauravDatta in the EPW, and a href="http://spicyipindia.blogspot.in/2013/05/the-times-publishing-house-threatens-to.html">SpicyIP, on the attack on a blogger by the Times...
Tuesday, 4 June 2013
The role of the board
Posted on 19:42 by Unknown
The board is a critical ingredient of well functioning public bodies. The board must:Have a big picture of the objectives of the organisation;Get pushed, through accountability mechanisms, when these objectives are not being achieved;Lead the top level thinking about the organisation chart and resource allocation, so that the organisation is constantly reshaped so as to fit its purpose;Exert direct influence on key policy choices so as to push the management team towards delivering results.In India, we lack experience with boards that perform these...
Monday, 3 June 2013
Bureaucrats are not stakeholders
Posted on 18:18 by Unknown
Indian democracy has become quite focused on bringing views of all stakeholders into the policy debate on any question. That is a good thing.I have an article in the Economic Times today, where I argue that while we do this, we should be careful to not treat officials as stakeholders. When the merger of Indian Airlines and Air India is being evaluated, all viewpoints should be brought to bear on the decision but one -- the views of existing employees of Indian Airlines or Air Ind...
Should policy makers favour home ownership?
Posted on 09:12 by Unknown
The argument in favour of home ownershipMany people believe that more home ownership is a good thing. It is felt that people who own homes have a greater incentive to get involved in local politics as they have a stake in higher house prices. In contrast, people who rent lack this commitment device. Indeed, in a short run sense, a person who is renting benefits when the neighbourhood goes bad : his rent goes down.From the viewpoint of the individual, renting is always better as it preserves flexibility. Owning a house imposes limitations on the...
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