Reviewing role of monetary policy in the 2007 crisi

Here is a superb speech from Jean-Pierre Danthine of Swiss National Bank.

He points to three theories which have targeted monetary policy for the crisis for different reasons. All these say concepts of inflation targeting were misapplied:

Fed’s low interest rate policy to remain till low 2014

On reading FMOC  statement for Fed’ monetary policy held on 25-Jan-12, I was stumped. It said zero policy rates to remain till end-2014. It got sharp reactions when it was extended to mid-2012 in Sep-11 policy. Now zero policy rates have been extended further by 18 months to end-2014. Looking at economic projections, they are better than Nov-11 projections. And then recent data has been much better than anyone expected including Fed.

TGS Blog does a superb analysis and criticism of the recent Fed move. I just don’t need to  say anything more…

A guide to RBI’s weekly statistical supplement

This has taken a long long time. Each time I decided to do something on RBI’s weekly stats supplement (WSS),  I got lost.

Finally, I have managed to understand some portions of it and have put them in this paper. This analysis will be in two parts. In the first part I have looked at WSS tables related to RBI’s monetary operations. There are three main tables I look at:

• Table 1: RBI’s balance sheet
• Table 2: Forex reserves
• Table 8: Reserve Money

The other tables  are related to banks and financial intermediaries and will be covered in a future report.

I hope this helps the visitors understand a bit about RBI’s operations and ofcourse the WSS..

Opposing liberalization in retail – Italy vs India

Gulzar points to this interesting comparison. It seems there has been opposition in Italy as well over liberalization of  retail market. India opposed FDI in retail and  Italy opposed  more flexible hours in opening/closing of retail shops!!

However in India it may have some justification, in Italy it just seems to be anti-competitive.

Global financial crisis and new awakening

A nice speech by B. Mahapatra ED of RBI. He speaks at the convocation ceremony of one of the B-schools in Mumbai. Summary is:

Let me now sum up. I started with the Arab Spring Movement – a social revolution. I thereafter discussed the growing frustration of the public with corporate greed and wealth disparities that symbolised the Occupy Wall Street Movement.  I touched upon the Los Indignados Movement in Spain reflecting the angst of the public which has grown resentful of the economic and political systems. These have been the three standout “awakening” movements of 2011. All the three movements have used social networking platforms effectively to arouse public opinion and thus highlight the power of the youth when unified. I have thereafter touched upon the economic, strategic and ethical factors behind the crisis and the lessons to be learnt. I have particularly underscored the ethical dimensions which you must keep in mind throughout your life.

It has some nice basic info on the various social movements  in 2011…does not include the anna movement on corruption though…

Books on newspaper/media dynasties

Dynasties and in particular newspaper dynasties are a great topic to follow and read.

Amanda Smith picks five books which provide some more spice on the topic.

Are markets now overestimating risks in Europe?

Paul De Grauwe and Yuemei Ji have written a paper on the same. They summarise it here.

They say first markets underestimated the risks between 2001-08  and are now overdoing things.

Is CRR a liquidity or a monetary tool?

Is the title of my new article in Mint.

The print edition has a pretty interesting pic as well (page 4). It is there in the e-paper (dated Jan 25, 2011) as well. Was quite interesting to get photos clicked like that…

RBI’s Third Quarter Review of Monetary Policy 2011-12

Here is the review of today’s monetary policy. Loads of confusions over CRR…

How central banks are ruled by men from MIT…

I wish there were more women central bankers and trained at MIT..,the title of the post would have been less biased..

In case people have not read this article, it is a must read. Our economic lives are increasingly in the hands of econs trained at MIT:

India vs China: Services vs Manufacturing

Ejaz Ghani has been providing lots of insights on Indian economy on voxeu. His recent column looks at the ever hot topic – differences  between India and China..More importantly what drives growth in services in India and manufacturing in China..

It has been a real busy day thanks to RBI’s monetary policy (review coming soon). Hence can only point to stuff today…

 

Making economics exciting to teach…

Peter Boettke has this superb note on one of the most universal aspects of world of economics – teaching the subject poorly.  And if at GMU he feels this, one can just imagine the plight of thousands of students in other parts of the world.

Spain’s labor market woes

Samuel Bentolila, Juan Dolado and Juan Francisco Jimeno write this super post on the topic.

RBI’s Q3 2011-12 Monetary Policy: Expectations

RBI’s monetary policy coming up on 24-Jan-12.

Here is a research report on the background  under which the policy decisions are likely to be taken. It includes expectations as well..

In each policy, RBI has some interesting decisions to make. This one is no better…

Comments/expectations welcome.

Gokarn’s speech referred in this report  is here

Where did the word crisis originate from?

As per this KC Chakrabarty speech the origination comes from a Greek word Krisis :-)

Will emerging economies stop maintaining forex reserves?

This is a super speech from Adam Posen of BoE.

Some background first. Economic Historians/Historians have pointed how the recent globalization phase is similar to the one seen in 1870-1910. The previous one was interrupted by world wars and in the middle due to Great Depression. After that we had these tight controls which began to be relaxed around 1970s and again a new wave of globalization emerged. The players  changed. As in previous, UK was the supplier of funds and US was the receiver (Adam Posen disputes this in this recent speech). This time China (and other middle ease etc) are the suppliers and US the receiver. US should have been the supplier of funds this time as it is the leading economy as UK was then. However, as highlighted by Lucas in 1990s capital flows have not flown to developing but developed economies. Subsequent research shows even amidst developing economies, it goes to economies which are better off.

So just as this recession was taking place, some said perhaps globalization will at best not increase as much as countries become more protective.

Posen curiously titles the speech as  - What the return of 19th century economics means for 21st century geopolitics? According to him, we are likely to see the trends of 19th century globalization now. As emerging economies have gained immensely from globalization barring some issues here and there, they are unlikely to undo glob.

He covers following themes:

How Dodd Frank Act is connected to increasing conflicts in Africa/Congo?

I came across this really interesting paper on the topic. It is by Laura Seay (Prof of Pol Sci) of Morehouse College.

She points to this interesting section of Dodd Frank Act(section 1502)  which aims to increase transparency in financial reporting of all companies engaging in conflict regions of Africa. The idea is to ensure American firms (and its suppliers) are not engaging in illegal activities and sourcing precious minerals (apart from diamonds etc…recall Blood Diamond) from these conflict regions. The law hopes this will lead to improvement in overall financial activity in these regions and indirectly lead to better governance in these countries.

However Laura disagrees with this provision in the DFA. She says instead of improving conditions in Congo, it has already worsened them. And so far there has been no final law on this as SEC is still working on the provisions. Even before a final word, it has put a ban on exports from Congo and almost 2 million Congolese mine workers are jobless.

How can we trust S&P etc. to rate securities and do a good job of it?

Victor Ginsburgh, Professor of Economics of Art and Culture writes this superb post.

He picks examples from the field of arts to show how experts in their areas cannot differentiate good stuff from bad one:

Impossible Trinity of European crisis

Jean Pisani-Ferry of Bruegel takes us through another impossible trinity. Impossible trinity says you cannot have all the three things working together. You have to give up one of the things in order for the system to work.

Robert Mundell gave us the first impossible trinity in economics which was related to price stability, capital flows and currency movement. Dani Rodrik gave us another trilemma/trinity in the international political economy field between nation states, economic integration and domestic policies.

Pisani-Ferry gives yet another trinity related to European crisis. This one is related to absence of co-responsibility for public debt, the strict no-monetary financing rule and bank-sovereign interdependence. Currently we have all three playing which is creating a stress.

The tragedy of childhood in India

Till 2011-12, Indian economy was about growing macro and worrisome social economy. Now both are gloomy.

Niranjan summarises the recent reports which show widespread malnutrition in children and how children are not really learning in schools. His article starts with this line:

It is not easy being a child in India.

 It could easily have been the end-line as well. Instead he ends saying:

The problems faced by Indian children arise out of complex reasons, and thus need a multi-pronged attack. Not every problem can be solved with higher budgetary allocations to flagship programmes such as the Integrated Child Development Services. Yet, there can be no denying the state of the Indian child is nothing to write home about. It’s not something that a country that is betting on a demographic dividend should either be proud or confident about.

Earlier government could hide these huge asymmetries in India’s growth in the veil of robust macro numbers. Now these huge  social disparity numbers are looking even worse amidst macro gloom as well…