1. TTR shareshis views on capital controls. He responds to this newswhich says RBI and Finance Ministry are planning new measures to curb capital controls especially ECBs. The measures include auctioning ECB loans and sterilization tax. Here is what TTR says:
I don’t believe these measures will be effective enough. The government should have a better capacity to sterilise. For this, it needs to have a bigger war chest of market stabilisation bonds and it also needs to bring down domestic rates. It must also act to make returns to investment in India less attractive through, for instance, introducing long-tax capital gains tax on equities.
I am not sure whether lowering down interest rates would help. The banks to give more loans to corporates, leading to more expansion and further surge in equity markets meaning more capital inflows. Even more MSS bonds would mean higher costs for the government and with FRBM in place, I am not sure whether it is a good strategy.
2. MR points to an excellent article on America’s excessive risk taking.
4. Mankiw points to economics of loosing weight.
5. Rodrik on science of exchange rates
6. ESAP Blog on the 3rd inconvenient truth about India’s growth – only the western and southern states are growing.
7. Econbrowser discusses possibility of rising inflation. Excellent.
8. Ajay Shah points Malaysians influence Indian policymakers.