Archive for December 14th, 2009

IMF’s Finance & Development December 2009 issue is a must read

December 14, 2009

IMF’s Dec 2009 issue of Finance and Development is a must read. It has interview of Joseph Stiglitz, discussions on climate change, crisis etc.

Excellent stuff.

Rupee Design contest – final 5 entries are out

December 14, 2009

Thanks to the various comments, I got to know that  top 5 entries for the Rupee Symbol design contest are out.

Congrats to all the winners.

Try the Tax cuts prescription

December 14, 2009

Mankiw has a nice article on US economy issues and suggestions for Obama

He says the situation is similar to the one facing a doctor:

IMAGINE you are a physician and a patient arrives in your office with a troubling and mysterious disease. Some of the symptoms are familiar, but others are not. You have never treated anyone with quite this set of problems.

Based on your training and experience, imperfect as it is, you come up with a proposed remedy. The patient leaves with a prescription in hand. You hope and pray that it works.

A week later, however, the patient comes back and the symptoms are, in some ways, worse. What do you do now? You have three options:

STAY THE COURSE Perhaps the patient was sicker than you thought, and it will take longer for your remedy to kick in.

UP THE DOSAGE Perhaps the remedy was right but the quantity was wrong. The patient might need more medicine.

RETHINK THE REMEDY Perhaps the treatment you prescribed wasn’t right after all. Maybe a different mixture of medicines would work better.

This is also the problem faced by Obama team. He passed a stimulus to save the economy in Jan 2009 and to lower unemployment. But unemployment continued to rise and is now at 10%.

So what should Obama do? Mankiw says he should opt for choice 3 and go for tax cuts. He points to a couple of studies which are suggesting the same.

Fiscal Multiplier debate to continue….

Paul Samuelson RIP

December 14, 2009

Paul Samuelson passed away on Sunday, 13 Dec 2009. Many tributes paid to the great economist:

I was the first journalist, he said, come to see him in many years. As were talking, a young student poked his head in through the door, slid a package on to his table, and said, “Hi, Paul, will you give this to Bob?”

The Bob in question was another Nobel winner, Robert Solow, whose room was next to Samuelson’s. “This is what I do these days,” said the Great Man. “You know, young man, you come from a very good country. Unlike here human capital depreciates very slowly there.”

It is really sad. For anyone who studies economics in Delhi University, Samuelson works’ is a staple diet. Be it anything-  microeconomics, macroeconomics, public finance etc, his works act as references everywhere. On studying finance, one realises most financial economics is also because of his ideas. His book “Economics” was always used to understand the tough topics. If a particular topic was just too difficult to understand, refer Samuelson, get some ideas and then try and write on it in the exam.

Addendum:

Paul Samuelson’s 2 pieces on Nobel Prize website are very interersting read. How he became an economist?

From one point of view my studying economics was the result of accidental blind chance. Prior to graduating from high school I was born again at 8:00 a.m., January 2, 1932, when I first walked into the University of Chicago lecture hall. That day’s lecture was on Malthus’s theory that human populations would reproduce like rabbits until their density per acre of land reduced their wage to a bare subsistence level where an increased death rate came to equal the birth rate. So easy was it to understand all this simple differential equation stuff that I suspected (wrongly) that I was missing out on some mysterious complexity.

Luck? Yes. And all my life I have been at the right place at the right time. Chicago was at that period the top center for old-fashioned neoclassical micro-economic study. But I didn’t know that; my reason for entering there was simply because the University of Chicago was close to my high school and home. Later when I was bribed to leave the Eden of the Chicago womb, choice boiled down to either the Harvard or the Columbia Graduate School. My revered Chicago mentors–Frank Knight, Jacob Viner, Henry Simons, Paul Douglas, …–without exception said, “Pick Columbia.” Never one to blindly accept adult advice, I picked Harvard. I picked it by miscalculation, expecting that it would be a little oasis on rolling green hills.

That is just too modest.


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