Archive for September 28th, 2011

Reviewing India Economy – Progress and Prospects

September 28, 2011

A nice speech by Deepak Mohanty of RBI. A nice snapshot of the progress so far (focusing on 1990s crisis and progress from then) and challenges ahead.

In the end he says:

Envisioning India’s emergence as a major economic power in the world, Dr. Manmohan Singh in his Union Budget 1991-92 speech that launched wide ranging economic reforms had quoted Victor Hugo’s saying, “no power on earth can stop an idea whose time has come”. Ever since, there has been no looking back as India launched wide ranging structural reforms and has made significant economic progress over the past two decades. India’s industrial environment has become more competitive and open, infrastructural gaps have been sought to be bridged through public-private initiatives with both domestic and foreign sources of funding, current account has become fully convertible while capital account is virtually free for non-residents.

The policy environment has become more enabling with rule-based commitment on fiscal policy and considerable instrument independence for operation of monetary policy. As statutory preemptions were reduced and interest rates were deregulated, banks gained operational autonomy for commercial lending. As a result, India’s per capita income, which had taken four decades to double by 1991, doubled thereafter in 15 years and is likely to double again in 10 years by 2017-18. If India could maintain the current pace of growth it will lift millions out of poverty and enrich the global economy. While India has come a long way, maintaining the current pace would itself be challenging and require continued reform efforts.

Why NY Mayor’s attempts to ease New York traffic have only made things worse

September 28, 2011

A nice article from Herbert London of  Hudson Institute. He points to certain initiatives by NY Mayor Bloomberg to ease traffic congestion in NY have not worked.

He first wanted to impose congestion taxes but were opposed:

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Chicago Economics on Trial

September 28, 2011

A nice interview of Robert Lucas.

The School is famous for two main ideas – EMH and Rational expectations:

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The Governance of a Fragile Eurozone

September 28, 2011

This paper from Paul De Grauwe is I think one of the best paper to understand Eurozone (EZ) crisis. (shorter version here though fonts are real tiny). It has been highly recommended with Krugman wishing he had written the paper (Though Paul Wenzel says he wrote the same De Grauwe thought in one line and is waiting to get praise) .

Grauwe points why countries in a monetary union are disadvantaged compared to a non-monetary union country. When times are good, the MU model works well otherwise it just falls flat on its face.

He compares UK to Spain and says though UK debt has been higher than Spain, interest rates in Spain are much higher than UK. Why is this so? It is because Spain is part of EMU and UK is out if it:

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Recent unemployment trends in US..

September 28, 2011

Rob Valletta and Katherine Kuang of FRBSF analyse the recent rise in US unemployment rate and unemployment insurance claims.

Rising layoff rates during the spring of 2011 highlight renewed labor market weakness. Although job cuts among state and local governments have accelerated over the past few years, most of the recent increase occurred among private-sector employers. Following modest improvement in early summer, subsequent labor market performance has been uneven, indicating that labor market conditions remain fragile.

There is a nice graph which looks at unemployment insurance and recessions:

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