They share the findings in Mint’s column:
Archive for the ‘Indian Economy/Financial Markets’ Category
I think it was NR Narayanamurthy of Infosys who famously remarked: India is the only country where people take privelege in calling themselves backwards. Unfortunately, this is true not just for people but also other more macro related areas.
This blog is a huge fan of whatever Nitish Kumar has managed to do for Bihar. It has been a huge change of perception since he arrived and there are no words to justify the praise.However, his agenda of using the political card to get Bihar a Special/Backward State status is what is unnerving really. Why would he goto the extent of saying that he will support any alliance who gives Bihar a special status. Instead of trying to move Bihar away from the special/backward category, he wants Bihar to get that status. Why?
Finally, after many years of deliberation Govt/RBI have decided to launch inflation indexed bonds (IIBs). It was announced in the budget 2013-14 but has been under consultation for a very long time. The launch is based on this technical paper. I will try and release a simplified version if possible.
The choice of index for inflation remains WPI despite having a new CPI. What is the purpose of new CPI then? Yes it does not have a time-series as old as WPI but we are not really talking about using CPI from a historic perspective. If the bond is issued today we are going to use CPI series from hereon.
The technical paper says:
Filipe R. Campante, Ruben Durante, Francesco Sobbrio write this paper which must be read by Aam Aadmi Party (and other new parties if any) people in India. It is actually a must read for all interested in how and whether internet can influence political participation.I have just written an article on the hopeless state of affairs in India’s political system. Based on this paper, internet can help give people some better political choices in years to come..
The authors base their study in Italy. They show internet first leads to lower political participation in Italy and then over the years leads to rise in participation. It is like this U-curve you see with most things in economics. It declines first and then rises:
I got curious on seeing this piece from Amish Tripathi while flipping HT yesterday. I was interested in knowing how the Shiva trilogy guy (haven’t read any so far ) writes on this very complex issue of decentralisation in India. I must say the article was really good. Tripathi sticks to the subject he knows best – history.
He says India has been a decentralised regime for most part of its history:
I am really miffed to read such articles. That too by likes of Dr Shashi Tharoor. One would imagine that people like him would bring a breath of fresh air to Indian politics but it is all so stale really.Though, I have not been impressed with his recent articles as well and this one is just an addition to the growing disappointment.
Indian politics clearly converts the best of the lot as I even pointed to Dr Raghu Rajan’s case as well.
He like India’s PM says the recent Congress victory in Karnataka shows resurrection of the party:
Given the state of corruption and mis-governance in India, one would think Foreign investors would be really wary. I would surely think there is some criteria called ethics and governance/ corruption before investing in any country. However, looking at the FII flows in India, one is not sure:
I was looking at the flows in India in recent years and here is how it goes:
It is by Charles Calomiris (of Columbia) and Stephen Haber (of Stanford). So you read this paper and you get a flavor of why certain national banking systems keep failing. Just like Why nations fail, here also the answer is Politics. Just as seen in WNF, this paper tells you a narrative account of how political systems and history shapes banking systems. Accordingly, why certain banking systems remain safe come what may and others are so crisis prone.
So unlike other papers on baking and financial crisis which look at tons of data to figure what went wrong, this one gives you a more powerful account. It tells you why if political systems do not bring changes in banking system, nothing else really matters.
The recent EPW edition has this review of a new econ textbook – Economics: A Primer for India by G. Omkarnath. Prof. G. Omkarnath is based at Univ of Hyderabad. It looks like a promising book for Indian students looking to study economics.
The review is by Prof. Pulin Nayak of DSE. He begins saying econ text-books continue to be dominated by American econs. Despite many Indian authors, the books are not as great as American counterparts. This leads to problems for Indian students:
Most must have read this paper from IMF (as part of a special chapter of its WEO Apr-13 publication).
It starts nicely picking a Sherlock Holmes story:
Is there any point to which you would wish to draw my attention?”
“To the curious incident of the dog in the night-time.”
“Th e dog did nothing in the night-time.”
“That was the curious incident,” remarked Sherlock Holmes.
Silver Blaze, Arthur Conan Doyle
The dog in the research here is inflation. With growth prospects declining sharply and amidst large monetary stimulus, the inflation did not budge (not bark). Why did this happen? The answer is : 1) Philips curve has become flatter over the years and inflation exp have become anchored:
This chapter seeks to grasp, in Sherlock Holmes’s words, “the significance of the silence of the dog, for one true inference invariably suggests others.” To do this, we use a simple economic framework to interpret some basic summary data on recent developments. This provides some suggestive hints about what may have been going on. We then put the data together in an econometric model that more formally tests the alternative views of what drove inflation in the past and what is driving it now.
These tests suggest that inflation has been quiescent recently because expectations have become more anchored and the relationship between cyclical unemployment and inflation has become more muted. We then look to the future and
ask what other inferences these findings suggest for inflation. We first assess the implications for the risks, alluded to above, that ongoing monetary stimulus may lead to a strong cyclical increase in inflation.
We then consider the possibility that current conditions may be a prelude to stagflation, facilitated by a disanchoring of expectations as occurred during the 1970s. To do this, we consider lessons from the contrasting experiences of the United States and Germany in the 1970s. We conclude by considering the policy implications of our findings.
In India’s case though, the thing was just opposite..The dog kept barking no matter what you did…It has only quietened now..
Prof. Abhijit Banerjee (AB) of MIT was invited for the first Suresh Tendulkar lecture recently. This annual lecture is to be organised by RBI’s College Of Agri banking.
The lecture was uploaded recently on RBI’s website. It was an interesting read. Though, it could have been organised a bit better.
AB says there are three ways to identify poor – direct targeting, community based targeting and self-targeting:
Siddharth Singh of Mint has this nice article on the topic.It is about a couple of days old and forgot to review it. Meanwhile another interesting article came from Mint editor- Niranjan Rajadhyaksha. It is really interesting to see these articles on federal system in India and how it is demanding a change with growing clout of states.
Siddharth’s article is slightly different. He argues Centre should be responsible for foreign policy. The article was written post DMK intervention in SL and Tamil case:
Figuring State economics and finances has become one of the most important things given the recent surge in importance of states. The most important and also the only report to figure all this is RBI State Finances report. It is easily the best thing to read. But the report is really long and by the time you finish one, next one comes Hence, one has to find shorter papers where one gets some trends and can build upon his/her knowhow.
Here is a nice paper by NIPFP econs – Tapas Sen and Santosh Dash. It conveys the trend in State finances from 2000-01 to 2010-11. For simplicity it divides the period into two 4-year periods - 2000-04 and 2007-11.
I came across this paper by Rudiger Dornbusch and Sebastian Edwards. It is based on a NBER conference hosted by the duo to understand the economics of populism in Latam. There is a much bigger paper with detailed experiences on latam here.
I am actually surprised that this paper is not quoted anywhere with respect to Indian economics. This sums up all there is to understanding India’s economics since independence and recent decline. The Economic Survey and RBI speeches/reports which try and make sense of the recent slowdown blaming Eurozone, RBI policy (RBI defends it ofcourse) etc should just point to this paper. Nothing else is needed really.
For instance, in the opening para which is on Latam, you just replace Latam with dashes and fill it with India and you get the picture: