Archive for September 27th, 2007

When the Fed says X, they really mean Y

September 27, 2007

A reader of my blog pointed out this article to me titled “When the Fed says X, they really mean Y” and he thought the readers of my blog might find it interesting. 

The Fed typically convenes every month to discuss interest rates. It is not only the action (whether rates are raised, lowered, or held constant), but also the accompanying “statement” which is of interest to investors and analysts. In its statement, the Fed may signal both its motivation for the current policy decision as well as offering clues towards the future direction of rates. Unfortunately, the Fed often couches its commentary in vague language and specialized terminology, which may be difficult for amateur traders and investors to understand. The following is designed as a handy translation guide for people who wish to read and understand the Fed Statement but don’t want to train for a PhD in economics

It reminded me of the pretty widely discussed speechby Bernanke in 2004 on Fedspeak. Off course, there are little similarities.


Nobel Prize 2007 predictions

September 27, 2007

It is that time of the year when the prospective Nobel Prize winners are going to be  discussed. The website informs first prize would be announced on 8 October, 2007 and it would be for medicine.

The Prize for economics is going to be announced on October 15 and we would see a lot of blogging on the deserving candidates in coming years.

Scientific Thomson runs a poll for all the prizes and the one on economics is here. The selection process is here and the successful candidates predicted are here.

This year the poll shows 5 economists in 3 areas:

I. For international trade and economic growth: 

a) Elhanan Helpman: Galen L. Stone Professor of International Trade, Harvard University, Cambridge, MA, USA; Emeritus Professor, Department of Economics, Tel Aviv University, Israel.

b) Gene M. Grossman:Jacob Viner Professor of International Economics, Princeton University, Princeton, NJ, USA; Professor, Department of Economics, Woodrow Wilson School of Public and International Affairs, Princeton, NJ, USA.

II. For Industrial organisation and regulation:

a) Jean Tirole: Scientific Director, IDEI (Institute of Industrial Economics), University of Social Sciences, Toulouse, France; Affiliated researchmember of CERAS, Paris, France

III. For their work on auctions

a) Robert B. Wilson:Adams Distinguished Professor of Management Emeritus, Stanford Graduate School of Business, Stanford University, Stanford, CA, USA

b) Paul R. Milgrom:
Shirley and Leonard Ely Professor of Humanities, Department of Economics, Stanford University, Stanford, CA, USA

So far, results are:

41% –  Tirole
35% –  Helpman, Grossman
24% –  Wilson, Milgrom

No Fama & French this time in the list.

Anyways,. it is just a poll. Let us see what happens on Oct 15, 2007.

Keep posted for developments. 

Update 1: Greg Mankiw asks his blog readers to suggest who would win Nobel this year. Here are the comments. Mankiw also shares his predictions.

MR suggests his names.

Update 2: WSJ Blog posts on the propective winners from various sources.

Assorted Links

September 27, 2007

1. WSJ Blog points out to Larry Summers suggestions that Fed should not be in consumer-protection business.

2. Fin Prof on why cash flow statement matters.

3. MR points to world in 7 pictures.

4. TK Arun on Financial Inclusion.

5. Vivek Moorthy says RBI should provide an exchange rate target. I am not sure whether this would work as numerous examples show that it has not worked and only leads to worsening of the situations.

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