Archive for March 20th, 2009

How about forecasting US Per capita income for 2007 in 1928 and getting it almost right?

March 20, 2009

I came across a very interesting note on economic growth from Fatas- Mihov duo (see another paper on growth here, and the excellent blog here).  It lists four factors as critical for economic growth – innovation, initial conditions, investments, and institutions.



IMF says first global contraction in 60 years!

March 20, 2009

IMF has released a new report on the crisis which has new forecasts and coverage of the policy options taken so far and future. The press release is here.

IMF has revised the growth forecasts downwards once again:

  March forecasts Jan forecasts Nov forecasts
  2009 2010 2009 2010 2009
World -1.0 to -0.5 1.5 to 2.5 0.5 3 2.2
Advanced -3.5 to -3.0 0.0 to 0.5 -2 1.1 -0.3
US -2.6 0.2 -1.6 1.6 -0.7
Euroarea -3.2 0.1 -2 0.2 -0.5
Japan -5.8 -0.2 -2.6 0.6 -0.2
Emerging 1.5 to 2.5 3.5 to 4.5 3.3 5 5.1

This implies first global contraction since world war II. The forecasts have been revised severely for major economies.

Towards the end, the note also has an excellent analysis on the fiscal policy during the crisis. It breaks the fiscal stimulus into two types- automatic and discretionary. It presents these figures for G-20 economies and shows the impact of stimulus on output, deficit, debt etc.

This leads to two things I have noted in this crisis. The research on fiscal policyis growing and is highly welcome. Two, it is very interesting to note that IMF has switched its attention to using fiscal policy during the crisis. In previous emerging market crisis, it had always lamented usage of fiscal policy and instead focused on mon policy. Infact, it asked countries to cut govt expenditure in times of crisis. I first noted this IMF switch in July 08 Update and since then it has been quite aggressive. What has brought this change? Why has IMF started to believe that fiscal stimulus is the way out? What is so special about this crisis when we are told that the crisis is similar to others, and is as not as severe as it is made out to be. I am actually interested to know how and why this fiscal policy activism has picked up in this crisis?

A great website for policy research papers

March 20, 2009

I came across this website Policy Pointerswhich provides all latest research,views on various aspects of policymaking. It is like an aggregator website which provides links to all latest stuff on policymaking.

It has listed the various policy areas and provides research on the same. For instance, if you click Economic Policy you get latest research from various sources on economic policy. And best part is all is free to download.

It also has an email and RSS subscription. A link that should go immediately in one’s favorites. Excellent source.

Assorted Links

March 20, 2009

1. ASB points that there is a need to fix financial regulatory architecture. I think we need to first fix what do we really mean by financial regulation. Architecture will only work if we know what to really regulate.

2. ACB asks where are the good political orators in India?

3. Indicus blog on irrelevance of economic theories

4. MR says it was Fisher not Keynes who analysed Great Depression

5. WSJ Blog points ECB member Smaghi answers Krugman. Also Trichet says ECB stands alone. Fatas has an excellent post on the EU problems

6. Econbrowser on quant easing

7. Mankiw points to some innovative thinking of pushing interest rates below zero.

8. Rodrik points to a Mundell presentation on the crisis

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