Archive for November, 2010

What are the changes needed in teaching finance?

November 23, 2010

I just wrote an article in Mint on changes needed in teaching economics. I could not expand but the changes apply to finance classrooms as well. So just added one line that similar changes are needed in finance curriculum as well. Having studied finance before the crisis, I was always get surprised how little weight both teachers and students put on knowing and understanding economics. So you had pure finance teachers which only focused on financial sector related issues.

In this superb speech Jean Boivin, Deputy Governor of the Bank of Canada points to the deficiencies in finance teaching before the crisis. He was an economics professor at HEC Montréal, a business school.  So he links the issues really well:

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A set of Fiscal Policy tools = 100 bps rate cut

November 23, 2010

Minneapolis Fed chief, Narayana Kocherlakota in this speech points to results of an interesting research done by his Fed economists.

He says given the eco situation, he would prefer to cut rates further. But with rates at zero bound, could there be other options? We know there are many unconventional/non traditional measures. But what about fiscal policy?

He says three changes in tax policy will help deliver a stimulus equal to 100 bps policy rate cut.

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Navi Mumbai airport cleared on hope!

November 22, 2010

One only gets to see these things in India. Despite many criticisms against the Navi Mumbai airport site, it gets final clearance from Environment Ministry.  The press release is here.

There is a nice timeline of events since 1997 when talks of second airport in Mumbai started. So it has taken us 13 years  to get an airport in a city like Mumbai! And that too is going to be a puny (just 60 million passengers in full capacity). Going by India’s project delays and corruption the final costs are likely to be what it would cost to build an airport 4 times the size.

The first site for second airport was Rewas Mandwa. The press release says Navi Mumbai airport was proposed as a site in 2000. The idea was Rewas Mandwa does not have adequate infrastructure and Navi Mumbai is within Mumbai Metropolitan Region. There are so many airport sites which are unviable to begin with….It is amazing how this was taken as an argument.

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Globalization of Ideas

November 22, 2010

Here is a superb short note on the topic from Dallas Fed econ – Anthony Landry. He points how ideas can help in the global growth process.

First what is an idea?

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What is a useful central bank?

November 22, 2010

Norges Bank hosted a conference on the topic.

Jan F. Qvigstad, Deputy Governor of Norges Bank in Words of welcome tracks the history of Norway’s central bank.

I read this Paper from Michael Bordo. It is a nice brief on history of central banking.

Bordo looks at the cycle of central banking from glory to abyss and then again a rise.It is much like the business cycle. In good times it is glorified and then loses its charm in bad times.  

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RBI Communications and Monetary Policy – A review of recent measures

November 22, 2010

This is the title of my new paper. Comments/Criticisms most welcome.

Taking lessons for this crisis from Great Inflation crisis of 1970s??

November 19, 2010

Richmond Fed President, Jeff Lacker in a recent speech draws lessons from the inflation crisis of 1960s and 1970s:

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Rogoff’s three challenges for macroeconomic research

November 19, 2010

In this white paper, Rogoff points to three challenges for macroeconomic researchers:

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Economics after the crisis: need for a new pedagogy

November 19, 2010

This is the title of my op-ed in Mint. Let me know your comments.

Has the Fed Been a Failure?

November 18, 2010

Is the title of this food for thought post by Tyler Cowen. Cowen points to few papers on the topic. All look like a decent read.

What a turn around for Fed. Just till 2009, it was how successful Fed has been. And now the question of whether Fed has been a failure ?

Financial Crisis Inquiry Commission postpones final report – Republican members dissent

November 18, 2010

I don’t know what to make of this interesting story.

Financial Crisis Inquiry Commission (FCIC) was to submit its report on the crisis on 15 Dec 2010. Y’day FCIC released a press release saying the report would now be released in January 2011.

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Indian Economy – Fortnightly Update

November 18, 2010

The latest issue has been uploaded. Includes discussion on IIP, WPI Inflation and export data.

Why does economy fall to pieces after a financial crisis

November 18, 2010

This is the title of a new paper by Robert Hall in the latest issue of Journal of Economic Perspectives.

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White Papers for Future Research in the Social, Behavioral & Economic Sciences

November 18, 2010

I came across this superb link where you have white papers from top economists on future of economic research (HT Market Design Blog).

The National Science Foundation sent out a Dear Colleague letter requesting white papers on grand challenges in the social and behavioral sciences. The Directorate for the Social, Behavioral, and Economic Sciences of the National Science Foundation (NSF/SBE) will use these white papers “to frame innovative research for the year 2020 and beyond that enhances fundamental knowledge and benefits society in many ways. This request is part of a process that will help NSF/SBE make plans to support future research.” The Dear Colleague letter is available here. Advance copies of some of the papers were also sent to the AEACGR and are available below.

So you have white papers from Acemoglu, Poterba, Rodrik, Duflo, Alesina, Diamond etc. The topics are also highly diverse – development economics, macroeconomics, environment economics, market design etc. You name it and you have it here.

On each, there are neat 4-5 pager papers on what to expect from econ research in their fields in future and what are the challenges?

I have started reading them…..will post on them if I find anything interesting. Superb resource.

Economics of central banks’ decision making

November 17, 2010

Norway Central Bank Deputy Governor Jan F. Qvigstad gives a superb speech on the topic. The speech revolves around how central banks make decisions and what makes a decision good or bad. He also talks about what goes into trying to make better decisions. It covers following areas:

  • Independence provides a sound framework for interest rate decisions
  • We make decisions under uncertainty
  • Groups often make better decisions than individuals
  • But groups are no guarantee for good decisions
  • How do we arrive at a decision?
  • Was the decision good?

The overall speech is superb drawing insights from other subjects like history, politics, psychology, television shows etc.

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Why aren’t US banks lending?

November 16, 2010

Chicago Fed economists look at this issue in this short paper. They explore the role of banks’ exposure to commercial real estate as one of the important factors:

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Understanding the issue of Currency Wars

November 16, 2010

William Cline and John Williamson of Peterson Institute have a nice paper on the topic.

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Angela Merkel or Angela Keynes?

November 12, 2010

Mark Schieritz, Finance Editor at the weekly German newspaper DIE ZEIT writes a super column in eurointelligence titled – Angela Keynes.

He says, though Merkel is preaching to the world the virtues of fiscal austerity and how Germany has grown because of the same, the story is different.  Germany has been as Keynesian as others like US:

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Macroprudential Policy and Central banking

November 12, 2010

This is the title of my new paper. Summarises the issues so far in this crucial area of central banking and financial regualtion.

Let me know of your comments/suggestions/criticisms if any.

Some sympathies for Ben Bernanke

November 12, 2010

Bernnake has faced severe criticism for his recent decision to go ahead with QE2. The criticisers include people from all around the world – economists like Feldstein, US politicians like Sarah Palin, German Finance Minister, Chinese policymakers etc.

Paul A. McCulley of PIMCO has some kind words for Bernanke in this article:

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