Archive for December 15th, 2010

Why megacities continue to exist in this knowledge and internet age?

December 15, 2010

Professor Mario Polèse writes a superb article explaining the question (HT: Charter cities blog).


Decadal Infrastructure Goals vs Millennium Development Goals

December 15, 2010

Gulzar Natarajan points to this new idea proposed by Harvard Professor Stephen Peterson. H says foreign aid focus should be on developing infrastructure not fluffy social development indicators:


Economic Growth and Development: Latvia vs Croatia

December 15, 2010

These kinds of studies are very interesting where two countries take up a common strategy at a similar point of time. The common strategy could be opening up economies, political independence etc. And then after some 50 years or so one compares how the two have fared. So you have studies comparing India with S. Korea with both getting independence at near similar times (Korea also celebrates its independence day on August 15). Then you compare South Korea and North Korea. One also looks at Barbados vs Jamaica and Barbados vs Guyana.

Thorvaldur Gylfason and Eduard Hochreiter look at Croatia vs Latvia case study in this paper. They discuss the findings in voxeu:


ECB’s two excellent games to understand monetary policy and inflation

December 15, 2010

This is a wow. ECB recently launched two educational games which help in understanding monetary policy and inflation.

First game is called €CONOMIA which is a monetary policy game:

Have you ever wondered what exactly monetary policy is? Or how the key interest rate affects inflation? €CONOMIA will help you understand these basics of central banking. Your goal is to keep inflation low, at just under 2%, and stable. The interest rate decisions you take can achieve that – but they can also cause inflation to slow down or to rise sharply. Achieving a balance between the two extremes is not easy.

Second is Inflation Island where we understand the various situations of inflation – normal, hyper and deflation.

Explore the different areas of Inflation Island, see how people react to inflation and deflation, and how the scenery changes. You can also test your knowledge and try to identify the different inflation scenarios.

The Island’s cinema features videos and photos showing how inflation and deflation have affected various countries over the years.

In the second game you have video clippings of hyperinflation in Germany, Hungary and Zimbabwe. It also has a super video on deflation in Japan.

I played both the games for a little while and found them to be excellent. Very good graphics and exciting way to explain the key issues in central banking.

Highly recommended.


Trichet inaugrates these games and gives a short speech

ECB’s capital raising issue

December 15, 2010

ECB proposes to ask Euroarea members to raise its capital base.

ECB’s subscribed capital by members is EUR 5.8 billion, compared with a balance sheet of almost €138 billion (heavy file) in Dec 2009 (latest we have). And then it has bought EMU sovereign bonds worth EUR 72 billion. So it is weary of making losses on these bonds and also wants more firepower to fight any future concerns. A higher capital will provide markets some confidence as well:


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