Archive for December 31st, 2010

Wishing all a very happy new year

December 31, 2010

Wishing all the visitors a very happy new year.

It was a decent year for Mostly Economics with loads of research and stuff to write on.

Hope 2011 is better and there is more insights and stuff to write on. Let me know your suggestions/comments to improve in the next year.

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Did ECB change its policy stance in the 2008 crisis?

December 31, 2010

Not at all.

In this paper, a team of economists say ECB stuck to its mandate of price stability despite the huge crisis. They also look at whether ECB has taken decisions being influenced by it member economies. Again the answer is No. Hence, earlier criticisms that ECB will get politicised by member economies has not been true. ECB is a strong independent central bank.

By updating the Taylor rule study of Gorter et al. (2008), we analyze the stability of the coefficients of expected inflation and expected output growth, thereby addressing the question whether the ECB has changed its policies due to the recent crisis.  Our results suggest that the ECB – in line with its mandate – puts a stronger emphasis on maintaining price stability than earlier point estimates of Taylor rule models indicated.

In addition we address whether regional developments have affected ECB policies. Some critics of the governance structure of the ECB “think the institution and the process will be unavoidably politicised – member countries facing asymmetric shocks will want the ECB to follow different policies, the country governments will be able to influence their representatives on the ECB to fight for the national interest, and exert pressure through other channels of operation of the European Union, and at least sometimes succeed in bending the ECB’s policies.” (Dixit, 2000, p. 759). Despite the diverging economic developments in the countries in the euro area, notably during the recent financial crisis, we do not find support for the view that policy decisions have been influenced by regional developments.

Crisp and short.

Rise in variety of imports in US shows the battle for competetive advantage

December 31, 2010

Shalah Mostashari writes a nice short note on the topic. The author explains that number of varieties in US imports have risen from developing economies. Much of these varieties are similar pointing to rise in competitive advantage amidst developing economies for US market share.

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Two-speed Recovery to continue into 2011 and beyond

December 31, 2010

Oliver Blanchard, chief econ of IMF gives his forecast for 2011 in this interview. He says not much is likely to change in 2011 and theme of 2010 will continue to apply:

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Speech of Chinese Nobel Peace Prize Winner

December 31, 2010

Liu Xiaobo,winner of the 2010 Nobel Peace Prize wrote a statement on 23 Dec 2009 before beginning his eleven year sentence.

This statement was read as his Nobel Prize acceptance speech (HT: Ajay Shah’s Blog).

Must read . Liu was a very good writer as well.

Speech is


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