Archive for May 4th, 2011

Whys is RBI’s monetary policy still called as credit policy?

May 4, 2011

Most news channels and economists continue to dub RBI’s monetary policy as credit policy. Some don’t even mention monetary policy and others say credit and monetary policy.

What is the distinction? Well I would believe there is. Earlier RBI’s policy was called Monetary and Credit Policy as RBI did have policies and interventions in  credit market. Now it is the case of  RBI just regulating the sector with credit decisions free to the bankers. So, it has become a monetary policy and RBI has dropped the word as well.

I was scanning the RBI’s website and came through this:



Cost and benefit of fuel economy cars – case of Indian consumer

May 4, 2011

Randy Chugh, Maureen L. Cropper and Urvashi Narain have written an amazing paper looking at whether Indian consumers understand the costs and benefits of fuel economy cars.

The cost is higher purchase price of these cars and benefit is the fuel savings from the purchases. So how do consumers look at this trade-off? Do they understand these economics? The paper says they do.

First why the need for the study?


Barney Frank introduces bill to disallow Regional Feds in FOMC

May 4, 2011

Barney Frank (one responsible for Frank-Dodd legislation along with Chris Dodd)  has introduced a bill that will only allow Fed Governors to sit on FOMC and decide on policy rates (HT: WSJ Blog). As per his BIll, Regional Feds will not be allowed to sit on FOMC and be just outside members.

The logic is – Private sector is a shareholder of Regional Feds and Fed Presidents elected by them, hence there is a conflict of interest. Whereas all Fed Governors are appointed by President and are political appointments.


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