Archive for May 18th, 2012

Financial crisis in US and euro area in 2007 vs Japan crisis in 1990s

May 18, 2012

A note in ECB’s latest bulletin on the topic. The usual fashion is to compare US-2007 with Japan-90. Here we have US/Euroarea-2007 with Japan 90.

The authors feel it is unlikely that US/EU will be like Japan in 1990s. Highly optimistic …

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Using Asset Disclosures to Study Politicians’ Rents in India

May 18, 2012

A terrific paper by  Rikhil Bhavnani of University of Wisconsin-Madison. The paper was presented in World Bank’s Annual Development conference – ABCDE 2012.

He looks at corruption amidst India’s politicians using their asset disclosures before the elections. The paper is full of surprises:

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An Assessment of Inflation Modelling in India

May 18, 2012

B. Karan Singh of ICRIER throws some light on this otherwise dark issue.

He analyses inflation using Philips curve:

This study analyses India’s inflation using the Phillips curve theory. To estimate an open-economy Phillips curve, we need three variables: (1) inflation (2) the output gap and (3) the real effective exchange rate. In India, the incorrect measurement of variables causes much difficulty in estimating the Phillips curve. The study by Singh, B.K. et al (2011) found that the Phillips curve existed, after addressing the issues related to measuring the variables. They suggested that the composite consumer price index (CCPI) was the best measure of inflation, and should be used to construct the real effective exchange rate in India. In measuring the output gap, the paper found that the Kalman filter estimates of the output gap capture all the dynamics of the Indian economy. This study constructs the variables, using a method similar to that followed by Singh, B.K. et al (2011). During the period 2008 to 2011, a combination of adverse supply shocks and overheating of economy resulted in an inflationary situation.

The paper discusses some interesting papers on inflation modelling in India as well..


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