Archive for August 2nd, 2012

European Crisis: Whether economic knowledge helped?

August 2, 2012

A nice lecture by PIMCO’s Mohamed A. El-Erian at NBER-Sloan Conference on the European Crisis.

He looks at whether econ know-how helped understand policy issues in European crisis:

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Index of Industrial Production (IIP) vs Purchasing Managers Index (PMI)

August 2, 2012

Came across this nice summary note comparing the two indices.

It is from an Indian perspective but should apply to other countries as well. The note says both are very different and hence cannot be compared:

As the methodology used for calculating IIP and PMI are different, one being based on actual production data and the other on business expectations, the comparison between the two cannot be made. The table shows that there exist no one-to-one correspondence between the two. The IIP for March decelerated to while the manufacturing PMI, however, showed expansion.

One can understand some divergence of trend on some months. But from a longer term perspective, the two indices should convey the same. If one shows contraction and other an expansion consistently, how does one make sense of the production trends?

If Gujarat is India’s China, and Kerala its Scandinavia, might Himachal be its Switzerland?

August 2, 2012

Fascinating articles (part-I and part -II) on the topic by Arvind Subramanian. They were published in Business Standard on 25/26 Jul 2012 in two columns respectively. These articles are  an ongoing work of Arvind Subramanian on Indian states performance.

The purpose of these two is to understand whether growth matters for social outcomes. Not surprisingly it does. However, in a typical India style there is large diversity in states. Hence the title which has been picked from the article (part-2).

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Relationship between Liquidity and Money in India: A Primer

August 2, 2012

A.K. Mitra and Abhilasha of RBI write this phenomenal and much need paper on the topic. It should be made compulsory reading for all students interested in banking/finance.

The topic of the post and paper may be exotic but the paper is what it says – a primer. Most of the time econs dupe you into reading their paper by calling it a primer. This one truly is.

It explains very neatly about this flow of funds between RBI and banks which is broadly also called as liquidity.

It explains how this liquidity changes under various situations:

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