Archive for August, 2012

List of world hyperinflations so far..

August 22, 2012

Steve Hanke and Nicholas Krus of Cato Institute have worked on a list of countries which have hyperinflations so far in econ history.

They say the literature  on hyperinflation is either incomplete (as in certain countries are missed) or incorrect (as facts are not right over right inflation numbers). As per the authors there are 56 episodes of hyperinflations:

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Why do some states develop as democracies while others remain authoritarian?

August 21, 2012

Today seems to be an institutions blogging day.

Elena Nikolova of EBRD has written a paper on the topic and summarised it in voxeu.

She says countries adopt liberal representative institutions (meaning democracy) when labor is scarce. When it is in abundance, there are more chances of extractive institutions.

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Why Central Planning exixted?

August 21, 2012

Acemoglu/Robinson in their wnf blog have been running series of posts on central planning.

They started the topic in early August questioning why Soviet Union picked up central planning which was inefficient way to create institutions. The usual theme is that Bolsheviks were influenced by Marx and hence implemented central planning in USSR. So it is seen that central planning existed because of Marxian ideology.

You knew back even then A/R duo would be unimpressed and point instead to the role of political power and centralised institutions in picking central planning.

In later posts the duo picked examples (here and here)  of countries which adopted central planning without any role of ideology.

So, in the recent post they say central planning existed because of control:

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Medieval Venice’s response to globalisation

August 21, 2012

Such papers on economic history just stump you. The paper is by Diego Puga of CEPR and  Daniel Trefler of University of Toronto.

It looks at couple of things:

  • First how international trade was done during the Medieval era
  • How Venice because of its geographical advantage became a great choice to take advantage of rising international trade
  • How Venetians formed institutions (mainly contracts) to realise the geographical advantage
  • How the institutions led to incomes becoming increasingly polarized to top traders
  • The top traders tried to limit competition leading to protests
  • This also led to overall decline of Venice…

The authors  says:

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Ideas for India – a voxindia type knowledge portal

August 19, 2012

Smit Gade sent me this wonderful resource – IdeasforIndia.in. Not an ideal thing to do on Sunday evening, but have not been able to control myself since have scanned it…

It has all the who’s who as editors and contributors.. 

Its chief editor Ashok Kotwal writes he wants to build it bigger than existing webportals like voxeu etc.

Hoping to get continuous food for thought on Indian economy..Thanks Smit once again..

Europe’s Summer Reading List..

August 17, 2012

A reading list by Barry Eichengreen obviously connected to what Europeans should be reading to end their crisis.

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What Is Accomplished by Banning Short-Selling?

August 17, 2012

Nothing much as per this paper by Ny Fed econs – Robert Battalio, Hamid Mehran, and Paul Schultz.

They compare two periods – first in 2008 post Lehman when there was a ban on short-selling in US. Second in 2011 when post US rating downgrade when there was no short-selling ban.

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Behavioral economics approaches have greater impact on savings than financial outcomes..

August 17, 2012

It is interesting to read such papers.

Brigitte Madrian of Harvard says that so far we have sued traditional route to increases savings – matching contributions. With behavioral economics we have more tools like text reminders,  simplification, automatic enrollment etc. These latter approaches have a great impact than the traditional approach:

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Is finance/financial globalisation great?

August 17, 2012

BIS organised its annual conferencein Jun-12. The theme was:  The future of financial globalisation. There are some interesting papers (including comments on a  paper by Dr Reddy whose career graph has soared post-crisis).

The opening remarks by Stephen Cecchetti are quite a read. He says finance is great but only upto a point. Similarly fin glob is great but upto a point.

 

 

I am unable to extract the content. So nothing much to say. Just reinforcing the fact that how times change. Before crisis even saying that finance is not really beneficial (even upto a point) was a crime, now it is all over the place..

Coase and the New Zealand Spectrum Reforms

August 17, 2012

A superb paper picked up from the conference given in honor of Prof Coase.

Via this paper I came to know NZ was the first economy to auction spectrum in 1989 (1989 was also the year when NZ adopted inflation targeting, another first). The paper is Charles Jackson who was part of the core team which managed this auction.

What is seen as an obvious thing now – allocation of spectrum to private parties using auctions – was just impossible a while ago. Coase’s paper in 1959 questioned this practice and suggested to auction  spectrum etc to private players.

In 1989, New Zealand’s Parliament enacted a new statute, the Radiocommunications Act 1989, that explicitly used a system of property rights to regulate the use of the radio spectrum.1 This statute resulted in the first ever spectrum auctions—and New  Zealand’s use of auctions has been copied around the globe. New Zealand’s adoption of a propertyrights regime, a more fundamental change than the introduction of spectrum auctions, has not had the same wide acceptance.2 How did New Zealand’s adoption of a propertyrights approach to spectrum come to pass? What role did Coase’s 1959 article play in the decision to adopt a property-rights approach  and in the design of the property-rights mechanisms? How does the New Zealand system (both in theory and in practice) differ from a naïve application of Coase’s insights?

It is my goal in this paper to address these questions. I was on the team that developed most of the system that is embodied in the New Zealand statute, and I participated in some of the drafting sessions for the statute.3 In recounting the background of  the New Zealand project, I also have to describe Coase’s influence on my own thinking. Although I conclude that the spectrum rights regime in New Zealand reflects Coase’s insights and, most probably, would not exist without his work, I indulge in some speculation about the benefits of broader and earlier implementation of a property-rights approach to spectrum management.

I did not understand the technology bit in the paper though. Nevertheless a nice read..

Hoping to read (can I write??) something on similar lines on auction of spectrum in India…

 

 

Could market design have saved Mr. Vilasrao Deshmukh?

August 16, 2012

This is not just about Mr. Vilasrao Deshmukh but several other Indians who die because of unavailability of organs for transplant..

This blog is a big fan of works of Prof. Al Roth of Harvard University (his super blog here). He has been advocating designing markets for repugnant goods like kidney etc. His work falls under the category  “market design”

Is it time for application of Prof Roth’s works in India as well and have a formal market for the same (there is already an illegal market though)? I wrote an article on the same a while ago. What do others think?

Meanwhile, I am revisiting Prof Roth’s works as lot of water has flown in the river since the last article..

How Do Consumers Make Choices?

August 16, 2012

A nice survey by Zakaria Babutsidze of United Nations University.

In this paper I review the evidence from marketing and psychology literature about the purchase behavior of consumers. I concentrate on the characteristics of the choice process, choice of the external information source and nature of the  information obtained from these sources. The impact of important systematic differences among consumers and products on choice behavior is also discussed.

Summary is consumers are different (irrational) and complex. They use heuristics and decisions differ across products. On durables, they spend more time gathering information and so on:

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India: Large and Small?

August 16, 2012

A nice lecture by Amartya Sen. Sort of an abridged version of his book- The Argumentative Indian. Just discovered it on planning commission website.

He even discusses the Indian economic policy:

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Economics of Spam

August 16, 2012

A nice paper by Justin M. Rao and David H. Reiley in the recent edition of Journal of Econ Perspectives.

They look at this whole business of spamming. Interestingly, they say it is nothing but negative externality like pollution, traffic congestion:

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Should new editions of intermediate microeconomics textbooks be banned?

August 14, 2012

An amazing post by an amazing blog and its team of bloggers.

Francis Woolley says econ authors bring new editions to kill second hand market.

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ECB’s TARGET2 system vs. Fed’s interdistrict settlement account

August 14, 2012

A nice analysis on TARGET2 account by Richmond Fed econs – Thomas A. Lubik and Karl Rhodes.

They say TARGET2 is not a cause but symptom of the Eurozone crisis. My research on the same was also on similar lines.  I am not going into Target2 discussion as have pointed to many articles etc in the past.

This bit on comparison of ECB’s Target2 system (t2) and Fed’s interdistrict settlement account (ISA) is really interesting. The comparison basically started when Herbert Sinn (who kickstarted the T2 debate) said the settlements between Eurozone central banks should be as done in Fed’s case:

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Will falling natural gas prices help mitigate the impact of rising oil prices?

August 14, 2012

Not really as per this note. The analysis is for US economy..

As oil still forms much of the total natural resource (oil +gas) consumption, decline in natural gas prices has not really impacted much.

Historically, oil and natural gas prices have moved hand in hand. However, in the past few years, while oil prices climbed to near record peaks, natural gas prices fell to levels not seen since the mid-1970s as a result of new hydraulic fracturing technology. U.S. consumer energy expenditures are still mainly driven by oil prices, so household energy bills got little relief as natural gas prices fell. Moreover, even though the United States has trimmed crude oil imports, they still equal a substantial share of gross domestic product.

 

Ponzi scheme was actually a case of failed arbitrage…

August 14, 2012

This is an amazing article on Charles Ponzi, the one on whose name all  fraud financial schemes are named. The website just made it paid and was really disappointing as it was free till yesterday…

The article makes for a great case study on several subjects:

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How medical school students are taking interest in economics..

August 13, 2012

A nice interview of one of my fav econs – Robert Shiller.

He discusses behavioral economics, its history and  way forward. He even discusses Einstein..He also points to how med school grads are taking interest in econ seminars because of linkages with neuroscience..

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Explaining the UPA/Congress victory in General elections of 2009..

August 13, 2012

As most Indians and India watchers look fowrard to 2014 general elections, here is an excellent analysis of previous elections in 2009. The authors are Yogendra Yadav and Suhas Palshikar. Prof. Yadav is a pretty famous face and analyses elections and its outcome on TV channels/media etc.

The authors discredit the widely held view that Congress/UP won the election because of some strategic planning etc. It was a combination of several things: bit of planning by UPA, BJP’s inability to hold  both some planning and some luck which went Cong/UPA way:

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