Archive for November 19th, 2013

Are high inflation expectations in India getting entrenched and ignored?

November 19, 2013

This blog has made many a posts for this aspect. Inflation despite being so high is hardly a cause for concern.

Arvind Subramanian of PIIE says taming inflation may prove difficult because the social consensus in favour of moderate inflation appears to have eroded:

Today, three aspects about inflation in India are worrisome. It is unprecedentedly high. It may have been the key proximate cause of the recent rupee crisis. And taming it may prove difficult because the social consensus in favour of moderate inflation has eroded. Consider each.

It being high..India is Latinised. This is perhaps India’s first inflation crisis:


What Is Central About Central Banking?

November 19, 2013

US House Committee on Financial Services held a hearing on the topic.

Experts shared their concerns on central banks and their policies going ahead:

Useful to read different views. Posen argued for a more powerful Fed. Makin points to risks from monetary cliff, Orphanides shows how intervention helped avert the crisis  and Lachman is not sure how these policies have helped..

Central Bank Limited or Limited Central Bank?

November 19, 2013

Central Bank Limited means central bank behaves like a private financial firm free to do things as per objectives stated by stakeholders. Limited central bank means its powers need to be curtailed as it has become too adventurous..The first view prevailed till even say last year. Now we are hearing more concerns from the latter group.

Philly Fed chief Charles Plosser argues for the latter case. This is nothing new as he has been arguing this for a while:


How Pakistan’s banking reforms were anything but reforms..

November 19, 2013

A really interesting research on Pakistan’s banking reforms in the latest EPW edition. It is written by Kamal Munir and Natalya Naqvi of University of Cambridge. 

They show how Pakistan’s banking sector reforms have turned upside down. This is nothing new as we have seen most countries who attempt banking reforms go the same way. The problem is mot of these reforms come during times of pressure and we simply adopt the western models without looking at home conditions. So much so, whenever one reads on banking reforms in a country one should be more skeptical than optimistic.

The banking system was seen as highly inefficient and public ownership of banks was seen as the main cause for this.


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