Archive for January 23rd, 2014

Urjit Patel Committee on Monetarty Policy Framework – Some reflections

January 23, 2014

What does a RBI Deputy Governor do when he is appointed by the RBI Governor to look at a revamping mon pol framework (whatever that means)? Of course he looks at whether  the Governor has written on the matter and simply work around it. In this recent committee’s case, this is clearly the case. There is hardly any difference between what the Governor said in his 2009 report and what this comm says in 2013. (The same is true for Mor committee on financial inclusion). And then recent report on FSLRC also has similar ideas on RBI. One wonders what purpose do these committees serve other than generating hype.

Another thing which aids the Comm is that you need to just look around the central banks and see what they are doing. Lot of work has been done on this design aspect so makes it easier. No wonder the comm has picked up insights from central banks around the world – BoE, Fed etc. So soon, RBI will be in global company of central bank policies.

Much was already known about the committee and written upon. Things like targeting CPI, having an inflation target, forming a MPC etc have been written by several people in the past. So, the committee is bang on expected lines. Some thoughts:

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Building a circular economy — based on reuse and refurbishment of products, components, and materials..

January 23, 2014

Long back Mahatma Gandhi said “the world has enough for everyone’s need but not for everyone’s greed”.

Frans van Houten CEO of Royal Philips has this interesting piece revisiting the Gandhi dictum (does not mention it though). He says world economy is going to be majorly urbanised and middle classed by 2030. This will put huge constraint on the available resources given our current economic system of use and throw:

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Linking the Chinese saving puzzle to China’s one-child policy….

January 23, 2014

Taha Choukhmane, Nicolas Coeurdacier , Keyu Jin have this interesting piece in voxeu.

There is this Chinese saving puzzle (well most things in economics are just that puzzles)..China is a growing country and ideally should be borrowing against their future income. However, they don’t and their savings are really high. Some econs have said this is because of lack of social security and vibrant financial system where people can park their savings.

They say much of China’s higher savings can be explained by their one child policy.

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