Archive for January, 2014

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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Cutting the Gordian Knot or splitting hairs – the debate about breaking up the banks

January 22, 2014

Superb speech by Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank.

He starts with this tale of Guardian knot:

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Recovery from Financial Crises: Evidence from 100 Episodes..

January 22, 2014

Rogoff-Reinhart duo keep repackaging their huge hitoric macro/finance data to throw some interesting results.

In this paper they compare recoveries from financial crisis from 1o0 episodes:

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A Monetary Policy Rule for Emerging Market Economies..

January 22, 2014

Though am not such a fan of mon pol rules  as they are usually broken.

However, this piece by Alok Sheel (member PMEAC) has this nice piece in EPW. If not from a rules based perspective, he has this nice perspective on thinking about mon pol in EMEs.

He says much of policy thinking depends on these two frameworks – Mundell’s impossible trinity and Taylor rule. Policymakers want to use Taylor rule to change policy rates as per domestic conditions but are forced to do the opposite thanks to the trinity:

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How JD Power III (ratings) changed the automobile industry?

January 21, 2014

A nice interview of JD Power III, the guy who changed the auto industry by publishing the ratings and rankings of each auto product:

 In 1968, J.D. Power III took the radical step of soliciting customer feedback about cars through consumer surveys. This move ultimately led automakers to shift their operations from a product focus to a greater focus on the customer. Today, J.D. Power and Associates is focused on gauging customer satisfaction across a broad array of industries.

Power is now the subject of a new book that documents that history: Power: How J.D. Power III Became the Auto Industry’s Adviser, Confessor, and Eyewitness to History, by Sarah Morgans and Bill Thorness.  Recently, Power was a guest at theMack Institute for Innovation Management conference on the theme of disruptive technologies. Wharton professor of management John Paul MacDuffie sat down with Power to learn more about the experiences that led him to launch J.D. Power and Associates.

Nice bit..he has had quite a career working in different industries (started with auto industry thiugh) before starting on his own..

Rise of AAP and cases of similar middle class revolutions from history..

January 21, 2014

Prof. Vivek Dehejia of Carleton University has this nice piece in BS.

He says rise of AAP is basically a middle class revolution against the poltiical elite. There have been such resurgences by middle class in the past too:

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How thinking over FDI has evolved in India?

January 20, 2014

Nice paper in last week’s EPW edition. It is by Sojin Shin (a PhD candidate in South Asian Studies at the National University of Singapore).

He tracks the thinking since 1969 and talks about three regimes:

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Did political incumbents influence electoral redistricting in India?

January 20, 2014

Ignorance is both a source of bliss and frustration.

Lakshmi Iyer of HBS) and  Maya Reddy of McLean Hospital have this really interesting and informative paper on Indian political economy.Through, the paper I learnt of this very interesting political exercise called redelimitation (funny name) and its ramifications.

Electoral redistricting or redelimiting is a process by which boundaries of constituencies are redrawn to keep populations similar across. The idea is to neutralise the impact of population on electoral outcomes. The more populated a constituency that more likely it can have a candidate in the Parliament to represent former’s interests (atleast on paper). So the idea is to redraw these boundary lines once a while to make constituencies relatively equal.

In India’s case the process was done in 2006 after 1977 . The reason for such a long gap was that  states complained that this disincentivised their effort to lower population (well India is unique for nothing):

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Indian economy and policy during financial crisis (2008)

January 20, 2014

Much is written and known. Still it is useful to keep revising what went on.

Deepak Mohanty of RBI summarizes how Indian policy reacted to global financial crisis. He begins showing how Adv econ central banks intervened during the crisis. Then the impact on EMEs and finally on India.

Like EMEs, India suffered two rounds of crisis – one in Sep-2008 as crisis started and two in May-2013 when the word taper buzzed. In both, the policy responses were different. In the first, India had huge cushion given the robust economic conditions. In the second, the conditions were not as great:

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How recent trends in labor market are bidding goodbye to Dilbert comic strip..

January 17, 2014

Never really thought about it as have never really read Dilbert diligently.

K@W points how  recent trends on labor markets of temporary workers and shorter work hours is kind of making Dilbert out of sync with today’s times:

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The Entrepreneurs Who Invented Economic Forecasting..

January 17, 2014

Prof. Walter A. Friedman of HBS has written this book which should make a great reading. He looks at how economic forecasting as a discipline developed over the years.

HBSWK runs an interview of Prof. Friedman.

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Do video games lead to less studies? Case from Japan..

January 17, 2014

Tomohiko Inui, Ryoji Matsuoka and Makiko Nakamuro at voxeu point lessons from their recent experiment on the topic. 

It seems video games do have an impact on Japanese children as they have less time for studies. But this is marginal. What matters more is whether Parents are involved during studies:

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A Tale of Two Mayors—and Two Exits..

January 17, 2014

Paul Starobin writes this article in City Journal explaining the case of these two Mayors – Thomas Menino (of Boston) and Michael Bloomberg (of NY).

Despite doing similar kind of work, both got different exit receptions. Where Menino was celebrated, Bloomberg was more muted.

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Financial recovery of Iceland: A case worth studying

January 16, 2014

A very good article by Guido Mingels of Spiegel.

Instead of looking at numbers which we econs do, he goes to Iceland to figure what is going on post crisis:

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Why financial markets need referees and can anyone regulate a $400 trillion market?

January 16, 2014

A nice interview of Gary Genseler, just retired head of CFTC (Commodity Futures Trading Commission).

He points to how CFTC has tried to bring regulation to the futures market in US. He says transparency is the key:

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How Government can restore the faith of citizens (using a behavioral nudge)..

January 16, 2014

A billion dollar (or trillion?) dollar question facing most citizens across the world. And this is perhaps the oldest research question which remains relevant today and likely to remain in future as well.

Michael Blanding at HBSWK summarise the findings of this recent research by HBS profs -Michael Norton and Ryan Buell.

What research says is something really simple and intuitive — Seeing is believing. So unless people see that the govt is working for them, they are always going to feel nothing is working. So, for a government to demonstrate its efforts it needs to show people that something is going on.

What is interesting in the research is how they come about these results:

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From Helicopter Ben to Ambassador Ben..

January 15, 2014

Arvind Subramanian pays tribute to Ben Bernanke as the latter moves put of his role as Fed chair.

He says historians will look at Fed under Bernanke in due course of time. However, that is just one aspect. He played a stellar role as an American leader in global policy amidst chaotic and ineffective political leadership:

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Crisis firefighting is more glamorous than crisis prevention..

January 15, 2014

Super column by Prof. Shiller.

He says it has been really difficult to pass any reforms to regulate financial sector. The policymakers have een rejecting simple ideas to rein in future crises. He narrates his experiences of chairing sessions at recent AEA-2014 meeting in financial crisis policy:

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From Philips curve for economics to Philips curve for politics..

January 15, 2014

An interesting article by Siddharth Singh of Mint. It is kind of interesting to put economics framework to figure all complex things in life.

He uses Philips Curve used in economics and draws a similar curve for politics:

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Why is Recent Food Inflation in India so Persistent?

January 13, 2014

The recent reading (Dec-13) of CPI inflation has declined thanks to significant correction in food inflation. The CPI food index has declined from 145.7 in Nov-13 to 142.2 in Dec-13. The bewildering swings in food inflation remain a huge concern for policy making.  Despite correction in veggie prices last month food inflation remains 12% compared to 14.5% in Nov-13.

Though, this does not take away the fact that food inflation has remained highly persistent from 2010 onwards. The average CPI food inflation has been 11.11% from Jan-12 onwards compared to average CPI of 9.88%.

Deepak Mohanty of RBI has this speech on persistence of food inflation in India..

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