An interesting case study by HBS Professors.
Archive for April, 2016
It is amazing and humbling to see Mostly Economics complete its ten years of writing and blogging. The birthday was around a week ago but due to travel issues the celebrations got delayed.
The blog just started from a remote office corner in Mumbai due to sheer boredom and lack of work. Taking a cue from a cousin who started a blog, one just ventured into it and continued somehow. It has been fascinating ever since and no amount of words can sum up the experience so far.
What has made it really special is to see the number of visitors coming to this blog and getting comments from some of them. In the end it is this one factor which has kept the writing going for so many years. The blog has registered 2.2 million hits so far and has 1604 subscribers who get all the blog posts for whatever they are worth. Truly humbling.
On this occasion, Mostly economics would like to thank all the visitors (both regular and once a while ones). It also requests them to chip in with their comments/suggestions on making Mostly economics a better blog. What should it do so that visitors can keep coming to this place for the next ten years as well? 🙂 Thanks in advance..
Till then, happy birthday once again and let the party continue.
Have been noticing quite a few searches for Nitit Aayog internship on this blog.
Here is the 2016 notice/advertisement. Deadline for application is 30 Apr 2016. The applications started this week on 18 April 2016. So rush in your applications and pass on the word.
Sandeep Moudgal has a great piece on the topic. How certain castes/communities come to being associated with certain products and then how they keep looking at ways to revive and stay in competition. It just makes for a great reading.
Iyengars that run bakery shops in Bangalore are one such community. They migrated from Hassan and started bakeries across the city:
This is an interesting piece of news. Given the noise on how Indian equity markets will reach new highs in future (the noise is not anything new BTW), one would imagine the equity players doing well. But one hardly sees this.
Look at most market players around – investment banks, mutual funds etc all seem to be bleeding and exiting. Most small players in these various sub-markets are shutting shop and in MF industry we have seen big MNC players exiting the space.
Broking industry is joining the exiting game as well:
This blog has been really quiet on behavioral economics/nudging for a while. It was once the favorite topic and quite a few posts were written on it. Perhaps, have not stumbled on something interesting in the space.
Prof Utpal Dholakia (Professor of Marketing at Rice University) has a post on how nudging could backfire.
This is a hard hitting piece by Prof Steve Keen which questions the basic ideas on banking. It is hard hitting as he takes on Prof. Joseph Stiglitz of all people. I am ignoring the hard hitting bit and getting directly to the banking bit.
Traditionally, we are taught that banks intermediate between depositors (surplus units) and loan seekers (deficit units). So they take deposits from someone and pass them on to others as loans. It charges higher interest rates on loans than interest it pays on deposits. This spread in turn should ideally help recover operational costs and also result in profits.
Lately. this model is being questioned as too simplistic. Bank of England econs make a great case of this.
This one is by Norges Bank Deputy Governor Jon Nicolaisen. As he is a central banker, what more to expect than whether one should intervene ot let markets work during a crisis:
Superb video on Chris Blattman blog. Brilliant ride and its does feel like as if one is sitting on roller coaster. Highly recommended to take the ride.
The global economy is actually like this theme-park as of now with multiple rides. Some promise a lot of thrill but are a disappointment. Then there are those less hyped ones which give much better bang for the buck.
Ajay Shah has a post on the topic. The summary is:
Many times in India, subsidies are being used to express sheer value judgments; they are just the faddish thinking of one bunch of hausfraus running policy versus another. At other times, a market failure is indeed present. But instead of more subtle interventions and the minimum use of force — based on a sound scientific understanding of the anatomy of the market failure — we tend to rush to the excessive use of force that is a subsidy. Every subsidy is grounded in the monopoly of violence of the State that is required for tax collection. We should be far more circumspect before doling out subsidies. Subsidies are the last refuge of a failed policy maker.
One may disagree with what the author has to say but points have been well argued.
I guess the problem is not subsidies but open ended ones. Some form of subsidies might be needed to get things going in initial years. But they continue to go forever without looking at merits of the case. What is needed instead is a closed end approach to subsidies where after a definite time, they should be phased out.
Those who think shadow money/banking is a new idea and came to the fore only in 2008 crisis, should know better.
Similar concerns arose when banks started offering deposits and one was not sure whether they should be counted as money or not. Over a period of time, deposits are not just counted as money but has become the most dominant form of money as well. So will repos the new shadow banking instrument make the similar transition as well?