Archive for August 12th, 2016

Using prospect theory to figure today’s monetary policy and its impact on markets..

August 12, 2016

Prof Jayant Varma of IIM Ahmedabad has a nice post which gets to the crux of the negative interest rate issue.

He says as bonds have negative rates, the concept of yield/coupon etc is lost. So, investors are looking at bonds in terms of prices alone just like stocks. Whereas, investors are looking at stocks as bonds as they give dividends. So bonds are the new equities and equities are the new bonds.

This is like the prospect theory applying in monetary policy as risk averse bond investors are seeking risks in wake of losses:

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Making DSGE models less imperialistic

August 12, 2016

Mainlymacro blog has a post on DSGE models. He points to a recent short paper from Blanchard who questions the hype and imperialism of DSGE models. Blanchard has become really critical of current macro models which is kind of ironical. After all these are the econs who have made these ideas so popular and imperialistic.

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Figuring origins of our food and globalization in our food supply

August 12, 2016

This is a superb piece based on this research.

The authors track where most of our foods come from and how much of our food supply is globalised. On an average in most countries around 70% of food come from elsewhere. There are images and maps to figure all this interesting bit:

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What played a bigger role in selecting the 12 Regional Feds? Economics or Politics?

August 12, 2016

Three posts in St Louis Fed Blog look at the question.

There was a Regional Bank Organisation Committee which tried to ensure the selection is as much on economics:

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