Archive for January 16th, 2017

RBI Board could learn good practices from SEBI Board…

January 16, 2017

Today is truly a RBI Board day on this blog.

Thanks to Prof Jayant Varma’s post, one went back to SEBI Board. While looking at whether RBI Board can disclose more information of its meetings. one need go very far. SEBI provides a template to show this can indeed happen and even shows the way forward.

Interestingly, SEBI’s Board has been following different practices compared to the RBI Board.


What does FSLRC say on RBI Board and why there has been no mention of this at all?

January 16, 2017

One report which was supposed to overhaul India’s financial sector was – Financial Sector Legislative Reforms Commission. One does not know the status of the report as there is lots of confusion around its status.

Though, parts of the report have gained traction and policy attention like those on setting an inflation target and constituting an MPC.

Given the attention on the Central Board of Central Bank, one was curious what does FSLRC say on the Board?

Part II of the report (page 16) looks at RBI Board. It said the Board should not have more than 12 members which is less than current prescription of 21 members:


Opening up Indian central bank Board..

January 16, 2017

The storm is clearly brewing now.

It has taken a while for followers of India’s macroeconomy to realise the importance of RBI Board. While they were busy singing praises for how the newly constituted MPC will change India’s central banking forever, finally it was the oldest RBI Board which took (or asked to take) one of the most important decisions in India’s monetary history. We should have asked for disclosure of RBI Board minutes (where all action is) than just MPC minutes (which are a drag anyways).

Ila Patnaik adds to the brew:


Study economics not to be deceived by clever economists..

January 16, 2017

An interesting comment by Dr Manmohan Singh. More so they coming  at launch of a book on history of economic ideas by Vinay Bharat Ram:

Economics should be studied not to find settled answers to unsettled questions but to warn on how not to be deceived by clever economists, former Prime Minister Manmohan Singh said quoting economist Joan Robinson. “When we study economics, what is the purpose of the study of the economics? It is not to find settled answers to unsettled questions but to warn us how not to be deceived by clever economists,” Singh said at launch of the book ‘Evolution of Economic Ideas – Smith to Sen and beyond’ by DCM Limited’s Chairman Vinay Bharat Ram.

“When we study economics, our impulse is not the philosopher’s impulse, knowledge for the sake of knowledge, but for the healing that knowledge may have to bring. It is for the heart to suggest our problems, it is for the intellect to solve them. The only purpose of intellect is to be a servant of social sympathies. That gives you one idea of what economics is all about,” Singh said.

This is superb bit of quoting by Dr Singh from history of economic thought.

As students of economics, these ideas/statements should be really well known to us. But it is a pity (or a shame?) that as none of this is taught, we get to read about them so randomly and then ponder/wonder over the words of wisdom….

The top rich in Europe in the long run of history (1300 to present day)

January 16, 2017

Prof. Guido Alfani of Bocconi university says:

A lesson from Bhandarkar about the need to rein In historical fantasies

January 16, 2017

Food for thought piece by Kiran Kumbhar in Wire:


Crises in economies vs Crisis in Economics…

January 16, 2017

Some interesting links on the topic (HT:Economist’s View Blog)

  • Andy Haldane of Bank of England raised concerns on state of economics. His main idea is econs failed to see the crisis
  • David Miles, former Bank of England official responds saying no such crisis. Most economics models confirmed the crisis.
  • Simon Wren Lewis sums up and says problem is to think economics only means macroeconomics and finance. The other areas of economics like micro, public etc did not face any such crisis.  Moreover, even within the two macro and finance, former mostly excluded the latter. So there is no crisis as such but a case of overlooking the data. He says if there was someone who should have spotted risks it was Bank of England!

Then there is another article by Prof Paola Subacchi of University of Bologna. She hits the nail on its head:

Where do we go from here? While we should appreciate Haldane’s candid admission, apologizing for past mistakes is not enough. Economists, especially those involved in policy debates, need to be held explicitly accountable for their professional behavior. Toward that end, they should bind themselves with a voluntary code of conduct.

Above all, this code should recognize that economics is too complex to be reduced to sound bites and rushed conclusions. Economists should pay closer attention to when and where they offer their views, and to the possible implications of doing so. And they should always disclose their interests, so that proprietary analysis is not mistaken for an independent perspective.

Moreover, economic debates would benefit from more voices. Economics is a vast discipline that comprises researchers and practitioners whose work spans macro and micro perspectives and theoretical and applied approaches. Like any other intellectual discipline, it produces excellent, good, and mediocre output.

But the bulk of this research does not filter into policymaking and decision-making circles, such as finance ministries, central banks, or international institutions. At the commanding heights, economic-policy debates remain dominated by a relatively small group of white men from American universities and think tanks, nearly all of them well-versed devotees of mainstream economics.

The views held by this coterie are disproportionately represented in the mass media, through commentaries and interviews. But fishing for ideas in such a small and shallow pond leads to a circular and complacent debate, and it may encourage lesser-known economists to tailor their research to fit in.

The public deserves – and needs – a marketplace of ideas in which mainstream and heterodox views are afforded equal attention and balanced discussion. To be sure, this will take courage, imagination, and dynamism – particularly on the part of journalists. But a fairer, more pluralistic discussion of economic ideas may be just what economists need as well.

Amen to that.

I mean the whole thing is such a close circuit (or a circus?) that all this crisis talk reads like a joke. As the author says the coterie of world economic policy comes from selected certain schools (read Ivy leagures in North East USA). The majority of coterie first rejects a mega event coming (amidst some opposition), then they decide the crisis is on applauding the minority dissenters and then they together look for the solutions! It is that simple.  They are least impacted by any crisis as they are always deciding the big world game.

Unless we see more broad basing of economics and look at economists minus the usual tags we are not going anywhere. It will just keep going in circles. It is funny how a local economics person is never seen as an expert despite spending so much time in the region and sector. Whereas anyone from the coterie is seen as an expert on all the issues across the world.



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