Archive for February 8th, 2017

RBI courts unnecessary controversy by not inviting The Economist for its post monetary policy press conference…

February 8, 2017

There was big furore last time when Stanley Pignal of The Economist was not allowed to attend press conference post monetary policy decision in Dec-2016.

This time again Mr. Pignal tells us that invites have been sent to journos for today’s meeting but TheEconomist is not invited:

Invites to next RBI press conference have gone out. Sad to say again not invited. Journalists trying to figure out who is.

He also says some other journalist who has been critical of the demonetisation policy has not been invited without naming the person.

This is just needless really. One does not know why these invites are sent. All journos should be allowed if they fit basic guidelines and manners. The central bank should not really disallow a journalist who is critical of monetary policy. It should actually welcome criticism and look to answer questions from critics first.  There is no point in having journalists who are merely going to nod heads and ask meek/usual questions.


We are increasingly told by the government and its esteemed advisers that demonetisation is such a great idea and so on. After all the Central Bank and its Board agreed and advised the government on the idea. Now we are told discussions were on since Februray 2016 on the move.

In such a case, why get into needless controversy. Just let critics come and look to answer their questions.

One does not know what is going on really. New lows for Indian central bank..

Digital payment in India down by 10% as cash comes back to the system..

February 8, 2017

This bit of analysis by Anup Roy of Business Standard is interesting.

He shows how the digital payment data which had jumped significantly post demonetisation is beginning to decline. Some people are going back to their choice of usage of cash over digital payments:


The key to lowering corruption is reduction of Government/Public sector

February 8, 2017

Daniell Mitchell of FEE has a post on corruption in Romania. The Government in Romania has said that corruption only beyond certain value will be an offense! The people are obviously not happy and protesting in streets.

He says though Romania has made progress since its inglorious past of even more corruption. The key to reducing corruption is to lower the size of the public sector:


Figuring the monetary policy toolkit of People’s Bank of China..

February 8, 2017

Interesting piece by Robin Ganguly pf Bloomberg.

He lists the various methods/tools used by PBOC to manage monetary policy from OMOs to X-Repos (identity not disclosed) ..

How Economic Populism Works…

February 8, 2017

Prof Andrew Velasco cautions against rising economc populism. He says though there are no immediatesigns of stress post Brexit and Trump against expectations but in long run things will turn around for worse. How long is anybody’s guess:

In the United States, academic economists repeatedly warned that Trump’s economic plans were little short of lunacy, and in the aftermath of his shocking election victory, some prophesied immediate economic catastrophe. Since then, the stock market has reached record heights, commodity prices have recovered, and forecasts of US economic growth keep rising.

Have the pundits been smoking something? Or have Trump and pro-Brexit leader Nigel Farage abrogated the principles of introductory macroeconomics?

Nothing of the sort. But to understand the effects of populist policies, one must first understand their logic. In a classic paper, Sebastian Edwards of UCLA and the late Rudiger Dornbusch of MIT define economic populism as “an approach to economics that emphasizes growth and income redistribution and deemphasizes the risks of inflation and deficit finance, external constraints, and the reaction of economic agents to aggressive nonmarket policies.” They add that populist approaches “do ultimately fail,” not because conservative economics is better, but as “the result of unsustainable policies.”

“Ultimately” can be a very long time. Populist policies are called that because they are popular. And they are popular because they work – at least for a while.

A sizeable fiscal stimulus in a sluggish economy produces a pickup in growth and job creation. If financial markets turn bullish (as they often do), the exchange rate appreciates, quelling nascent inflationary pressures and making it cheaper to import. And, as Argentine economist and Columbia University professor Guillermo Calvo has long argued, precisely because they are unsustainable, populist policies cause people to shift spending from the uncertain future to the present, when the going is good. This reinforces the expansionary impact of the stimulus, which is particularly strong under fixed exchange rates. So, eurozone countries: beware!

Anti-populists in the US, the UK, and elsewhere must come to terms with the reality that bad policies pay off, both economically and politically, long before they become toxic. Yes, the excessive private and public debt, the loss of export capacity, and the weakening of institutions harm the economy (and the polity) – but only in the long run. If critics do not understand that and act accordingly, populists will have as long (and destructive) a run in the rich countries as they once had in Latin America.

What times really. When Advanced world has to take lessons from Latin American economies.

A review of tenure of New Zealand Central Bank Chief – Graeme Wheeler…

February 8, 2017

Yesterday, this blog had posted about how the end of tenure of NZ central bank chief and date of elections in the country are happening at the same time this year.

In the post, I had highlighted the Croaking Cassandra blog which is a goto blog on NZ economy.  It is so nice really to read blogs from different countries. The blog is run by Michael Reddel who worked in the central bank for  many years. One wished we had similar people writing in India too.

In a new post, Reddel looks at the tenure of Graeme Wheeler which is a decent read. Earlier we criticized central banks for not able to lower inflation. Now the criticism is for not able to increase inflation:


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