Archive for September 8th, 2017

Estonia may launch its own virtual currency..

September 8, 2017

Interesting to know this:

If you’re already having trouble keeping track of all the virtual “cryptocurrencies” out there, then here’s another one that might end up on your radar: the Estonian “estcoin.”

Estonia isn’t the first country to consider launching its own digital currency as a rival to the better-known likes of Bitcoin and Ethereum—China’s central bank is quietly testing the idea of a new cryptocurrency, and Russia’s central bank is considering the same. However, Estonia may have an advantage in the public-sector digital infrastructure that it’s already built, and it sees the idea as a way of allowing people around the world to directly invest in the country’s digital aspirations.

 Over the last two-and-a-half years, Estonia has offered so-called e-residency to foreign entrepreneurs who want to virtually site their businesses in the country. The program gives people an Estonian government-backed digital ID, the ability to simply register an EU company, access to business banking and payments services, and tools with which to digitally sign documents. So far, more than 22,000 people have signed up from around the world.
In a Tuesday blog post, Kaspar Korjus, the managing director of the e-Residency program, said this experience gave Estonia an edge over other countries that are considering the introduction of national cryptocurrencies. Indeed, the estcoin could become bound up with the rest of the e-Residency ecosystem.

“No other country has come close to developing both the technology and the legal frameworks that would enable them to introduce and securely manage tradable crypto assets globally,” Korjus wrote. “The secure digital identities used by e-residents (as well as citizens and residents of Estonia) are now the ideal mechanism for securely trading crypto assets in a trusted and transparent digital environment. The tokens cannot be counterfeited and the government oversight means they cannot be used for illegal activities.”

Estcoins could be used to pay for public and private services in Estonia, and “eventually function as a viable currency used globally,” he said.


Why don’t we look at lessons from Indian banking history while resolving current NPA crisis..

September 8, 2017

It was interesting to read RBI DG’s speech on Indian banking NPA crisis. He starts pointing to the scale of the problem and then looks at examples of banking crisis in Japan (1990s)  and Europe (recently).

In the end, he asks several qs in words of William Wordsworth:


Uzbekistan devalues currency by 50% overnight…

September 8, 2017

As markets opened on 5 September 2017, Uzbeks were in for a surprise as the currency opened  at 4200 soms compared to 8100 soms a day earlier.It was a long overdue move and welcomed. SO much so one person sayd to declare 5 Sep as a national day:

Even normally level-headed experts like Yuliy Yusupov were exuberant.  
“I don’t think it would be a bad idea to make September 5 a holiday — Convertibility Day. Outsiders wouldn’t understand. … For 21 years we’ve been waiting,” Yusupov wrote on Facebook.

More links  here:

A useful timeline of history of economic thought…

September 8, 2017

The Minskys blog has done students of history of economic thought a huge favor by putting this timeline:


Challenging the Samuelson paradigm in economics textbooks…

September 8, 2017

This blog had written about a new economics text called “The Economy” or the core textbook. The book is making inroads.

Samuel Bowles and Wendy Carlin explain how the book marks a shift from the Samuelson textbook (HT: CafeEconomics):

Things are radically different at the undergraduate level. The Samuelsonian paradigm is basically Marshall plus Keynes, and this remains the basic content of the dominant textbooks today. Asymmetric and local information, and strategic social interactions modelled by game theory are mentioned, if at all, at the end of the introductory course, or as special topics,. (Von Neumann had commented – surely ungenerously – about Samuelson that “…even in 30 years he won’t absorb game theory”.)

Understandably, students think information problems and strategic interaction are simply refinements of the standard model, rather than challenges to two of its foundations – price-taking as the benchmark for competitive behaviour, and complete contracts (and hence market clearing in competitive equilibrium) made possible by complete information.

CORE’s introductory text, The Economy, attempts to do for information economics and strategic social interaction what Samuelson did for aggregate demand. CORE has made these concepts part of the foundation of an economic paradigm that can be effectively taught to introductory students. This new open-access online text, simultaneously published as a conventional book, is now available (The CORE Team 2017).1

The Economy takes on board the fundamental innovations of Hayek and Nash used in contemporary economics research. But concerns about climate and other market failures as well as economic instability provide reasons to doubt Hayek’s argument that governments should limit their activities to enforcing property rights and other rules that permit markets to function.

Likewise, behavioural experiments and research on human cognitive capacities call for a more empirically grounded conception of human behaviour than is present in Nash’s work. Integrating both limited cognitive capacities with greater capacities for cooperation among individuals provides a more adequate foundation. Keynes’ contribution is similarly in need of modification. We provide both models and evidence to question his optimism that government demand-management policies could substantially eliminate involuntary unemployment in the long run.

In Table 1 we contrast the foundational tenets of the standard paradigm, as represented by Samuelson, with that represented by CORE. By the ‘benchmark model’ we mean the standard case presented to students, from which ‘deviations’ are studied. For example, competitive markets are treated as the standard case, with monopolistic competition as an extension.

Table 1 Samuelsonian and CORE paradigms


One keeps wondering why economics textbooks take so long to change? For a subject which talks so much about change, it is amazing how little its own textbooks change?

I mean our major macroeconomics textbooks continue to rely on IS-LM models which say central banks change money supply. Whereas central banks change interest rates.

Undercover Historian tweets on this new textbook as: “Using thin history of economics to manufacture a scapegoat”



Women leading banks: A case for more or less stability?

September 8, 2017

They say if Lehman Brothers was Lehman Sisters, things would have been more stable not just at the firm but even for markets.

However, economists will always say but where is the evidence?

A group of IMF economists look at data and show that banks led by women are more stable:


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