Archive for September 15th, 2017

Role of media in shaping people’s voting patterns in elections: Case of Fox News..

September 15, 2017

There are broad trends happening in media these days. One, lives of journalists reporting on sensitive political matters is in danger and two, how so called independent media is increasing taking sides with one political party and presenting its news always favoring the same political party.

Two economists have studied the second trend and shows how FOx News is influencing voting behaviour in US elections towards Republicans.

Vox reports the summary:

(more…)

Advertisements

Did Free Banking Stabilize Canadian NGDP?

September 15, 2017

Interesting post by Prof George Selgin. Selgin counters view of a blogger who says that Free banking between 1867-1935 in Canada did not stabilize its GDP.

About a month ago, a Facebook post drew my attention to an attempt, by Casey Pender of Prague’s CEVRO Institute, to test my thesis that free banking contributes to NGDP stability using statistical evidence from Canada, which had a relatively free banking system between 1867, the year of Canada’s confederation, and 1935, when the Bank of Canada was established.

In “Some Odd Data on Free Banking in Canada,” a blog post discussing his preliminary findings, Pender reports that he had hoped to

be able to show that Canada, from 1867-1935, had a more stable NGDP percent change from year to year than the U.S. And I thought this would be an easy and quick historical example that I could use to bolster my underlying theory. But things seem like they just ain’t so.

Instead, in comparing the fluctuations of Canadian and U.S. NGDP using data from the Macrohistory database, Pender found that Canadian NGDP was not less but more volatile. Moreover that conclusion held not just for the full 1870-1935 sample period, but also for the sub-period 1870-1914, which omits various extraordinary Canadian government interventions during WWI and the Great Depression.

Here is Pender’s chart showing his results from the full sample period:

 

 

 

 

 

 

 

 

Having now been made privy to these findings, I suppose that you are looking forward to seeing ol’ Doc Selgin eat humble pie. Well, you can quit holding your breath ’cause that won’t be happening anytime soon. In fact, for the moment at least, I remain thoroughly impenitent.

He says one must not just look at changes in NGDP but look at the relationship between those fluctuations and underlying changes in Canada’s monetary base. He shows that this relationship is much stronger in Canada than US…

In the end:

In brief, both our Canadian regression results themselves, and a comparison of those results with results using U.S. data, seem fully consistent with the theory that free banking helps to stabilize the relationship between NGDP and the monetary base.

Does that mean they confirm the theory? Alas, it doesn’t. Freedom in banking is but one of many differences between the pre-WWI Canadian system and its U.S. counterpart. Furthermore, even if Canada’s more stable NGDP-M0 relationship were in fact due to its having had a relatively free banking system, it wouldn’t follow that my theory is correct. Free banking could well have contributed to the stable relationship in question for reasons apart from the one my theory points to. We know, for example, that branch banking — itself an element of free banking — made Canada’s system less fragile, and therefore less vulnerable to financial crises, than the U.S. system. We also know that financial crises tend to involve a collapse in bank credit and spending. So the relative stability of the Canadian NGDP-M0 relationship, instead of reflecting a tendency for changes in M to offset opposite changes in V, may instead simply have reflected a relative lack of banking crises and associated increases in the ratio of bank reserves to bank credit.  Although all this is still good news for fans of free banking, it leaves my particular hypothesis unproven.

In short, while my theory has yet to be discredited, it also has yet to be confirmed. I hope that either Mr. Pender or some other enterprising econometrician will eventually settle the matter, one way or the other.

Hmm..

75th anniversary of Bank of China branch in Sydney and some interesting history…

September 15, 2017

Philip Lowe, chief of Reserve Bank of Australia shares some history from the Archives at the 75th anniversary.

Back in 1940s it was much easier to open a bank branch in Australia and tougher for people to travel to the country. How global banks and finance is built over the years is a tale of many a struggle:

(more…)

Should Indian equity markets extend trading hours?

September 15, 2017

The talks have started again. In 2007 or so at the peak of the global financial cycle there were suggestions to extend market hours as one needed to keep upto global finance.

Once again stock exchanges have asked to extend trading hours till 7.30 PM:

(more…)


%d bloggers like this: