Archive for January 2nd, 2018

Just as there are stock market cycles, there are regulatory cycles of harsh and light regulation…

January 2, 2018

A lot of financial bubbles are linked to regulatory cycle. In order to invite participation, regulators start with easier/light regulation. This leads to rise in financial activity and build up of bubble. The idea is to take the punch bowl away but one rarely has the courage to do given the sentiment. Then eventually the bubble bursts and the regulatory cycle tightens. As, the activity slows down the regulator again lightens the load and the cycle again resumes…

In this article Securities and Exchange Commission of Pakistan (SECP) is going through a similar cycle (HT: Prof JR Varma):

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The rate of return on key asset markets in advanced economies from 1870-2015…

January 2, 2018

I have just started to read this long paper by Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, Alan Taylor.

But they just put the summary on voxeu.

They find equity and housing give similar returns and surprisingly volatility is much higher in housing, One would expect equity to have lower volatility as one has the option to diversify in this market. Then even in bond markets, volatility is high making it even worse for bondholders compared to equity ones. Then rate of return on capital is much higher than rate of growth than Piketty showed in his research.

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The relevance and irrelevance of small cities..

January 2, 2018

It has been a long time since I blogged about Paul Krugman’s articles/pieces. In this piece, Krugman gets to discussing something he discusses best – economic geography. He wonders about economics of small cities and says they are not as relevant today:

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How did weekdays get their names?

January 2, 2018

How did Sunday get its name? What about Thursday?

Margaret Clunies Ross (Emeritus Professor, University of Sydney) in this piece explains:

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