Archive for January 25th, 2019

From Julius Baer to MBaer: Long history of one family in banking…

January 25, 2019

Interesting piece which again shows history and families matter in banking. Michael Baer, great grandson of Julius Baer is to start his own bank. He separated from the Julius Baer group in 2005 over differences:

Michael Baer, a great-grandson of Julius Baer — who founded the Swiss bank of the same name over a hundred years ago — is about to start accepting clients for his MBaer Merchant Bank AG. After receiving a banking license from the Swiss Financial Market Supervisory Authority at the end of 2018, the final preparations are now under way.

We hope to be operational by March,” Baer said in an interview. “We are still looking for suitable offices in Zurich,” said Baer, who himself worked at Julius Baer Group Ltd. for many years.

Can the family name help him to win customers? “I can provide an answer to this question in two or three years,” Baer said. “I’m proud that I can look back on such a long history in banking.”

His great-grandfather started what is today known as Julius Baer Group as a small currency exchange in Zurich in the 1890s. It later became a wealth management firm with international expansion starting in 1940, becoming the first Swiss private bank to go public in 1980. The majority of the voting rights from the initial public offering remained within the Baer family, ensuring full control of the Group. That only changed at the beginning of 2005 with the introduction of the ‘one share, one vote’ principle.

Such stories are so interesting…

New rule will give surplus reserves of Sebi, pension regulator to govt

January 25, 2019

It is not just about RBI’s reserves, but about other regulators too.

Shrimi Choudhary reports in BS:


Towards India’s new fiscal federalism

January 25, 2019

Vijay Kelkar gave Prof. Sukhamoy Chakravarty Memorial Lecture at the 55th Annual Conference of The Indian Econometric Society (TIES). TIES was organised by Mumbai School of Economics and NISM. The program looks quite interesting and hopefully they also put up papers overtime.

Good to see NIPFP put up Mr Kelkar’s talk as a working paper where he talks about India’s new fiscal federalism. He argues to bring back Planning Commission’s role to address state imbalances (horizontal) in development in today’s Niti Aayog. He also argues for a single GST rate of 12% with 2% of the resources marked for the third tier of oue governance: elected local bodies.


In conclusion, I have discussed the issue of the need to revisit the fiscal federal architecture in contemporary India. Briefly tracing the origin of arrangement in
contemporary history, I have attempted to point out the changing political- economic parametric environment calling for commensurate change in the way our fiscal federal setup ought to be conceptualised, here and now. In doing this, I have identified some of the important issues that arise as we move forward. I have also suggested innovative reform proposals towards creating Four Pillars- based architecture for India’s new Fiscal Federalism. While the final resolution of these matters will be attained through a dialectic that will play out in the domain of realpolitik, it is important that such a process be helped along by evidence based analysis and debate. It is my strongest possible hope that this lecture will contribute to such a debate on the issues which are so vital to our country. I should say that  in these debates, this society and its members should play a fulsome role.

Useful stuff…

Principles of tax design, public policy and beyond: The ideas of James Mirrlees, 1936-2018

January 25, 2019

Nice tribute and review piece on Prof Mirrless work:

Sir James Mirrlees, co-recipient of the 1996 Nobel Memorial Prize in Economic Sciences, passed away in August 2018. This column outlines how his work has transformed economists’ understanding of their discipline – from the principles of tax design to the theory of contracts and beyond. By conceiving of policy questions in terms of information asymmetries between governments and taxpayers, Mirrlees demonstrated how to conduct convincing analysis of redistributive objectives together with incentive effects in the design of general tax systems and public policy more broadly. His ability to simplify complex problems in ways that reveal their tractable essence means that his work has yielded insights that have reverberated throughout the discipline. It has also proved highly fruitful for practical policy design.

I know very little of his work. Should read more and this piece is a start…

Federal Reserve marks the 100th anniversary of its data on industrial production

January 25, 2019

Nice to see Fed marking 100 anniversary of an economic data: industrial production.

The publication on Friday of the Federal Reserve Board’s monthly statistical release on industrial production and capacity utilization marks the 100th anniversary of Board data on industrial production. The index has kept pace with an ever-evolving industrial sector by providing information that spans from the rise of the modern factory through the digital age.

The Board began collecting information about industrial production to satisfy the Federal Reserve’s need for timely and relevant data on the U.S. economy. The Board’s measure of industrial production remains an important economic indicator today and is frequently used by academics, businesses, and policymakers.

The index originally divided output into 55 categories and now includes 300, reflecting an increased ability to track the diversity and changing composition of the industrial sector. For example, in 1919, textile manufacturing represented nearly a quarter of the index. Almost the same proportion is represented in 2019 by the combination of motor vehicles and parts, aircraft, and oil and gas extraction. Textiles now represent less than 1 percent of the index. A short history of the index that describes its introduction and tracks its changes and improvements over the past century is available on the Board’s website.


I had earlier pointed to history of other macro data in US such as output, inflation and unemployment. We now have some history of industrial production data as well:

Ever since the Federal Reserve was founded in 1913, understanding current business conditions has been a central focus in pursuing its mission of a stable and secure financial system. Less than a year after the first Board members took their oaths of office, the organization issued the inaugural monthly Federal Reserve Bulletin, which included narrative summaries of general business conditions in each of the 12 Federal Reserve Districts.

Over the next few years, the monthly reports from the Federal Reserve Districts became more statistically oriented. At the same time, private industry was in the process of reorganizing to supply the country’s effort in World War I and would soon thereafter transition to a postwar economy. In order to track the changes that were taking place, the Board in 1919 began publishing monthly tables containing data on the production of different goods, such as iron and steel, cotton and wool, and pulp and paper.2

By early 1922, the tables on the physical volume of trade had expanded to show a large number of items. To present this information in a “more compact and better coordinated form,” the Board developed three indexes of industrial activity: manufacturing, mining, and agriculture.3 These monthly indexes were published back to 1919, and they used the average of monthly activity in that year as a base. By the end of 1922, a second set of indexes—narrower in coverage but based on more refined methodology—was introduced.4 These new measures were made available by the 25th day following the reference month.

Nice stuff..

NZ to present a “well-being” budget from 2019

January 25, 2019

After pioneering monetary policy and financial regulation, New Zealand wants to change and pioneer fiscal policy too.

In World Economic Forum, NZ’s cool Prime Minister Jacinda Ardern spoke about a new approach to their fiscal policy:

Jacinda Ardern has unveiled a new approach to running New Zealand’s finances.

“We need to address the societal well-being of our nation, not just the economic well-being,” she said during a Davos discussion on More than GDP.

This means that from 2019, her government will present a “well-being budget” to gauge the long-term impact of policy on the quality of people’s lives.

In practical terms, child poverty figures will be presented at every budget. The onus will be on ministers to show how spending proposals will benefit people, and work with other ministers across party lines to ensure they have a positive, long-term impact, Ardern explained.

“Our people are telling us that politics are not delivering and meeting their expectations. This is not woolly, it’s critical,” she said.

The larger discussion in which she talked about the new approach budget along with other participants.

Looking forward NZ…

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