Archive for April 9th, 2019

30 years of inflation targeting: How RBNZ continues to shape monetary policy and central banking….

April 9, 2019

My new piece in moneycontrol.

Learning about geography of India’s food habits from Zomato’s annual report

April 9, 2019

Fascinating piece by Anil Padmanabhan in Mint (HT: Avinash Tripathi). The piece is based on this annual report of Zomato, the food app which itself is so cool to read. I mean annual report written like a blog post.

Anil writes how the annual report gives many insights on culinary tastes of India:


Income transfers meet Gandhian and Rawlsian ideals

April 9, 2019

Ajit Ranade in this article reflects on Congress Party’s NYAY scheme:

The idea of guaranteeing a certain basic income (or more generally “capabilities”) to every citizen is implicit in the classic treatise of John Rawls, A Theory Of Justice. Coincidentally, it was published in 1971, the same year that Indira Gandhi launched her “Garibi Hatao” (eradicate poverty) plan, which of course did not succeed.

Rawls’ theory is based on two principles: first, equal rights and maximum liberties for all (of opportunity, speech and other freedoms), but only so long as one person’s liberty does not diminish another person’s liberty; and second, allowing worsening inequality only so long as the worst-off person’s prospects are not made any worse.

This second principle says tha tthe well-being of society at large is judged by looking at the worst-off person. The one who is last in line. This resonates with Mahatma Gandhi, who wrote five decades before Rawls, “Recall the face of poorest and the weakest …and ask yourself, is your (policy) going to be of any use to him?…”

The focus on enhancing the welfare of the poorest and the weakest is often called the “Rawlsian” notion of justice and fairness. The Rawlsian idea of bettering the prospects of the worst off stands in contrast to the utilitarian notion of raising society’s average (in terms of income growth or per-capita income). Most democracies and capitalist societies have embraced the Rawlsian idea.

In a more practical sense, Joseph Stiglitz has pointed out that a dollar given to the poor ends up being spent as consumption, whereas a dollar given to the rich ends up as savings. Hence on the margin, to some extent, redistribution can be growth-enhancing. Thus, whether we take recourse to the philosophy of Rawls or Gandhi, or talk of growth maximization, the logic of cash transfers to the poor cannot be refuted. The debate is only about how and how much.

What economic factors are driving the tech firms to enter financial services?

April 9, 2019

Really nice paper by a team of authors: Jon FrostLeonardo GambacortaYi HuangHyun Song Shin and Pablo Zbinden.

We consider the drivers and implications of the growth of “BigTech” in finance – ie the financial services offerings of technology companies with established presence in the market for digital services.

BigTech firms often start with payments. Thereafter, some expand into the provision of credit, insurance, and savings and investment products, either directly or in cooperation with financial institution partners. 

Focusing on credit, we show that BigTech firms lend more in countries with less competitive banking sectors and less stringent regulation. Analysing the case of Argentina, we find support for the hypothesis that BigTech lenders have an information advantage in credit assessment relative to a traditional credit bureau. For borrowers in both Argentina and China, we find that firms that accessed credit expanded their product offerings more than those that did not. It is too early to judge the extent of BigTech’s eventual advance into the provision of financial services. However, the early evidence allows us to pose pertinent questions that bear on their impact on financial stability and overall economic welfare.


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