Archive for May 15th, 2019

Glass skyscrapers: a great environmental folly that could have been avoided

May 15, 2019

Glass skyscrapers are all over the place in hot Indian cities. It becomes really hot inside leading to full blast AC and then one has to sit with a jacket!

Henrik Schoenefeldt (Senior Lecturer in Sustainable Architecture, University of Kent) in this piece looks at history of glass skyscrapers:

New York Mayor Bill de Blasio has declared that skyscrapers made of glass and steel “have no place in our city or our Earth anymore”. He argued that their energy inefficient design contributes to global warming and insisted that his administration would restrict glassy high-rise developments in the city.

Glass has always been an unlikely material for large buildings, because of how difficult it becomes to control temperature and glare indoors. In fact, the use of fully glazed exteriors only became possible with advances in air conditioning technology and access to cheap and abundant energy, which came about in the mid-20th century. And studies suggest that on average, carbon emissions from air conditioned offices are 60% higher than those from offices with natural or mechanical ventilation.

As part of my research into sustainable architecture, I have examined the use of glass in buildings throughout history. Above all, one thing is clear: if architects had paid more attention to the difficulties of building with glass, the great environmental damage wrought by modern glass skyscrapers could have been avoided.

 

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Some lessons from cricket to tackle development constraints

May 15, 2019

Niranjan in Mint writes on how fast bowling has emerged and risen in India.

He compares the rise to development economics:

The dominant view in India during our long decades of fast bowling drought was that it was a lost battle. All sorts of pessimistic explanations were bandied about. The Indian weather is too hot for fast bowling. A country where meat eating is uncommon will be unable to produce the muscular young men needed to hurl the ball at opposing batsmen. A culture rooted in the principle of non-violence does not have the attitude needed to bowl a bouncer aimed at the head. Indian soil is too loose to have pitches that support fast bowling.

Many of these cultural or geographical explanations may have seemed convincing back then, very similar to how experts were pessimistic about Asia’s development prospects after World War II. A couple of American academics even wrote in 1967 that the US should send food aid only to countries that could be saved; it was prudent to let overpopulated countries such as India starve. This was just years before India broke the hunger barrier with the Green Revolution.

The Indian fast bowling renaissance in recent years would have been impossible if the cultural or geographical explanations had indeed been so potent. An editorial published in this newspaper in May 2018 rightly pointed out that the turning point was the emergence of Kapil Dev—the sort of historical accident that economists write about when thinking about economic development. He proved that it was possible to match the best in the world.

Then policy took over. One important milestone was reached when the MRF Foundation got Lillee to coach young fast bowlers after 1987. Think of this as technology transfer. Many of the best Indian fast bowlers after 1990 came from within this system. Suddenly, you had Indian opening bowlers who could make good batsmen duck in a hurry. More youngsters followed the path as they saw Indian quickies getting their due. The pitches in some recent Ranji Trophy seasons got greener. The IPL opened another window of opportunity for young fast bowlers in India.

An entire ecosystem is now in place to nurture Indian fast bowlers. The role of cultural or geographical factors are indeed important—but they can be overcome if there is effective policy support, the spread of new ways of doing things and an initial big push to overcome the older path dependence. The broader lessons of development economics are actually not very different from the broader lessons from the Indian fast bowling renaissance.

Just hoping we don’t lose sight over our potent weapon of spin bowling…

RBI’s once used multiple indicator approach is becoming preferred approach for EME monetary policy…

May 15, 2019

BIS chief Agustin Carstens in this speech reviews monetary policy framework in emerging markets.

He says it was thought that have an inflation target and allow the currency to float and find its own level.  However, this approach is not what emerging markets have strictly followed:

(more…)

Selecting the next ECB chief: Avoid the song contest..

May 15, 2019

Stefan Gerlach (Chief Economist at EFG Bank in Zurich and Former Deputy Governor of the Central Bank of Ireland) in this piece:

Choosing the next president of the European Central Bank should not be like picking the winner of the Eurovision Song Contest. Instead, Europe should ask which criteria candidates must satisfy to be an effective ECB president, and then search for the person who best meets them.

He says following should be followed:

First, the president must be a team player. Journalists and commentators who have disagreed with the bank’s unconventional stance under Draghi often forget that the ECB president does not set policy, but rather chairs the Governing Council meetings at which policy decisions are taken.

Second, the ECB president needs a solid economics background. 

Third, the new ECB president must reflect the diversity of the eurozone.

Finally, one would hope to see several women among the main contenders for the position. But unless IMF Managing Director Christine Lagarde throws her hat in the ring, there may be no leading female candidates. That would be deeply regrettable, and out of tune with the tenor of the times.

Last bit of not having leading female candidates for the job is really disappointing…

Bank Deposits in India: Underlying Dynamics

May 15, 2019

Harendra Behera and Dirghau K. Raut and Arti Sinha of RBI in the monthly bulletin for May-2019 research analyse the recent trends in bank deposits:

Bank deposits remain an important part of the financial savings of households and key to the financing of bank lending.

Deposit growth is picking up in recent months in a cyclical upturn since December 2018, which is overwhelming a trend lowdown that has been underway since October 2009. The latter warrants policy consideration since deposit mobilisation is fundamental to India’s bankbased system of financial intermediation.

Empirical evidence puts forward several interesting facts about the behaviour of bank deposits.

First, it underscores the income as its most important determinant, both in the short-and in the long-run.

Second, interest rate matters for deposit mobilisation but only at the margin.

Third, financial inclusion has a boosting effect on deposit mobilisation over the long-run suggesting expansion of bank branches in unbanked areas.

Fourth, substitution effects associated with Sensex returns for deposit growth are limited to the short-run, warranting a careful appraisal of regulatory reforms and tax arbitrage, even as efforts need to be intensified to make both more market determined.

Finally, similar to Sensex return, small savings substitute bank deposits in the short-run but supplement deposits in the long-run, reflecting that limits on income tax exemption eventually evens out substitution effects and allow income to be the key determinant of both in the long-run.

In the final analysis, therefore, accelerating the rate of growth of the economy and disposable incomes holds the key to higher deposit mobilisation by the banking system.

Hmm..


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