Archive for July 1st, 2019

What explains the surge for political science degree in Delhi University?

July 1, 2019

Mine edit explores:

…what explains the surge in students opting for Political Science as their top preference? On the face of it, it is easy to explain. On anecdotal evidence, politics in India has begun to attract frenzied interest among the youth. Prime Minister Narendra Modi’s historic win at the hustings may have something to do with this.

On the other hand, there is always the possibility that a scramble for seats in any given year is influenced by the scramble reported the previous year. If Economics cut-offs acquire infamy as unachievable one year, students might go rushing to English the next. If demand for English bids up cut-offs, it sends admission seekers clamouring for something else—say, Political Science. If this is so, then it amounts to a market failure of sorts. But if it’s a genuine spike in interest for the study of how we govern ourselves, perhaps we can hope for greater political awareness among post-millennials.

Though not sure why is it called Political Science? Adding science to any subject should be avoided. IT should be called as Political studies but that does not sound as glamorous..

Is Delhi lobby stalling the airport in Agra?

July 1, 2019

It is never clear why Agra does not have a functional airport yet.

One hears the role of Delhi lobby as the main reason. A story in ET talks about obstacles surrounding the airport.

Implicit trade patterns in global cuisines: Who are the exporters and importers in cuisine market?

July 1, 2019

Fascinating paper by Joel Waldfogel of Carlson School of Management:

Perceptions of Anglo-American dominance in movie and music trade motivate restrictions on cultural trade. Yet, the market for another cultural good, food at restaurants, is roughly ten times larger than the markets for music and film. Using TripAdvisor data on restaurant cuisines, along with Euromonitor data on overall and fast food expenditure, this paper calculates implicit trade patterns in global cuisines for 52 destination countries. We obtain three major results.

First, the pattern of cuisine trade resembles the “gravity” patterns in physically traded products.

Second, after accounting gravity factors, the most popular cuisines are Italian, Japanese, Chinese, Indian, and American.

Third, excluding fast food, the largest net exporters of their cuisines are the Italians and the Japanese, while the largest net importers are the US – with a 2017 deficit of over $130 billion – followed by Brazil, China, and the UK.

With fast food included, the US deficit shrinks to $55 billion but remains the largest net importer along with China and, to a lesser extent, the UK and Brazil. Cuisine trade patterns appear to run starkly counter to the audiovisual patterns that have motivated concern about Anglo-American cultural dominance.


Canada enters 50th consecutive year with a Floating Exchange Rate…

July 1, 2019

Lawrence L. Schembri, Deputy Governor of Bank of Canada, in this speech speaks about merits of floating exchange rate.

Canada shifted to floating exchange rate in 1970 and has gained immensely from this strategy:

This is my second speech in our public engagement campaign called “Toward 2021.” We call it that because 2021 is the next renewal date for our five-year inflation-control agreement with the Government of Canada, first adopted in 1991. For the renewal, we’ve committed to a wide-ranging review of our monetary policy framework to ensure it best achieves our mandated goal of price stability and thereby promotes strong and sustainable output and employment growth for the benefit of all Canadians. The framework has two components: our 2 per cent inflation target and our flexible exchange rate.

The inflation target normally gets most of the attention, so the value of our floating dollar risks being overlooked at a time when the performance of flexible exchange rates is coming under greater scrutiny in international policy circles.

My purpose today is to review the evidence and make the case that Canada and many other open economies have been well-served by a market-determined flexible exchange rate. In particular, Canada’s experience with inflation targeting underpinned by a floating currency is an instructive example of the most durable monetary policy framework in the post-war period.1 The flexible exchange rate has helped our economy adjust to external shocks, primarily changes in commodity prices. Although our floating currency does not completely offset the impact of all of these shocks, it has complemented the Bank’s inflation target to help achieve low and stable inflation and keep our economy functioning well.

While we’re not going to alter the flexible exchange rate component of our monetary policy framework, it is incumbent on policy-makers to review even successful regimes regularly to ensure that they are serving the best interests of Canadians. To this end, it’s worthwhile to explore the four main benefits of our floating dollar:

    • It allows monetary policy independence to achieve domestic price stability.
    • It facilitates adjustment to external shocks, thereby buffering their impact on economic activity.
    • It contributes to policy clarity and effectiveness.
    • It promotes financial sector development.

We also examine recent criticisms of flexible exchange rates. Because exchange rates are market prices that trade daily, they are intrinsically volatile. This volatility increases the cost of making international transactions and poses risks that have to be managed, especially by exporters and importers. Nonetheless, we come down squarely on the side that the benefits of a flexible exchange rate for Canada far exceed any such costs.

English Comeback: How England are trying to reclaim earlier status in ODI cricket and central banking

July 1, 2019

My new article in last Saturday’s Business Standard.

I look at how England is trying to reclaim their earlier status in ODI cricket and central banking.

A table (not in the article) which shows how English ODI team has done in recent years:

Record of English Cricket Team in ODIs
Total Won Lost Tied W/L Ave RPO HS LS
1971-92 World Cup 203 107 88 8 1.22 28.61 4.27 334 (60 overs) 93
1992 World Cup – 2015 457 210 226 6 0.93 30.32 4.97 408 86
2016 onwards 78 54 18 1 3 43.41 6.34 481 113

They have nearly won 75% of the matches from 2016 onwards which is crazy. One never associates English ODI team doing this well. Even India which captures all limelight has a Win/Loss ratio of 2.27 (75 matches).

Apart from ODI cricket, English are also trying to capture the numero uno status in central banking. Bank of England was a pioneer in central banking activity but lost its way in the 20th century. Post-2008 crisis it is trying to reclaim the glorious past.

The article compares these two institutions which English created…

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