Archive for August 2nd, 2019

Analysing capital flows: Push factors, pull factors and pipes

August 2, 2019

Missed pointing to this speech by Mark Carney, Governor Bank of England.

He gave the speech in June-2019 and says we need to lower volatility in capital flows:

Today, I want to examine what drives capital flow volatility and, in the process, sketch an agenda for sustainable capital flows in the new world order.

Specifically, what should be the priorities to increase sustainable cross border capital flows? How many are the responsibility of the receiving country? What about the advanced economies who set the tone for the global financial cycle? And to what extent does the structure of the international monetary financial system itself, including the global safety net, determine safe flows?

To begin to answer these questions, the Bank of England is developing a holistic “Capital Flows-at-Risk” framework that assesses the relative contribution of the three drivers of Capital Flows-at-Risk:
 ‘Pull factors’ – domestic conditions and institutions that affect the relative attractiveness of investing in an individual country.
 ‘Push factors’ – that determine global risk appetite and financial conditions, particularly the level and prospects for US monetary policy and financial stability.
 ‘The Pipes’ – the structure of the global financial system itself, particularly the degree to which it dampens or amplifies shocks.

How these three Ps drive capital flows and their volatility plays a crucial role in macro and financial markets stability.

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Estimating Jane Austen’s income: insights from the Bank of England archives

August 2, 2019

Central Bank archives are not just about figuring the organisation but several other things.

John Avery Jones, a retired Visiting Professor at the LSE in this post estimates Jane Austin’s income from the Bank of England Archives:

Based on these assumptions, and taking into account such details as that she did not keep anything back for tax on the first receipt which was presumably funded by Henry’s bank, and assuming that she spent the income from the Navy Fives, the income from Mansfield Park would be £310. This is precisely Henry Austen’s figure; perhaps he was not exaggerating on this occasion. On that basis the total tax she paid (before its abolition in 1816) would be about £56. Alternatively if she commenced her profession at the later time the income would be £337, which is almost identical to Professor Fergus’s figure. (On the different assumption that she carried on a trade, which would necessarily have been set up at the time of the receipts from Pride and Prejudice and Sense and Sensibility, the tax would be lower and so would reduce the estimate of earnings from Mansfield Park to £297.)

Her total income from writing in her lifetime was a mixture of taxable receipts and receipts after the abolition of income tax in 1816. These amount, on my estimate, to around £631 before tax (while tax was in force), or £575 after tax, which would be equivalent to just over £45,000 at today’s prices.

Hmm…

Government opens applications for RBI Deputy Governor (Viral Acharya’s replacement)

August 2, 2019

This application should have come much earlier given Viral Acharya had indicated in June that he will not be able to serve beyond 23 July 2019.

Anyways, Government has put up the job advertisement:

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Bringing Wellbeing into the Public Finance (Act)

August 2, 2019

New Zealand is trying to reshape its fiscal policy with compassion and giving it a human touch.

In Jan-2019, I had blogged how NZ govt plans to include well-being into its budget. The Govt presented the budget in May-2019 which plans to focus on these aspects of well-being:

The Wellbeing Budget

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How Market Design Emerged from Game Theory: A Mutual Interview

August 2, 2019

Fascinating mutual interview of Al Roth and Robert Wilson in the new edition of Journal of Eco Perspectives.

To jog our memories about the history and development of game theory and how it shaped and was reshaped by market design, we interviewed each other over coffee during Fall 2018. We also touched on what we think has been learned about markets and marketplaces by trying to design them.

What emerged from our discussion is that, when we learned game theory, games were modeled either in terms of the strategies available to the players (“noncooperative game theory”) or in terms of the outcomes that could be attained by coalitions of players (“cooperative game theory”), and these were viewed as models appropriate for different kinds of games. In either case, the particular model was viewed as a mathematical object that could be viewed in its entirety by the theorist.

Market design, however, has come to view these models as complementary approaches for examining different ways in which marketplaces operate within their economic environment. And, because that environment can be complex, there will be aspects of the game that are not entirely observable.

Mathematical models themselves play a less heroic, stand-alone role in market design than in the theoretical mechanism design literature. A lot of other kinds of investigation, communication, and persuasion play a role in crafting a workable design and in helping it to be adopted and implemented, and then maintained and adapted.

As good as it can get…


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