Archive for the ‘Blogs to Read’ Category

What happens in an economy when banks close down?

January 21, 2016

Ben Norman and Peter Zimmerman have this fascinating post on financial history.

Greece banks closed last year and the post draws parallel from Irish example in 1970s. Now unlike Greece banks Ireland banks closed due to strikes. What happened was interesting:

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Mostly Economics Annual Report -2015 and new year wishes to all vistors…

December 31, 2015

Another year passed by and WordPress has been again kind to release annual report of ME blog for 2015.

The number of visits were sliding each year and really happy to note that the tide has been reversed this time.

  • 2012 – 340,000 visits
  • 2013 – 240,000 visits
  • 2014 – 210,000 visits
  • 2015 – 310,000 visits

Thanks to all the visitors/guests for coming to the blog and reversing this trend. Hope you keep visiting next year as well.

Wishing all a great 2016!

 

Should Fed start its own Fedcoin?

December 29, 2015

St. Louis Fed Vice President David Andolfatto makes a case for Fed starting its own bitcoin variant  called Fedcoin.

He says the bitcoin idea is exciting as it helps make payments much faster. The disadv is its volatility:

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Learning about Chinese economic history

December 4, 2015

This is a good new source on figuring Chinese economic history (HT: MR blog) . We hardly know anything about it and make a mess of our analysis on CHina. Just using western economic analysis lens, we miss most of the key aspects of Chinese economy and society.

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How is Development Economics Taught in Developing Countries?

November 19, 2015

David McKenzie (of World Bank) and Anna Luisa Paffhausen ( of University of Passau) have written an interesting paper on the topic. They summarise the findings in this post:

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Bankruptcy reforms: It is not dejure ranking but defacto outcome that matters..

November 16, 2015

Insightful post by Rajeshwari Sengupta. She analyses the recent bankruptcy code released by the Finance Ministry. She figures how the code will lead to a jump in Doing Business Rankings. So there will be a dejure increase but what matters is the defacto outcome. At the end of the day, businesses should see the benefits not just the media:

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Federal Reserve’s ties to the Barbie doll and why there isn’t a banker Barbie?

November 16, 2015

A really out of the blue post from 

She points to how the Barbie doll is connected to Fed. The doll’s founder sat on the board of San Francisco Fed:

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Regulatory governance problems in the legislative function at RBI and SEBI

September 24, 2015

Arpita Pattanaik and Anjali Sharma have a thoughtful post on the topic.

They point how the two regulators do not care much for public consultations:

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Amtek Auto and Mutual Funds: Use Side Pockets, not Gates

September 11, 2015

Prof JR Varma has an interesting solution for the ongoing trouble between JP Morgan Mututal Fund and Amtek Auto. Just for the starters,the fund had invested in the paper of Amtek Auto. As Amtek Auto got into trouble, so did the fund. It stopped redemptions from the funds.

Prof Varma says instead of closing the gate (i.e. redemptions), one should allow the side pockets to work:

JPMorgan Mutual Fund has gated (restricted redemptions from) two of its debt funds which have large exposure to Amtek Auto which is in distress. A gate is better than nothing, but it is inferior to a side pocket. I would like to quote from a proposal that I made in a blog post that I wrote in October 2008 when the NAVs of many debt oriented mutual funds were not very credible:

At the very least what is required today is a partial redemption freeze to ensure that nobody is able to redeem units of mutual funds at above the true NAV of the fund. Anybody who wants to redeem should be paid 70% or 80% of the published NAV under the assumption that the true NAV would not be below this. The balance should be paid only after the true NAV is credibly determined through asset sales.

Unlike the generalized distress of 2008, what JPMorgan funds are facing today is distress limited to a single large exposure. According the July portfolio statement, Amtek Auto was about 15% of the NAV of the Short Term Income Fund. Even if this is valued at zero, the fund can pay out 85% of the NAV to everybody. (For the India Treasury Fund, Amtek is only 5% of NAV, so the fund can pay out 95%). Essentially, my proposal is what is known in the hedge fund world as a side pocket: the holding in Amtek Auto should go into a separate side pocket until it is liquidated and the value is realized. The rest of the money would remain in the normal mutual fund which would be open for unrestricted redemption (as well as for fresh investment).

The gate has two big disadvantages:

  1. The gate is not total: redemptions are not stopped, they are only restricted to 1%. This means that some redemptions are taking place at a wrong value. The money that is being paid out to this 1% is money that is partly money stolen from the remaining investors.
  2. The gate rewards the mutual fund for its own incompetence. A fund which has made a bad investment choice would be punished in the market place by a wave of redemptions. That is the competitive dynamic that encourages mutual funds to perform due diligence for their investment. A gate stops the redemption and shields the fund from this punishment.

It is possible that the mutual fund offer document might not contain a provision for a side pocket. But the Securities and Exchange Board of India (SEBI) as the regulator certainly has the power to issue directions to the fund to use this method. Let us see whether it acts and acts quickly.

Hmm..Side pockets vs gates..nice way to explain complex ideas..

Knowing about 2 factor authentication using tales from Ramayana, Aladdin and Alibaba

September 1, 2015

Prof JR Varma has a terrific post on the topic. I hardly had any idea about this 2 factor authentication model (didn’t care for it either) used for payments. This post not just helped clarify what 2FA is all about, but also connected it via stories which will be difficult to forget.

As the name suggests 2FA means you need two things (factors) to identify yourself:

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Using twitter to predict bank runs

August 19, 2015

BoE’s Underground blog has a nice post on how to use (and not be mislead) by big data ideas.

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What can economists learn from literature?

August 11, 2015

Lots. I mean most of us will atleast learn to write better. What mattered for earlier generation of economists was how well and widely they read. Now it is just about showing whose model/equation is more sophisticated (read confusing ) than the other.

Sara Thornton, Professor of English at the Université Paris Diderot, tells us what econs can learn from literature. There is a video with a brief intro:

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A must follow blog: Economics in the rear view mirror

August 7, 2015

There is this really super blog called Economics in the rear view mirror. It is on history of economic thought. It presents history really differently. It looks at how economics teaching has evolved over the years in US’s elite departments.

Its author Prof. Irving Collier of Freie Universitat Berlin explains the idea:

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Helicopter Money: What is it?

August 5, 2015

Superb post from Fergus Cumming of BoE.

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Ease or regulate living in India??

July 22, 2015

Zubin Tucker, a British student reflects on his experiences in India. He does not undrstand why things which should be easy are so restrictive (like drinking age) and things which should have some regulation are so easy (like following traffic rules).

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A Bollywood take on the Greece crisis …

July 15, 2015

Prof. Manasi Phadke keeps getting better and whackier with her posts.

The latest is a Bollywood take on the Greece crisis:

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Figuring complex Greek derivatives seeing a kabaddi match

July 6, 2015

Manasiecon blog just keeps getting better.

The recent post is on trying to figuring out complex Greek derivatives in a Kabaddi match:

She points to a Kabaddi match and how both the teams did not want to take one particular player:

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History of economic thought : Battle of ideas to continue..

June 26, 2015

Ravi Saraogi of IFMR investments has a series of posts (one, two and three) on perhaps the most important subject in economics – history of economic thought.

He tracks how eco thought has evolved from Age of enlightement (1650s) to Neoliberalism (1990s to 2007).

In the end, he says the process of ideas has hardly settled. It has only become more bitter due to the crisis:

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From driverless cars to driverless monetary policy..

June 24, 2015

Bank of England’s venture into blog had an interesting post on driverless cars. What does a central bank have to do with these kinds of cars? Well, a central bank is bothered about anything under the sun. But this post was on impact of insurance industry die to driverless cars. They will lose premiums on car insurance and so on.

George Selgin says we could do better by moving to driverless money as well:

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Capital account convertibility and cooking..what is the connection?

June 15, 2015

Manasiecon blog keeps coming out with one idea after the other.

This time it is connecting capital account convertibility to cooking of all things. The idea is one can cook quite a bit in the limited time given we get the sequencing right. Same with capital account convertibility where sequencing is crucial to its success:

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