He looks at how these countries are faring and data shows nothing much has happened. The hyped convergence to west has been an illusion for most. Only in case of Poland has some kind of development and convergence happened:
Archive for the ‘Blogs to Read’ Category
Understanding the causes and consequences of the rise of finance is a first order concern for macroeconomists and policymakers. The increasing size and leverage of the financial sector has been interpreted as an indicator of excessive risk taking1and has been linked to the increase in income inequality in advanced economies,2 as well as to the growing political influence of the financial industry (Johnson and Kwak 2010). Yet surprisingly little is known about the driving forces behind these trends.
In our recent research we turn to economic history. We build on our earlier work that first demonstrated the dramatic growth of the balance sheets of financial intermediaries in the second half of the 20th century and how periods of rapid credit growth were often followed by systemic financial crises and severe recessions (Schularick and Taylor 2012, Jordà, Schularick, and Taylor 2013).
They say that main reason has been shift of bank credit towards mortgage lending or for home buying. Banks over the years have become like a housing fund:
WSJ Blog explains:
Unlike the U.S. Federal Reserve and other western central banks, the People’s Bank of China isn’t independent of the government. It reports to the State Council, the Chinese government’s top decision-making body and as a result, the PBOC has no real control over China’s monetary policy.
But on inflation front, China has had low inflation for a while. So even if the central bank is not so called independent, it has managed to keep govt at bay:
Fixing the economists Blog has this interesting post on the topic.
This is one of the most important philosophical questions regarding economics- is it a science? Econs surely believe and have tried to model their ideas as Science like with laws and theories etc. This is met with criticism as these laws are not universally applicable and are inconsistent.
But then what is science at the first place? There is huge disagreement on the same. The blog defines science and then sees whether economics fits as a science:
Jonathan Rothwell of Brookings has a nice post on the topic.
He puts up US map and looks at earnings of Software professionals across regions. He sees there is a wage premium in Silicon Valley compared to other places. Why this is so? It seems the region requires some typical software skills which lead to the premium:
As I write this post, there is a real proud feeling.
First, this is the 5000th post of Mostly Economics. This is a huge personal milestone as had no clue that would end up writing so much! Thanks to WordPress and the visitors who have encouraged this blog all this while. Huge pat to the blog..
Second, there could be no better way to write this 5000th post than talk about this wonderful book – The Story of the Reliance Cup by Mr. NKP Salve. The blogger has always been a huge fan of cricket and would love to write and think more on the sport. The events of the last few years has led to huge discontentment with the state of affairs. The blogger never cared to figure the man reason behind NKP Salve tournament and this autobiography gives you great insights about many things. As the authorities keep piling shame on Indian cricket, perhaps they should read this book to understand the challenges faced by authorities then to bring this whole cricketmania to India. Given how things stand today, even the guys who brought this whole game to Indian shores would be reflecting on whether they did any wrong?
Things are getting more and more complex. Countries which had recovered post-crisis are slipping. Sweden is the latest entrant to the list. The last reading was at -0.6% fueling debates over deflation in Sweden.
- Krugman always on red alert to these developments started the debate – one and two .
- Lars Svensson, former Riksbank MPC member and deflation expert added fuel to the fire. He blames the Riksbank rightaway:
Isha Agarwal (no relation to ME blogger!) a graduate student at Cornell Univ has started this intersting blog and hope we get to read some more posts.
In one of the two posts written so far, the author explains the time-series analysis of Indian macro data.
Macro economic time series are known to display trend growth. For example, if we look at a country’s GDP, it rises over time, i.e. it has a trend growth which can be categorized as a long term feature of GDP, however, in the short term we observe that the GDP fluctuates around the deterministic trend. A substantial literature in macro economics deals with the properties of these business cycles and how the government can come up with policies to counter these business cycles – also know as counter cyclical policies. Whether or not such policies are effective in containing the business cycles is a bigger question and there are different schools of thought (Freshwater and saltwater) which feel differently about this issue.
There is a class of models known as RBC (Real Business Cycle) models which addresses questions such as: what causes business cycles, how persistent is the deviation of any time series from its steady state, what accounts for co-movement between various time series(such as consumption and income). RBC model conjectures that business cycle fluctuations are due to real factors (such as shock to technology) as opposed to monetary factors(such as change in money supply/monetary policy). The macro economic course taught in the spring semester at Cornell revolves around RBC theory which also happens to be my area of interest.
In the first lecture of this course I learnt how to extract the cyclical component from any given time series and some stylized facts about GDP, consumption-income ratios, investment-income ratios, their correlations and persistence. In this post I endeavor to conduct the same analysis for Indian data. I take data on GDP and its components from RBI’s website.The first step is to extract the business cycles from the series of GDP. I use annual data from 1950 to 2012 for this analysis.
Nice stuff. Read the post for details.
Though, the graphs could be better as one can hardly detect the difference between original and cyclically/trend adjusted time-series. And then the author could also explain how does one actually detrend all this. It does share a matlab code but a code is a code.
Overall an interesting effort and looking for more such posts..
ME eventually wants to get into posts like these as econ research via papers is getting boring. Idea is to use simple econometrics (an oxymoron!) to convey basic ideas. There is hardly any dedicated website to doing economic research and helping people do research using basic tools. Especially these time series analysis where we fail to look at basics and keep projecting left, right and centre..
But as ME is still not there yet, so will have to wait. ME hopes to get into this space quickly..Till then hope Isha helps us..
Well the biggest circus/tamasha (whatever you may call it) is about to begin. As ECI announced dates for Elections-2014, we are going to have loads of action for next two months..
Interestingly, just y’day there was this interesting post in voxeu on voting and psychology behind it. The authors conduct the experiment in just one region (Illinois) and one time (2010 Congressional election) so there are limitations:
We were inspired to start this society when we heard about a Bank of England Conference called ‘Are Economics Graduates Fit for Purpose?’ At this event leading economists from the public and private sphere came together to discuss whether economics undergraduates were being taught the right things in the light of the 2008 Financial Crisis. This chimed with some of our frustrations about the economics we were learning and so we decided to set up a society that would through doing research, organising events and running workshops seek to bring this discussion to Manchester. That was at the start of the 2012/13 academic year.
As of today we have a fully-fledged society, a book club, an incredibly successful launch event led by world class economists, many student and academic supporters, a petition that is constantly gaining signatures, links with a national network of economic societies and organisation and even more passion and determination to change the current state of economic education!
However, this is just the start. We will ensure that this society will become a permanent fixture on the Manchester economics landscape in the years to come, forever seeking to provoke discussion between students and staff about what economics is, what it should be and how it should be taught.
Superb..Much needed action..
Time for some shameless self-publicity (much needed)..
It seems Bloomberg has begun to syndicate content from ME…if you have access to Bloomberg terminal…type blgs and then search for mostly economics…it is right there..whatever is posted on this blog comes on Bloomberg as well..(I get no royalty in case people are thinking)..
I was quiet excited to learn this..I have been reading/researching on Bloomberg for a while…now to see ME being featured on “The Newswire” is quite satisfying.. :-)
I did not know this till my friend Alok pointed this out. Thanks Alok..
Now, this post will also be featured on Bloomberg..
Blogging is going to be weak in the next few days. Will try and post a few things but not sure. Will try and write on weekend or perhaps next week. Till then, keep posting your comments and suggestions.
Interestingly, only today the blogger realised that ME ranked in top 100 most influential economics blogs last year (an amazing achievement for the blog and its visitors, given the high profile list). But it is not in the list anymore. The blogger has been unable to blog as vigorously compared to earlier months due to shift of base. But has always tried to put an effort. The focus has also moved to Indian economy drama and not much research related stuff. The drama was too interesting to miss. Though, will surely try and up the research ante in next few months.
So as the blog goes on a break, i would be grateful if you could send your suggestions to improve things here at ME…Thanks a ton as always for your comments and inputs..