This blog is on a short break. Blogging to resume by Monday hopefully. Till then cheers.
Archive for the ‘Blogs to Read’ Category
Why economics should be concerned with disappearance of teaching of economic history and history of thought?September 8, 2016
It is all so ironical really. Post-2008, there has been a rise in interest in economic history and economic thought.
This is because of two reasons. One, people are beginning to understand that much of economics today is a result of series of events in the past. So, to understand today or forecast future, you need alteast some understanding of past matters. Two, as economics profession has lost a lot of credibility, it is increasingly looking at past for some credibility, This is especially the case for central bankers who are increasingly trying to justify their decisions bringing some connections with the past.
Ideally, the rise in interest should be based on first but even second is fine as atleast there is some discussion on these issues.
So what is the irony bit? Well, economic historians are not getting their due. Worse is that few remaining departments which encourage historical work are struggling to remain open.
David Warsh of economicprincipals.com laments the issues:
Bank of England may be clueless on what next, but its blog Bank Underground keeps giving us food for thought via its posts.
In the recent one, John Lewis looks at this question of how robotics will impact macroeconomics. Will it lead to lower jobs as said and so on. For this, he draws upon years of history where some new technology has replaced an existing one.
Prof Perry Mehrling just nails it with this post. He says how The Jackson Hole this year was just another of those reunion of monetary policy families. It is a very tightly held family which is really difficult to break into. They have been either managing or shaping monetary policy for almost all the countries in the world.
It was a reunion as only one paper actually was based on the theme of the conference. Rest were just usual rambles. It seems most had just assembled to say hi to each family member and get family updates :
Why it makes sense for an M.D. to lead the World Bank? (some insights from history of Indian banks too!)September 1, 2016
World Bank’s recently appointed Chief economist Paul Romer in this post talks about why a Doctor of Medicine (MD) is a good fit to lead the world bank. After all his new boss his Jim Yong Kim who heads the World Bank with the original Dr attached to his name. So Dr Romer (who is a doctorate in economics) has no choice but to defend his Doctor in Medicine boss! Boss is always right no matter who he/she is the cardinal rule in any organisation.
Jokes aside, Romer says an outsider appointment is more efficient at cutting the flab:
Nice post by Michiel de Haas, Felix Meier zu Selhausen and Kate Frederick. Two of them are economic historians in Africa.
They point to their experiences in building archives and connecting dots in Uganda:
The field of African Economic History is flourishing. The rising number of participants at the annual meeting of the AEHN, the increasing flow of articles in mainstream economic history journals and thriving research groups in Lund, Wageningen and Stellenbosch, just to name some of the larger research clusters, testify to this. The ‘new economic history of Africa’ is strongly data driven, with researchers using published and unpublished sources to create datasets, establish and compare trends, and conduct statistical analysis to tease out causality (for discussion and an overview, see the recent paper by Johan Fourie (2016)
To further expand our empirical knowledge of long-term African development, the potential of colonial archives in Europe is hardly exhausted, with researchers using trade, tax, wage, price, climatological, and criminal statistics to make a wide range of new and compelling contributions. However, there is much scope to venture beyond Europe’s missionary and government archives, which tend to focus on key administrative matters and provide only limited information on the seemingly mundane and practical intricacies of colonial rule. Previously neglected, individual-level data sources have already shown to harbour great potential to advance our knowledge of long-term African development. Recent contributions have utilized sources preserved in archives on African soil, including military recruit records, the performance files of police officers, hospital registries, and the marriage records of Anglican Africans.
Archival documents in Uganda are in a state of flux after having been largely neglected or even destroyed during Uganda’s troubled post-colonial history. In recent years, things have been changing for the better. Social, cultural and political historians such as Derek Peterson (Michigan), Holly Hanson (Mount Holyoke) and Shane Doyle (Leeds) – just to name a few internationally renowned scholars – have been producing work that is firmly based on local source materials found in Uganda’s national, district and missionary archives.
Michiel de Haas and Felix Meier zu Selhausen share some of their experiences exploring a variety of source materials in Uganda. Michiel has been affiliated with the Makerere Institute of Social Research (MISR) in Kampala and visited the National Archives in Entebbe and five district archives. He has also conducted oral history interviews with cotton farmers in Eastern Uganda. Felix lived in Fort Portal for three years where he taught at Mountains of the Moon University. He has digitized marriage records from Anglican churches all over Uganda and in-patient registers from Western Uganda’s Kabarole Hospital.
Wow. This must be one of its kind experience. Church or any centre of religion archive is such a crucial place to understand initial development.
Prof Jayant Varma of IIM Ahmedabad has a nice post which gets to the crux of the negative interest rate issue.
He says as bonds have negative rates, the concept of yield/coupon etc is lost. So, investors are looking at bonds in terms of prices alone just like stocks. Whereas, investors are looking at stocks as bonds as they give dividends. So bonds are the new equities and equities are the new bonds.
This is like the prospect theory applying in monetary policy as risk averse bond investors are seeking risks in wake of losses:
There is little doubt that these currencies as they gain ground could pull the carpet under the central banks monopolist chair. Central bankers who are habitual to tell the politicians and businesses about allowing disruptive innovations are going to get a bit on their game as well. More than anything else, it will be interesting whether central banks try and preserve their monopolies or let it go.
Tolle says digitial currencies will create problems for both banks and central banks. One key reason is the payment bit is going to get divorced from the deposits:
Julien Noizet of Spontaneous Finance has a piece on he topic.
The money multiplier has been really low in US for sometime now. Most imagined that with the Fed pumping so much money multiplier will jump significantly and we would have hyperinflation etc. But none of this happened. Why? In most such monetary thinking, we just ignore the functioning of the banking sector. Just like all sectors, banking too has its microeconomics and rigidities:
The brilliant Manasi Phadke has another brilliant post.
BCCI. The hunt for the next Indian coach is on. A special panel will be interviewing potential candidates telephonically.
It is interview day, not only at the BCCI, but also at the RBI. The PMO has asked some economists to telephonically outline their plans to a special panel. As fate would have it, the lines overlap.
What follows is a laugh riot. How Manasi keeps coming with these gems. Kudos..
David Glasner says main culprit is poor teaching.
I mean how many economics students can even figure what is he saying in the post? Instead, most will say instead of reading this let us just solve a few models and equations!
We decided as a team to hold Bank Rate at 0.5% and to maintain asset purchases at £375bn. In our view it is not yet time to tighten monetary policy. Though we believe the output gap is small, we feel the economy is yet to reach escape velocity and the Wicksellian natural rate is likely to stay low in the years ahead. We are more optimistic on potential supply than other economists and we think oil prices will stay low.
Escape velocity? Oh no! A level students should be using more economic terms so to speak.
Read the whole thing. It just reads like any other MPC statement. Not sure how should one react reading this. Perhaps, the MPC can be replaced with these young guys. Based on their kind of analysis, one wonders whether you need the kind of army employed by Bank of England.