Archive for the ‘Blogs to Read’ Category

Why do people vote? Insights from a small experiment..

March 6, 2014

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:


Is Prof. Krugman a French war general?

February 18, 2014

Another round of debate on relevance of macro modelling.

It starts with NoahSmith’s poston macro modelling.  Prof Krugman reponds in his usual style connecting French war generals with macro modelling:


From James Bond’s licence to kill to central banker’s licence to lie

February 4, 2014

Anatole Kaletsky (chief economist of GaveKal Dragonomics) has this superb piece.

He says the central bankers have a licence to lie and they do the job really well.


Wishing all a very happy new year and ME’s Annual report 2013

December 31, 2013

Wishing all the viewers a very happy new year. Hope 2014 is a great year for all of you.

Here is ME’s 2013 Annual Report (courtesy


How certain Univ of Manchester students want to change the econ syllabus?

December 6, 2013

The website is here and the blog is here.

We are The Post-Crash Economics Society and we are a group of economics students at The University of Manchester who believe that the content of the economics syllabus and the way it is taught could and should be seriously rethought.

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..

Core-econ: A project to reform the undergraduate syllabus

November 12, 2013

Core-econ stands for: Curriculum Open-access Resources in Economics and is an attempt to reform economics teaching. It is funded by INET and the website is here (HT:MR Blog).


Bloomberg syndicates content from Mostlyeconomics..

November 7, 2013

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 next few days..

September 10, 2013

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..

A day in the life of a behavioural economist..

May 13, 2013

A superb post by  of Worth a lot Canadian Blog.

She points how one struggles to stay focused despite being a behavioral econ. Quoting the whole post as it is:


Measuring the clarity of central-bank communication..

April 12, 2013

A nice discussion by Aleš Bulíř, Martin Cihák, David-Jan Jansen in voxeu. The long paper is here.

There is a measure for measuring simplicity in language called – Flesch-Kincaid readability test. They use this to see which of the selected central banks communicate better and simpler.

Quality, clear communication is a very powerful tool for central banks because it influences expectations. This column presents new research on central-bank communications, using a formal measure of clarity – the ‘Flesch-Kincaid grade level’. The picture is varied: there are significant and persistent differences in clarity over time and across countries. However – and worryingly – the financial crisis is associated with unclear communication for some central banks.

We ask whether the clarity of central-bank communication depends on the context; if clarity is sensitive to the inflation outlook or uncertainty, or both; and how the global financial crisis has affected central-bank communication.

Under our null hypothesis, communication clarity is impaired when the bank is unsure about future developments or when it needs to explain larger deviations from the inflation target. Suppose that current inflation runs above the target, but the official inflation projection is close to the target, and the bank identified numerous mutually offsetting demand and supply inflation factors. It is going to be harder to present these developments in an accessible manner, presumably leading to less clarity. Nonetheless, the central bank may be aware of the need to present a clear message to the public and it may devote more resources to communication. If it succeeds, communication clarity may remain unchanged, or it may even improve. 

The seven central banks are: Chile, Sweden, UK, ECB, Czech and Poland. Findings:

We find statistically significant variation in the Flesch-Kincaid over time for each of the seven central banks, partly reflecting idiosyncratic trends. The inflation reports have become clearer over time in Chile, Sweden, and the UK (although the UK’s reports became less clear after 2007), improving by almost one fifth of a year of schooling per year. In contrast, the Eurozone Monthly Bulletins and in particular Thai inflation reports have become less clear during the sample period, by about one tenth and two fifths of a year of schooling per year, respectively. For the Czech Republic and Poland there are no statistically significant trends. Turning to our main question of the relationship between the clarity of communications and the broader economic environment, only a handful of factors structurally appear to affect readability..

Nice bit…

There is another such readability index I came to know of –  Gunning-Fog index. which ranks econ blogs uses this to see which blogs are simple to read and so on. Proud and humbled to say Mostly Economics ranks really nicely on this. One just needs 9 years of schooling and is much better placed compared to other blogs..

How US resolved its first debt ceiling crisis

March 11, 2013

A fascinating post by Kenneth Garbade of NY Fed.  It is written on the style of Lords of Finance.

In the second half of 1953, the United States, for the first time, risked exceeding the statutory limit on Treasury debt. How did Congress, the White House, and Treasury officials deal with the looming crisis? As related in this post, they responded by deferring and reducing expenditures, by monetizing “free” gold that remained from the devaluation of the dollar in 1934, and ultimately by raising the debt ceiling.

Well, just like most history episodes particularly econ history ones, one can’t help but compare the eerie similarities to today’s US debt ceiling crisis. The debt ceiling issue keeps coming back to hit the global markets as US keeps piling on debt. And how US resolves it each time just in nick of time should be fairly similar to how they resolved it way back in 1953.

What is most amusing is how fannie Mae rescued the government on debt ceiling crisis in 1954:


Latvia’s Parliament votes for the Euro….

February 25, 2013

Anders Aslund of PIIE points that Latvia’s Parliament has voted for joining the Euro:


Making a strategy to get an “A” despite scoring a zero in the exam..(insights from Game Theory)

February 18, 2013

Good friend Niranjan  Rajadhyaksha pointed this  super post by Catherine Rampell (on NYT Economix Blog).

She points how  computer science students (not economics) at Johns Hopkins University gamed the grading system. They managed to secure an A despite all scoring zero:


When the Bard met the Fed…

February 11, 2013

A nice post by Mary Tao connecting Shakespeare and Fed..

How an economist breaks from his girl-friend..

February 8, 2013

Clearly one of the best readings for a while (HT: Mankiw).  Should make it straight to all the micro classes where figuring things like utility etc never make sense.

Susan, we need to talk. I’ve been doing a lot of thinking lately. About us. I really like you, but ever since we met in that econ class in college I knew there was something missing from how I felt: quantitative reasoning. We can say we love each other all we want, but I just can’t trust it without the data. And after performing an in-depth cost-benefit analysis of our relationship, I just don’t think this is working out.

Please know that this decision was not rash. In fact, it was anything but—it was completely devoid of emotion. I just made a series of quantitative calculations, culled from available OECD data on comparable families and conservative estimates of future likelihoods. I then assigned weights to various “feelings” based on importance, as judged by the relevant scholarly literature. From this, it was easy to determine that given all of the options available, the winning decision on both cost-effectiveness and comparative-effectiveness grounds was to see other people.

Lol all the way..Brilliant take on applying economic principles on human relationships…

Happy New Year to all and Mostly Economics Annual Report -2012

December 31, 2012

Wishing all the visitors of ME Blog a very happy new year! Have a great year ahead.

WordPress has generated Annual report 2012 of the Mostly Economics blog (just like it did in 2011).

This year the total blog views was about 350,000 lower than 360,000 views seen last year:


About 55,000 tourists visit Liechtenstein every year. This blog was viewed about 350,000 times in 2012. If it were Liechtenstein, it would take about 6 years for that many people to see it. Your blog had more visits than a small country in Europe!

In 2012, there were 721 new posts, growing the total archive of this blog to 4,157 posts.

In 2011, there were more new posts  – 756 . However, both years have been near similar with few things here and there.

The most popular post that day was Temasek and Singapore Puzzle – Is it another Madoff crisis in making?. The popular search strings that led to the blog were  inclusive growth, hayek vs keynes,mostly economics, impossible trinity, and effective revenue deficit. Visitors came from 197 countries however one can never be sure of the origin in the internet era.

Thanks a ton people once again for visiting my blog. Suggestions to improve and make the blog a better one are always welcome..


Does the theory of comparative advantage apply to dolphins?

December 5, 2012

What a pointer from Tyler Cowen.

On his blog MR he points that Dolphins are losing their comparative advantage and utility to US Navy:


Acemoglu/Robinson reply to Jeff Sachs

November 22, 2012

This blog had pointed to Jeff Sachs’ review of Why Nations Fail.

A/R duo respond to the criticism in their typical style.

Several people asked us why we haven’t responded to Jeffrey Sachs’s review of Why Nations Fail in Foreign Affairs. Well the answer was sort of in-between the lines in our response to Arvind Subramanian review (the original review is here and our response is here): we said that thoughtful reviews deserve thoughtful answers. What about not-so-thoughtful ones?

Be that as it may. We cave in to pressure.

Sachs charges that we are “simplistic” and our argument “contains a number of conceptual shortcomings”. But in each case, these are either just stated (and are wrong) or he is criticizing something we haven’t said. The Sachs strategy seems to be to throw a lot of mud, hoping that some of it would stick — did we say that we didn’t think it was quite thoughtful?

Let’s go through each one of his points in turn.

They look at a total eleven criticisms made by Sachs. Fabulous stuff.

Thinking of coming to Canada to do an MA in Economics?..

November 7, 2012

A nice post by Prof.  of Worthwhile Canadian Blog.

She give some ideas and tips to those who want to pursue MA in economics in Canada. In the comments she explains the difference in Canada MA vs US MA:

In the US, students go from BA to the PhD program, right?. An MA is a consolation prize they give you if you drop out of the PhD after a year or two, right? In Canada the MA is a real degree. You go from BA to MA, then some students continue on to the PhD.


Acemoglu/Robinson on India and China puzzle…(reply to Arvind Subramanian)

November 5, 2012

One should have expected a reply though was amazingly quick. I had pointed to Subramanian’s review of the development tome Why nations fail. In this Subramanian said India and CHina are a puzzle in this entire development exercise. India has inclusive political institutions but growth remains poor. China has extractive political institutions but has a superb growth record in the last 30 years. How does this fit in with WNF claims that inclusive political instis lead to economic development?

The authors have  replied to the criticism.

Thoughtful reviews deserve some (hopefully equally thoughtful) responses. Subramanian is certainly right to draw attention to China and India. But perhaps his review is too brief to have done justice to our theory and its implications on these topics — so much so that he actually omits any mention of the extensive discussion of China and extractive growth in the book.

They start discussing China but I start from India. There have been couple of replies from the duo on China’s puzzle but nothing at all on India.

We go to pains in the book to emphasize that electoral democracy isn’t the same as inclusive political institutions. This becomes particularly binding when it comes to India. India has been democratic since its independence, but in the same way that regular elections since 1929 don’t make Mexico under PRI control an inclusive society, Congress-dominated democratic politics of India doesn’t make India inclusive. Perhaps it’s then no surprise that major economic reforms in India started when the Congress Party faced serious political competition. In fact, the quality of democracy in India remains very low.

Politics has not only been  dominated by the Congress party but continues to be highly patrimonial, and as we have been discussing recently, this sort of patrimonialism militates against the provision of public goods. Recent research by Toke Aidt, Miriam Golden and Devesh Tiwari (“Incumbents and Criminals in the Indian National Legislature”) shows there are other very problematic aspects of the Indian democratic system: a quarter of the members of the Lok Sabha, the Indian legislature, have faced criminal charges, but alarmingly, such politicians are more likely to be re-elected than those without criminal charges, reflecting the fact that Indian democracy is far from being an inclusive ideal.

What’s more, blaming India’s poverty on its democratic recent past, as Subramanian seems to do, is probably more than a little unfair. After all, India has been growing since independence even if the growth rate was disappointing for the first three decades, and it seems to have largely stagnated during British colonialism as Tirthankar Roy shows in The Economic History of India, 1857-1947.

Superb stuff..What most have been saying for a while. Dejure inclusive institutions do not mean de fecto inclusive developments.

Moreover, why so little on India?

In contrast to China, there is much less in Why Nations Fail about India, mostly because of space limitations. Be that as it may, Subramanian’s summary that our theory suggests India should be prosperous isn’t quite right. 

Hope there is a full book on India in future..

Now on China…

First, our theory isn’t that political institutions directly determine economic prosperity. Rather, we claim that economic institutions determine economic prosperity, and explain why the link is between inclusive economic institutions and sustained economic growth — not necessarily short-run economic growth. We then argue that inclusive economic institutions can only survive in the long run if they are supported by inclusive political institutions. On the way, we provide explanations and examples for why for extended periods of time economic institutions with fairly important inclusive elements can coexist with extractive political institutions. This is all brought together under our discussion of extractive growth under the auspices of extractive political institutions (see Chapter 5).

So China story is basically a result of inclusive economic institutions. This has led to higher growth. And where  did these inclusive economic institutions emerge from? Well it is politics again and the perspective is very different:

We also noted, in contrast to the standard accounts of Chinese economic reforms, that these didn’t have their origins in some clever planning by Chinese leaders but in political struggles within the Politburo pitting Deng Xiaoping against the Gang of Four. It was once again politics — not clever planning, design or economic advice — driving economics. In fact, the recent thought-provoking book by Victor Nee and Sonja Opper,Capitalism from Below convincingly argues that early reforms were neither instituted by the party nor were they outcomes of experimentation, but resulted from the party catching up with what had been going on on the ground given the political vacuum and crisis wrought by the Cultural Revolution.

They point out that before Deng Xiaoping’s reforms, privately-led experiments with production for the market and ending collective incentives had started. For example, in Anhui province, peasant households had already dissolved communes and collectives before any reforms, and had started a land-lease system. They suggest it was this sort of development that forced the hand of Deng Xiaoping and Communist Party elites to start loosening of central planning and collectivization. Whether Nee and Opper’s interpretation is correct or not, what seems clear is that there was a radical change in economic institutions in China and most likely this resulted from a variety of political factors — rather than from Deng Xiaoping’s farsighted genius as the hagiographic biography of Deng, Deng Xiaoping, by Ezra Vogel suggests.

However for growth to be sustainable, there is a need for inclusive political institutions.

So when economic institutions take steps towards greater inclusivity — which has happened many times in history and is exactly what happened in China starting in 1978 — this can usher a rapid period of economic growth. Where political institutions come in is that inclusive economic institutions can emerge and encourage growth in the short run but cannot survive in the long run under extractive political institutions. It is for this reason that the rapid growth of China over the last three decades isn’t an exception to our theory. If China manages to continue to grow for several more decades and reach levels of income per capita comparable to those of the United States or Germany while still austerely authoritarian and politically extractive, that would be an exception to our theory. This is exactly what we argue in Chapter 15 as well as pointing out why the transition from extractive to more inclusive political institutions in China will be difficult.  

People have question how China grew despite such extractive political instis, AR duo say wait for some more years. 30 years is not as long a time for sustained growth….

Even in this blogpost, focus remains on China :-(


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