Archive for the ‘Discussion’ Category

Ukraine Central Bank moves from one crisis to another

July 8, 2020

One was thinking that during the pandemic phase, governments will let central banks function fairly autonomously. After all, the governments are caught up with several problems of their own and have little time to interfere in central bank affairs. Moreover, as most central banks are following highly easy monetary policies, the governments would be happy as they often intervene when central banks are following tight policies.

Given this, the case of National Bank of Ukraine (NBU) which is the country’s central bank is one of those exceptions.

NBU’s Governor Yakiv Smoli resigned amidst high drama last week on 1 July 2020. His resignation letter stated: “For a long time, the National Bank of Ukraine has been under systematic political pressure. This makes it impossible for me, as the Governor, to effectively carry out my duties as the head of the National Bank of Ukraine and interact with other government agencies”.

On 3-July, Ukrainian Parliament approved his resignation with 286 members voting in favor in a 450 member Parliament. Smoli defended his tenure in the Parliament saying he along with members of the NBU Board “have been a shield that has protected our technocratic and apolitical institution from the influence of political forces.” However, he was forced to resign due to relentless pressure from numerous court cases, public protests outside homes of Board officials etc. He added that his resignation does not imply NBU has lost its independence.  His resignation was a mark of protest that the red line between central bank and government is about to be crossed.

The Smoli resignation becomes even more intriguing as the Parliament noted his commendable performance in keeping inflation at 5% whereas it was highest in the world in 2015 at 272%! They also noted that macroeconomic and financial conditions have been stable. The question is why did he resign and allowed to go despite doing reasonably well in his short 2-year tenure?

Infact, none of this is really a surprise for those watching Ukraine central bank. This blog has written several times on the Ukraine central bank.

The story starts much earlier in Dec-2016. A Ukraine based bank named PrivatBank ran into trouble leading to government nationalizing the bank. NBU was in the centre of the the nationalization as the central bank’s investigation showed that the bank was under trouble due to fraud in the bank. Ukraine’s oligarch Ihor Kolomoyskyi who owned the bank was accused of the fraud worth USD 5.5 billion.  His assets were frozen in Kolomoyskyi appealed against the Nationalisation in the court. In an interesting twist, in 2019 the Court ruled that Nationalisaiton of PrivatBank was illegal. People accuse Kolomoyskyi of influencing the judiciary.

In all this, Kolomoyskyi ran a vicious campaign accusing NBU of cooking the books. He using his financial muscle organised political and people’s protests against the central bank. So much so, the predecessor to Governor Smoli – Valeria Gontareva – had to also resign amidst serious public protests. Gontareva was appointed as the Governor during the nationalization, she was seen as key to the decision.  Gontareva received coffins outside her home as threats!  Even after her resignation, she was personally attacked in London and her home in Ukraine was burnt.

The home arson act led the Board of NBU to term it as Terror and an attempt to “intimidate reformers, past and present, and to paralyze our activities, to silence us”.  

The NBU added it will not be silent. The central bank has shown a lot of courage amidst constant pressure from several parties. In 2019, they developed a webportal named Storm ( which has a dashboard which shows pressure points on the central bank and is updated every day. As of 6-Jul-2020 (at date of writing this article), the central bank is dealing with 32 political declarations, 14 oligarch declarations. 39 court decisions and 9 lawsuits! Central banks usually have dashboards on inflation, growth, financial stability and so on. This dashboard is totally of a different kind!

To sum up, the saga of Ukraine central bank has upped the friction game between central banks and governments. The central bank’s fight is not limited to government but with courts, oligarches and even public.

The Government has appointed Kateryna Rozhkova one of the Deputy Governors as the Acting Governor of the Central Bank. Smoli was also appointed as the Acting Governor after the resignation of Gontareva and then confirmed as the full-time Governor. It has to be seen whether Rozhkova will also be confirmed as a full-time Governor. In normal times, Rozhkova could have picked the adline from Hero Scooters and say “why should boys have all the fun”! But these are highly tough times. He onareob is that of a fire-fighter who has to fight multiple fires with a single hosepipe with hardly any water to extinguish the fires.


Gontareva responds to Smoli’s resignation

Why Japanese Businesses Are So Good at Surviving Crises

July 7, 2020

Dina Gerdeman has a nice piece in HBSWK:

On March 11, 2011, a 9.1-magnitude earthquake triggered a powerful tsunami, generating waves higher than 125 feet that ravaged the coast of Japan, particularly the Tohoku region of Honshu, the largest and most populous island in the country.

Nearly 16,000 people were killed, hundreds of thousands displaced, and millions left without electricity and water. Railways and roads were destroyed, and 383,000 buildings damaged—including a nuclear power plant that suffered a meltdown of three reactors, prompting widespread evacuations.

In lessons for today’s businesses deeply hit by pandemic and seismic culture shifts, it’s important to recognize that many of the Japanese companies in the Tohoku region continue to operate today, despite facing serious financial setbacks from the disaster. How did these businesses manage not only to survive, but thrive?

One reason, says Harvard Business School professor Hirotaka Takeuchi, was their dedication to responding to the needs of employees and the community first, all with the moral purpose of serving the common good. Less important for these companies, he says, was pursuing layoffs and other cost-cutting measures in the face of a crippled economy.

“Many Japanese companies are not that popular with Wall Street types because they are not as focused on gaining superior profitability and maximizing shareholder value,” he says. “They talk consistently instead about creating lasting changes in society.”

Their reward for thinking beyond profits? These businesses tend to live a long time. In fact, on a global map, Japan stands out for corporate longevity; 40 percent of companies that have remained in existence more than 300 years are located in the country, according to Takeuchi’s research.

Based on interviews by Takeuchi (pdf) and his HBS students, who have studied businesses rebuilding in Japan for nine years, here’s a snapshot look at how the leaders of four companies jumped into action soon after the tsunami devastated the area.


Will Universities Learn from the current crisis?

July 7, 2020

Prof Ken Rogoff in this piece writes how he saw video learning will reshape univ learning 40 years ago but this did not happen. Will the current crisis change things?

When I was a graduate student 40 years ago, I was convinced that video learning (the technology of the day) would reshape university teaching. After all, I thought, why shouldn’t students around the world have access to the best lecturers and materials, particularly given that on-campus lectures to 200 students or more offer extremely limited scope for personal interaction anyway?

To be sure, in-class teaching would still have an important role to play. Professors would still curate materials and answer questions. And I did not envisage recorded lectures substituting for smaller classes (although taped materials can of course work in that setting, too). But while it is thrilling to watch a great class in person, surely a good taped lecture is better than a mediocre in-person one.

Fast forward four decades, however, and progress has been limited. One likely reason is university governance: faculty run these institutions, and few are inclined to go down a path that would reduce demand for their services. Professors are no doubt also worried that taped classes would make it harder for their graduate students to find jobs. And graduate students, with their energy and fresh ideas, are key drivers of research.

Demographic shifts have long been putting downward pressure on college enrollments. Even if faculty in some fields (such as computer science) still see robust demand, for many others, declining student numbers surely amplifies resistance to labor-saving new technologies.

But perhaps the biggest obstacle is the high cost of producing high-quality taped lectures that satisfy students as much as in-person classes. Producing even a single lecture for mass consumption is a risky and time-consuming proposition. And because recorded lectures are so easily cloned, it may be difficult to charge a high enough price to cover the costs. A plethora of education startups (including many in and around the Boston area, where I live) are trying to solve these problems, but so far have not had a major impact on the system.

It therefore seems reasonable to ask whether the United States government should take on the costs of creating basic pre-taped or online college lecture materials in certain fields. (The same could be done for adult education courses.) In particular, introductory online course materials in apolitical subjects such as mathematics, computer science, physics, and accounting should be prime candidates for federal funding.

Many other academic disciplines, certainly including my own field of economics, also have great online potential. Democratic US presidential candidate Joe Biden now supports making college free, which thrills some professors. But, rather than expanding the existing US university system, wouldn’t federal funding for online learning be a fairer and more efficient way forward, especially given that it can help adults of all ages?

Conversation on Relevance of Business History with Lakshmi Subramanian

June 29, 2020

The conversation was last week.

The youtube recording is here.

Prof Lakshmi made several interesting points in the conversation. Most people agree that business history is highly relevant but continue to struggle to teach the subject formally in business/management education.  We have to somehow name the subject differently or weave history in the other subjects.

Conversation with Dr Nachiket Mor on Health System Design today @ 4PM

June 20, 2020

I had blogged about this earlier.

The conversation with Dr Nachiket Mor will happen today at 4 PM. The importance of the topic cannot be emphasized enough. We cannot get a better person than  Dr Mor on the topic.

Those interested can register here:


The role of smallpox in the conquest of Mexico by Spain

June 19, 2020

I have known this story of role of Small pox in conquest of Mexico by Spaniards. Jared Diamond in Guns, Germs and Steel discusses this story and have seen in some other books as well,

Anantha Nageswaran points to the extract from the ‘Introduction’ of ‘Plagues and Peoples’ by the late historian William H. McNeill, published in 1976.

The extraordinary story of the conquest of Mexico ( soon to be followed by Pizarro’s no less amazing conquest of the Inca empire in South America) was really only part of a larger puzzle. Relatively few Spaniards ever were able to cross the ocean to the New World, yet they succeeded in impressing  their culture on an enormously larger number of Amerindians. The inherent attraction of European civilization and some undeniable- technical  superiorities the Spaniards had at their command do not seem enough to explain wholesale apostasy from older Indian patterns of life and belief.

Why, for instance, did the old religions of Mexico and Peru disappear so utterly? Why did villagers not remain loyal to deities and rituals that had brought fertility to their fields from time immemorial? The exhortation of Christian missionaries and the intrinsic appeal of Christian faith and worship seem insufficient to explain what happened, even though, in the eyes of the missionaries themselves, the truth of Christianity was SO evident that their success in converting millions of Indians to the faith seemed to need no explanation. 

A casual remark in one of the accounts of Cortez’s conquest-I no longer can tell where I saw it-suggested an answer to such questions, and my new hypothesis gathered plausibility and significance as I mulled it over and reflected on its implications afterward. For on the night when the Aztecs drove Cortez and his men out of Mexico City, killing many of them, an epidemic of smallpox was raging in the city. The man who had organized the assault on the Spaniards was among those who died on that noche trista, as the Spaniards later called it. The paralyzing effect of a lethal epidemic goes far to explain why the Aztecs did not pursue the defeated and demoralized Spaniards, giving them time and opportunity to rest and regroup, gather Indian allies and set siege to the city, and so achieve their eventual victory.

Ananth’s Blog Gold Standard is again on the list of top 100 economics blogs. Congrats Ananth!

Kerala Nagaland Shramik train special: Longest rail route in India

June 12, 2020

Eastern Mirror reports that the Kerala Nagaland Shramik train special which is expected to reach Nagaland on 13 June will cover 4322 km.  This becomes the longest train journey in Indian train history.

Vivek Express which runs on a weekly basis  from Kanyakumari to Dibrugarh was the longest so far at 4273 km.


Is Covid-19 a ‘rich man’s disease’: Evidence from Germany

June 11, 2020

Thomas Plümper and Eric Neumayer in this voxeu piece:

After lockdown, Australians seek to learn survival skills in the bush

June 8, 2020

Reuters has this story from Australia:

Learning Australian bush survival skills is becoming popular as city folk turn to nature with the easing of the coronavirus lockdown, organisers of a course outside Sydney said.

The Bushcraft course teaches basic survival skills like foraging for food and water, and also offers insight into traditional indigenous cultures. The course filled up soon after the lockdown began to be eased late last month, and there is a lot of demand, the organisers said.

“A lot of people come to learn self discipline. How to organise themselves and organise themselves in a natural environment,” said instructor Gordon Dedman at Bushcraft Survival Australia, who is a former army commando.

“The more knowledge you have… it actually gives you a sense of confidence and then you can make better informed decisions.”

Who knows, we all could be headed where we came from!

New Zealand is Covid-19-free, last remaining active case has recovered

June 8, 2020

Stuff happens. NZ has declared itself Covid-19 free. They have not had a case since last 17 days and the last patient recovered as well. There could be cases in future but for now NZers can relax a little.

It is a tragedy of sorts that countries which are most affected and continue to be affected are not learning/caring to learn from any of these countries. Yes these are small island countries which makes them special but this could have backfired on them as well.


Kannamparambu Khabarstan: Case of a Kozhikode cemetery which has been the the final resting place for victims of deadly diseases since 1850s

June 4, 2020

Neethu Joseph has a piece in TheNewsMinute on the Kannamparambu Khabarstan, a cemetry in Kozhikode which has been resting grounds for people who died in epidemics since the cholera epidemic in the 1850s

Travelling about three kilometers through the breezy South Beach Road in Kozhikode, to reach the point where the Kallai river opens into the Arabian Sea, it’s hard to miss the vast expanse of land on the left side of the road, while approaching the estuary. Hundreds of neat rows of tombstones cover the 13-acre area. For over a century, this cemetery has been the final resting grounds for the Muslim community, unidentified remains and those whose lives have been taken by outbreaks, epidemics and the coronavirus pandemic.

Ever since Kerala began reporting deaths due to the coronavirus, the cemetery, known as ‘Kannamparambu’ in Kozhikode district, has gained new recognition. Of the eleven people who have died due to COVID-19 in the state so far, four of them — natives of various districts in northern Kerala — have been laid to rest here, including a four-month-old baby girl.

Hmm.. One does not know if the cemetry keeps any records of the deceased. It might throw some light on the history of pandemics in Kerala..

States’ Loss of Fiscal Autonomy in a Centralised Federal System

June 4, 2020

Prof M. Govinda Rao has penned a piece in The IndiaForum:

The response to Covid-19 has brought out the fragility of the Indian federal system. A tendency towards extreme centralisation during the pandemic and the absence of checks and balances to correct this centralisation is a matter of concern. The process of concentration that happens when a country is at war with another comes from a patriotic zeal to empower the government to fight the war. However, the pandemic has to be fought by both the centre and the states as both have stakes in protecting lives and livelihoods­—in fact, the states more so since they are in the forefront. But they do not have the fiscal strength to do so. In such a scenario, the centre is using the states’ distress situation to force them to adopt its economic and institutional agenda.


How Iceland Beat the Coronavirus: The country didn’t just manage to flatten the curve; it virtually eliminated it

June 2, 2020

Iceland is another of those countries which has managed to do really well in handling the pandemic.

Elizabeth Kolbert has a terrific article on the Iceland story.  Highlight: Different aspects of pandemic management were handled by experts. Politicians stayed away:

Iceland never imposed a lockdown. Only a few types of businesses—night clubs and hair salons, for example—were ever ordered closed. Hardly anyone in Reykjavík wears a mask. And yet, by mid-May, when I went to talk to Pálmason, the tracing team had almost no one left to track. During the previous week, in all of Iceland, only two new coronavirus cases had been confirmed. The country hadn’t just managed to flatten the curve; it had, it seemed, virtually eliminated it.


But, when I asked Stefánsson about the Icelandic government’s response to covid-19, he had only kind words.

“This was done in an extremely balanced way,” he said at one point. “And I think the authorities did pretty much everything right.” At another point, he told me, “The remarkable thing in this whole affair is that in Iceland it has been run entirely by the public-health authorities. They came up with the plan, and they just instituted it. And we were fortunate that our politicians managed to control themselves.”

Kolbert is a journalist based out of US. She was so fortunate to get permission to travel to Iceland during the pandemic and document all this..

Much more in the piece…

Revenge of the experts: Will COVID-19 renew or diminish trust in science?

June 2, 2020

Cevat Giray Aksoy, Barry Eichengreen and Orkun Saka in this voxeu research:

Credit guarantees of 1970s make a comeback

May 30, 2020

India’s FM Ms Nirmala Sitharaman gave the breakup of the Rs 20 lakh cr stimulus over a 5 day presentation. One key feature of the stimulus is the several credit guarantees with the loans.

My new piece in Moneycontrol where I look at the long history of credit guarantees in India..

Revisiting Amartya Sen vs Jagdish Bhagwati debate: Was Sen right after all?

May 29, 2020

Manas Chakravarty revisits the Sen vs Bhagwati debate in this moneycontrol article:

Just before the general elections in 2014, a rather unlikely fight erupted in the pink papers. In the Left corner, wearing what some people said were bright red shorts, was Nobel Laureate and economist Amartya Sen. In the Right corner, wearing true blue shorts, was eminent trade economist Jagdish Bhagwati.

The dispute was whether social welfare and health and education were best served by rapid economic growth, which was the view from Bhagwati’s corner, or whether social equity and health and education lay the groundwork for rapid growth, which was Sen’s thesis.

These arguments became prominent in the context of the 2014 elections. The pundits said Narendra Modi stood for rapid growth, while the UPA was all about social welfare.

The UPA’s critics, who were legion, made Bhagwati their intellectual mascot and argued there could be no redistribution without rapid growth. Let India grow first, they said, by freeing markets and allowing the ‘animal spirits’ of entrepreneurs free rein and there would soon be a surplus that would trickle down to the masses. Go in for social welfare too soon, they added, and growth would falter, just as it had done under the UPA government.


And then came the COVID-19 pandemic. 


In developing countries, communities and primary care providers—not hospitals—hold the key to successful pandemic response

May 28, 2020

Nachiket Mor in this blogpost:

Almost uniformly across the developing world, pandemic policy responses so far have tried to replicate the typical developed country strategy: social distancing coupled with national lockdowns, quarantining suspected cases in centralized locations, and increasing hospital capacity of hospitals by shoring up their intensive care units (ICUs) and increasing the supply of invasive mechanical ventilators. This will almost certainly have to change.

To be sure, the steps being taken by advanced countries are significant and they could prove to be adequate if the caseload remains between 10-20 per 100,000 and the associated mortality between 0.5-1.0 per 100,000. But to help poorer countries deal with infection rates in the neighborhood of the 30,000 per 100,000 being predicted by the modeling work of the Imperial College COVID-19 team—even with social distancing—these strategies will have to be supplemented by an entirely different set of measures. This is because there is a concern that—as the Italians discovered much later than they should have—with infection rates of about 300 per 100,000, even well-equipped hospital systems become overwhelmed. In such conditions, mechanical ventilation is not an effective strategy even for those individuals fortunate enough to get access to one, and hospitals themselves become lethal transmitters of infection back into the community.

Many low- and middle-income countries (LMICs) lack adequate hospital and emergency transportation infrastructure, but most have strong community-based structures, such as community-based organizations and local nonprofits. LMICs could benefit from the near ubiquitous presence of these nonprofit organizations if their governments empower them to, among other things:

    1. Identify the most vulnerable, such as individuals over the age of 60, and guide their families on how to protect them over the next several years until a good adult vaccine is developed;
    2. Communicate home care and isolation guidelines even for the very sick, including the development of collaborative arrangements between families where space within a single home is limited;
    3. Map the local primary care provider (PCP) network, including private and the nonprofit providers and, wherever possible, assign households to specific PCPs so that when the numbers start to rise, there is no confusion as to who is responsible for taking care of particular families;
    4. Ensure that these PCPs are well prepared to manage all but the sickest of the cases; and
    5. Provide essential support to those families that are in the greatest economic need.

Additionally, while PCP availability varies greatly across LMICs, given the high levels of out-of-pocket expenditures in most of them, the supply of independent formally qualified PCPs is likely to far exceed the numbers within government facilities, even in relatively remote areas


Webinar on 30 May 2020: The Science and Economics of Climate Change

May 28, 2020

Ahmedabad University is organising a webinar on ‘The Science and Economics of Climate Change’. I will be conversing with Minal Pathak who is Scientist at Intergovernmental Panel on Climate Change (IPCC) and runs the Global Centre for Environment and Energy at Ahmedabad University.

Interested folks especially students can register here.

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Electrifying Rural America: How during Great Depression, communities formed cooperatives to bring electricity to rural areas

May 22, 2020

Super article by Tim Sablik of Richmond Fed. He narrates how US initiated its rural electrification program during Great Depression. As they say don’t let a crisis go waste.


The dirty history of soap

May 22, 2020

Judith Radner, a scholar who researches material culture looks at the dirty history of soap.

Soap is an essential part of our life. In modern day, it is a part of our daily hygiene routine. We use it everyday to bathe, wash hands and so on. Now, in time of COVID-19, it has become a life-saver, helping us to mitigate the risk of infection. But what do we know about the history of soap? When and where did soap originate? How did it evolve into its modern form? How did it become a part of our daily life?


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