Archive for the ‘Economist’ Category

Tributes to Prof TN Srinivasan

November 12, 2018

Prof TN Srinivasan passed away yesterday.

Tributes from Niranjan (IDFC Institute) and Madan Sabnavis (CARE Ratings).

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Hunting for a Hot Job in High Tech? Try ‘Digitization Economist’

November 1, 2018

HBSWK reports that Amazon has hired more than 150 PhD economists in last 5 years.

Under chief economist Pat Bajari, Amazon has hired more than 150 PhD economists in five years. He’s also cornered the market on what might be called “rookie economists” just out of school. That crowns Amazon the largest employer of tech economists—with more working full-time than even the largest academic economics department. Amazon is far from alone in this trend.

Some 50 tech companies “have been snapping up economists at a remarkable scale,” says Michael Luca, the Lee J. Styslinger III Associate Professor of Business Administration at Harvard Business School. “All of the big Bay Area tech companies have teams of economists, and lots of the smaller companies are starting to hire handfuls of them.” The list includes Google, Microsoft, Airbnb, Uber, Facebook, and numerous smaller companies.

Tech companies are turning to sharp economic minds to provide their unique lens on business problems like advertising auctions and market design. The accelerating phenomenon has given rise to a new field within economics called the economics of digitization. Research from the field is quickly finding its way into practice, directly through the work of PhD economists, and in the classroom, as HBS and other business schools add more tech-germane courses to their MBA offerings.

What do econs do there?

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Will Indian financial markets click Robert Merton’s SeLFIES?

October 24, 2018

Prof. Robert Merton recently gave the RH Patil memorial lecture organised by NSE.

Here is my recent piece where I have reviewed the key ideas of his lecture. The lecture was about this retirement financial product which he has named as SeLFIES. I also have tried to figure whether and how India can click these SeLFIES.

Reading the the wisdom of Leonard E. Read on his 120th birthday

October 12, 2018

Nice collection of 34 e-books of Leonard Read of I, pencil fame.

So much to read…

In praise of India’s women economists

October 10, 2018

Niranjan in his recent piece lists some of the prominent women economists of India and discusses their work.

In any general economic discussion, it is rare to find mention of Indian economists and even rarer to find mention of  works by women economists. This is a good starting put to think and work on the women economists in India….

Why Nordhaus and Romer deserve the Economics Prize for 2018?

October 9, 2018

My 2 paise on the economics prize for 2018.

Reblogging and reminiscing: Before Thaler there was Pai

October 9, 2018

I cannot help but reblog this article I wrote reflecting on last year’s Economics Prize.

The recipient was Richard Thaler for his amazing and inspirational work on behavioral economics.  His Nobel lecture is really inspirational on getting ideas and then pursue them despite all adversity. Thaler even mocked himself saying on completing his thesis, his adviser famoulsy said:” We didn’t expect much of him”.

Having said that, we have barely engaged with Indian financial history in a meaningful way. I wrote how Dr TMA Pai of Syndicate Bank had not just thought about the financial nudge idea but even implemented it very successfully at his bank via pigmy deposits way back in late 1920s. Sidin the editor of Mint Sunday paper not just agreed to publish it right away but also gave it a teasing title “Before Thaler there was Pai”. 🙂

I am still amazed how little we learnt from Pigmy Deposits gives our focus on financial inclusion. It helped open bank accounts across the region, encourage savings, mobilise deposits for the bank and most importantly generated enormous trust amidst bank’s customers. It was a huge win-win for all the stakeholders. But still never got the traction it deserved..

Reading Hayek on the Economics Prize day…

October 8, 2018

Just in one and a half hours, we are going to learn of the recipient of ‘The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel’ for the year 2018.

I had read Hayek’s Prize lecture (received the prize in 1974) but saw this Banquet speech recently (HT: Conversable Economist Blog)

Your Majesty, Your Royal Highnesses, Ladies and Gentlemen,

Now that the Nobel Memorial Prize for economic science has been created, one can only be profoundly grateful for having been selected as one of its joint recipients, and the economists certainly have every reason for being grateful to the Swedish Riksbank for regarding their subject as worthy of this high honour.

Yet I must confess that if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it.

One reason was that I feared that such a prize, as I believe is true of the activities of some of the great scientific foundations, would tend to accentuate the swings of scientific fashion.

This apprehension the selection committee has brilliantly refuted by awarding the prize to one whose views are as unfashionable as mine are.

I do not yet feel equally reassured concerning my second cause of apprehension. It is that the Nobel Prize confers on an individual an authority which in economics no man ought to possess. 

This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.

But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally. There is no reason why a man who has made a distinctive contribution to economic science should be omnicompetent on all problems of society – as the press tends to treat him till in the end he may himself be persuaded to believe.

One is even made to feel it a public duty to pronounce on problems to which one may not have devoted special attention.

I am not sure that it is desirable to strengthen the influence of a few individual economists by such a ceremonial and eye-catching recognition of achievements, perhaps of the distant past. I am therefore almost inclined to suggest that you require from your laureates an oath of humility, a sort of hippocratic oath, never to exceed in public pronouncements the limits of their competence.

Or you ought at least, on confering the prize, remind the recipient of the sage counsel of one of the great men in our subject, Alfred Marshall, who wrote: “Students of social science, must fear popular approval: Evil is with them when all men speak well of them”.

Wish Hayek had declined the economics prize with these words! That would have set a benchmark of sorts..

 

How the media helped turn the worst recovery in 100 years into a strong economy in stable hands before the 2015 election

October 5, 2018

Prof Simon Wren Lewis in his blogpost takes on UK’s financial media and City economists (non-academic) for painting a rosy picture of UK economy:

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Asia’s Strongmen and Their Weak Economies

October 4, 2018

Jayati Ghosh of JNU in this piece argues that our belief that authoritarian leaders deliver better economic performance is flawed:

all of Asia’s strongmen share a key characteristic: they secure public support by preying on economic ignorance. In particular, they trade on the popular belief that leaders who concentrate political power are freer to guide economic growth. For the most part, people accept this claim, expecting that financial gain and “development” will be their reward.

Curiously, markets have also accepted this flawed reasoning. Global investors tend to overlook human rights, and to prefer stability and autocratic resolve to the unpredictability of democracy. Equity and currency markets regularly punish countries for even a hint of political upheaval, whereas rulers with more power and fewer checks and balances are assumed to be more capable of ensuring meaningful “reforms.”

And yet, with the possible exception of Xi, the perception that strong autocratic rulers deliver better economic results is wrong. The truth is that Asia’s strongmen are presiding over increasingly vulnerable states and even more fragile economies.

….

What explains weak economic performances by Asia’s strongmen? Maybe untrammeled political power enables large-scale economic mistakes. Furthermore, while most autocrats show strength to their own public, they become meek in the face of global capital. Even when rulers rant against policies that will hurt their populist agendas – like high interest rates – they typically succumb to pressure from financial markets.

This is because the policies they have pursued have integrated their economies so completely into global trade and finance, on unequal terms. Despite their nationalist rhetoric, when the economic winds blow against them, it can be hard to change direction. The exception is China, where heterodox policies and significant state intervention have made the economy far less vulnerable to external shocks. But while Xi has thus far managed to deal with an increasingly complex and hostile external economic environment, many serious internal concerns could easily erupt into bigger problems.

Whatever the reason for Asia’s profusion of strongmen, people and markets have gotten it wrong for too long. Strongman rulers are bad for democracy, and they are really bad for the economy.

 Well, the decline is a lot due to hubris as well…

Adam Smith and his Russian admirers of the 18th century

October 4, 2018

How ideas transcend borders and in unlikeliest of places.

This is a fascinating paper written in 1937 by a Russian Michael P. Alekseev. It is reprinted in Econ Journal Watch.

Alekseev writes on how Adam Smith’s thoughts and ideas were so well admired in Russia in the late 18th- early 19th century. There is even a Pushkin connection!:

Reproduced here is an essay by Michael P. (Mikhail Pavlovich) Alekseev. In the 1760s two students from Russia, Semyon Efimovich Desnitsky (1740–1789) and Ivan Andreevich Tretyakov (1735–1776), attended Glasgow University, learned directly from Adam Smith, John Millar, and others, returned to Russia, and commenced a tradition of Smithian thought in Russia. Alekseev tells of other Russian Smithians including N. S. Mordinov (1754–1845), Ekaterina Romanovna Dashkova (1744–1810), Alexander Romanovich Vorontsov (1741–1805), Semyon Romanovich Vorontsov (1744–1832), Christian von Schlözer (1774–1831), Heinrich Friedrich von Storch (1766–1835), M. A. Balugiansky (1769–1847), Nikolay Turgenev (1789–1871), and the great author Alexander Pushkin (1799–1837). Alekseev writes: “After the war of 1812 Adam Smith became extremely popular among the liberal youth of Russia who were organizing secret circles. In endowing the hero of his novel Eugene Onegin with a taste for economic problems and by making him read Adam Smith, Pushkin merely reproduced the actual feature of the time, the writer himself having had the same taste.”

Hmm. That is a long list of admirers.

What is even more interesting is how there were these two Russian students who had studied under Smith. They made notes in early 1770s which clearly shows that Smith was teaching what was to become The Wealth of Nations. 🙂

 

Using Thirlwall’s framework to figure India’s Balance of Payments problems..

October 3, 2018

Trust Niranjan Rajadhyaksha to keep educating us about older generation of economists and their ideas.

As per Niranjan, India needs to figure was to fund its $75 billion current account deficit. This will act as a constraint on growth. We need to understand this In via the Thirlwall framework.

The uncomfortable question is how rapidly the Indian economy can expand in the long run without running into a balance of payments problem. Srinivas Thiruvadanthai of the Jerome Levy Forecasting Center recently pointed out the importance of assessing the balance of payments neutral growth rate that India can maintain. The English economist Anthony Thirwall said in a 1979 book that any country that has to maintain a current account equilibrium with a constant real exchange rate should grow at a rate equal to the ratio of the growth of exports to the income elasticity of demand for imports. A simpler explanation is that economic growth over the long run for a country that cannot easily fund its current account deficit is constrained by its export growth on the one hand and the income elasticity of its imports on the other.

Maybe Indian policy makers need to bring this insight back into their assessments of how rapidly India can grow without tipping into periodic balance of payments problems—to complement the usual discussions about the potential growth rate that keeps inflation close to the mandated target.

Hmmm..

Ideological Profile of Eugene Fama

October 3, 2018

Nice bit here by Econ Journal Watch:

This profile resumes the Econ Journal Watch projectexploring the ideological sensibilities of the economics laureates. Eugene Fama describes himself as a libertarian, and by his late twenties seems to have been well on the way towards such views. Like many Chicago economists, he firmed up those views during the 1960s and 1970s. He has not been outspoken, but he has lent his name to at least ten petitions, and events from 2008 called him into public discourse. He kindly provided answers to our questionnaire about his own ideological orientation over the course of his lifetime.

Ideological profiles are as important as citing works of prominent econs. Here is a whole list of profiles of the winners of the economics prize.

Book Review: How Economics Professors Can Stop Failing Us

September 27, 2018

Prof Samuel Bostaph (University of Dallas) reviews this hard-hitting book: How Economics Professors Can Stop Failing Us: The Discipline at a Crossroads bSteven Payson.

The book says:

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Learning economic history via business history: Case of how Ernesto Tornquist managed his empire in Argentina

September 27, 2018

Fascinating interview of Geoffrey Jones who is a business history professor at HBS. He has developed a case on Ernesto Tornquist who built an empire in Argentina. Apart from business history, the case also gives us insights into Argentina economy and political economy:

Professor Geoffrey Jones examines the career of Ernesto Tornquist, a cosmopolitan financier considered to be the most significant entrepreneur in Argentina at the end of the 19th century. He created a diversified business group, linked to the political elite, integrating Argentina into the trading and financial networks of the first global economy. The case, Ernesto Tornquist: Making a Fortune on the Pampas, provides an opportunity to understand why Argentina was such a successful economy at this time, and to debate whether its very success laid the basis for the country’s subsequent poor economic performance.

The case will resonate with quite a few similar empires in other emerging economies.

For instance, the case discusses that Argentina had a vibrant agri sector. But the problem was how to build a manufacturing sector?: (more…)

Profile of Raj Chetty: Data evangelist

September 26, 2018

IMF’s F&D Sep-2018 issue profiles Raj Chetty.

In some cases, Chetty’s work strikes out in new and unexpected directions. In others, it confirms earlier studies by sociologists or specialists in early-childhood education. Either way, what gives it such impact is his innovative use of massive data sets, which has put him on the cutting edge of a trend that’s transforming the field.

“Big data has been revolutionary in applied microeconomics,” says Emmanuel Saez, a frequent collaborator who teaches at the University of California at Berkeley. “Raj has been in the vanguard of this movement.”

For Chetty, big data promises to bring economics closer to the certainties of the natural sciences. The hope is that economists will have a greater impact on public policy by presenting evidence that’s convincing enough to bridge the ideological divide, especially at the local government level, where partisan rancor is less intense.

“He zealously preserves his ideologically neutral stand,” says David Grusky, a Stanford sociology professor who has worked with Chetty. “He wants the data to speak, and let the chips fall where they may.”

Grusky describes Chetty as a relentless investigator who roams widely through relevant literature, regardless of the discipline, and tests every conceivable hypothesis as he works toward a conclusion. “He considers it an abject failure if there’s ever a question coming from an audience that entails an analysis he hasn’t already undertaken.”

Speaking to audiences, on campus and off, is something Chetty does frequently in his role as evangelist for big data. He cultivates contacts with journalists and makes his articles available online, along with easy-to-understand summaries, which has helped attract widespread coverage of his work in publications including the Atlantic, the Economist, and the New York Times.

“If what we’re doing is important for the world, we should make it accessible to the world,” Chetty explains.

Hmm..

All India Radio’s Glory Days and Its Search for Autonomy

September 26, 2018

Coonoor Kripalani, an independent scholar revisits history and glory of All India Radio:

In the recent row over the “autonomous corporation” status of the Prasar Bharati, the fate of state broadcasters like All India Radio is in a deadlock. In the face of competition with private broadcasters, the corporation cannot exercise full autonomy in managing the state broadcaster, even though the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 has been passed. Functional autonomy remains a far-fetched reality with the government of the day finding it difficult to cut the umbilical cord with the state broadcaster. As AIR is reeling under the pressure of this managerial conundrum, one should not lose sight of its historic role as a nation builder, as well as its contribution to the cultural landscape of India. Many of the towering intellectuals, musicians, writers and theatre personalities of mid to late 20th-century India were associated with this remarkable institution.

 

How Keynes got idea about his General Theory book from Malthus…

September 18, 2018

Fascinating paper by Steven Kates.

He draws evidence showing how Keynes book General Theory drew inspiration from Malthus. More specifically Keynes drew insights about aggregate demand from the letter exchange between Malthus and Ricardo. Malthus wrote to Ricardo showing how excessive savings could lead to fall in demand to a fall in profits and to a fall in output.

It was because Keynes read Malthus’s letters to Ricardo in late 1932 that he eventually focused on effective demand in the General Theory. Because of his reading of Malthus, Keynes attacked Say’s Law and wrote the General Theory to establish variations in effective demand as the major cause of fluctuations in economic activity. If these conclusions are right, the story of how the General Theory came to be written cannot be understood in isolation from Malthus’s role nor is it possible to understand the General Theory itself without seeing it in relation to Keynes’s interpretation of Malthus. The continuing focus on aggregate demand by macro and business cycle theorists is due to the insights gained by Keynes from his reading of the Malthus side of the Malthus-Ricardo correspondence during the months of October and November, 1932.

How ideas evolve…

RIP: Deena Khatkhate

September 18, 2018

It is quite something about 2018 as notable figures in their respective fields leave us one after the other.

Last weekend, Deena Khatkhate also passed away.

Niranjan of Cafe Economics tweeted about Mr Khatkhate:

 Sep 17

Deena Khatkhate, Anand Chandavarkar, M. Narasimham and V.V. Bhatt were the formidable quartet that built up economics research at the RBI in the 1950s and 1960s. Three of them subsequently moved to the IMF. Narasimham stayed on — and became RBI governor

 Sep 17

Khatkhate was also an elegant writer on economic issues. His EPW column of dispatches from the banks of the Potomac were consistently brilliant. And his collected essays –Ruminations of a Gadfly — is one of my favourites, especially the pen portraits of great Indian economists.

There is another tribute by Prakash Loungiani of IMF on his blog. Prakash cites three main areas of Mr Khatkhate’s work:

“Life is lived forwards but understood backwards,” wrote the philosopher Kierkegaard. This collection of a life-time’s work of the Indian economist Deena Khatkhate can be understood as an act of rebellion against much of his intellectual inheritance: socialism and central planning, Keynesian macroeconomics, and an adversarial view of North-South relationships. Instead, these essays put forward a spirited (but not uncritical) defense of capitalism and markets, espouse a macroeconomics as much Friedmanite as Keynesian, and urge a constructive approach to relationships between developing and advanced nations.

The last of these themes is illustrated in arguably the best article in the collection, which is on the brain drain—the emigration of skilled workers from developing to advanced countries. In this article, published in F&D in 1971, Khatkhate challenged the prevalent view of the brain drain as an evil, a form of aid from the poor to the rich. He showed that because most emigration occurred from developing countries with a clear excess supply of skilled workers, it was actually a social safety valve for the poor countries. And because it encouraged the “cross fertilization of ideas” between skilled workers from the poor nations and the richer nations, the brain drain could be “a desirable investment.”

….

Prior to joining the IMF, Khatkhate worked for over a decade—from 1955 to 1968—at the Reserve Bank of India, the country’s central bank. Not surprisingly, therefore, a second major theme of the essays is the role of macroeconomic and financial policies in promoting economic growth. In the 1950s, the Keynesian view advocated running fiscal deficits to promote growth in developing countries. The rationale was that since there were underemployed resources in these economies, heavy government spending could lead to employment of those resources without triggering inflation. However, Khatkhate writes that the negative evidence on the actual impact of government spending convinced him that “all that happened as a result of heavy resort to fiscal deficit was inflation, decline in income, saving and investment.” Khatkhate’s views on monetary policy also differed from the 1960s Keynesian view, emphasizing as they did the need for rules to guide the central bank rather than give it too much discretion.

A third theme is the rhetoric vs. the reality of socialism and central planning. Khatkhate blamed socialism for trying to deliver both growth and equity and delivering neither. The real problem in developing countries, he said, was not so much the skewed income distribution but “improving the standard of the whole mass of people, which is possible only with rapid economic growth.” These views were far from the mainstream when Khatkhate wrote them in 1978. He is not, however, an unvarying defender of capitalism and free markets. On the free mobility of capital, for instance, his views are close to that of his compatriot Jagdish Bhagwati in favoring a cautious approach, given the evidence that hasty liberalization can contribute to financial crises.

Just as in case of Prof Dwijendra Tripathi, so little is known about Dr. Khatkhate as well.

Infact, barring M. Narasimham whose name comes up in the two financial sector reforms committees he chaired in 1990s, we hardly know anything much about the other three economists mentioned by Niranjan. The works of these economists is barely taught anywhere in economics departments in Indian universities.

I had the good fortune to review some of VV Bhatt’s work during my PhD thesis work, but is hardly enough.

Update:

Arvind Subramanian pays a tribute

Revisiting Marx and Smith

September 12, 2018

Nice post by Gulzar whose blog I should read more often.

He posts about how we need to move away from the usual description of Marx and Smith’s works.


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