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Liberation Day and Reciprocal Tariffs | Mostly Economics
President Donald Trump finally announced what he has been saying for long: reciprocal tariffs. America's persistent trade deficits: I, DONALD J. TRUMP, President of the United States of America, find that underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies…
How the free delivery of mail changed daily life for millions of rural Americans | Mostly Economics
We take so many things for granted. A nice (hi)story by Matthew Wells of Richmond Fed on how free delivery of mail changed lives of Americans: For much of the nation's history, rural Americans had to travel — sometimes great distances — to send and receive their mail or they had to hire a private…
What is a Book Review? The Case of Economics | Mostly Economics
In an earlier post, I pointed to this interesting paper by Julien Gradoz of Duke University on importance of books reviews in economics. In another accompanying paper, Gradoz points to two approaches for defining book reviews: This article identifies the two approaches to defining a book review. The first defines a book review as a text published in…
RBI@90: How was RBI’s first monetary policy decided and implemented? | Mostly Economics
Yesterday, RBI commemorated completion of its 90 years. In a Financial Express article, I wrote how the new central bank implemented its first monetary policy. The monetary policy was decided by the Central Board and its first tools were Bank Rate and Cash Reserve Ratio. Today, monetary policy is decided by the Monetary Policy Commitee…
A Teacher Writes to Students Series (42): Money and Soul-Based Economy | Mostly Economics
A Teacher Writes to Students Series (42): Money and Soul-Based Economy By Annavajhula J C Bose, PhD Department of Economics (Retd.), SRCC, DU There is money almost everywhere, and there are billionaires everywhere making it, literally devouring the earth in the process. By contrast, “There’s no money in poetry, but then there’s no poetry in…
Weaponising history: Smithsonian Museum | Mostly Economics
Donald Trump in his second Presidency is going by the playbook of authoritarian leadership. One of the major lessons from the playbook is to spread disinformation by weaponising history. You have to tell the people how history has been unkind to them and to the core values of their country. Then use history as a…
What it takes to increase the rate of growth in the economy? Lessons from economic history | Mostly Economics
Andrew Bailey, Governor of Bank of England in this speech discusses what it takes for an economy to grow. I am going to speak today about a topical subject – economic growth. The question I set myself is, what does it take to create a sustained increase in the growth rate of the economy in…
History of money: From coins to Digital Euro | Mostly Economics
Philip Lane of European Central Bank provides a sweeping account of evolution of money from coins to digital Euro: A few years ago, archaeologists excavated two silver coins at Carrignacurra Castle, not too far from here.[3] The first was a groat (a coin worth four pennies) from the 1200s depicting Henry III; the second was a…
A Model of Ponzi Schemes | Mostly Economics
Interesting paper on modelling Ponzi schemes: We develop a model of Ponzi schemes with asymmetric information to study Ponzi frauds. A long-lived agent offers to save on behalf of short-lived agents at a higher rate than they can earn themselves. The long-lived agent may genuinely have a superior savings technology, but may be an imposter…
225th anniversary of the Banque de France: Two lessons from its history | Mostly Economics
Banque De France established in 1800 by none other than Napoleon Bonaparte is celebrating its 225th anniversary in 2025. François Villeroy de Galhau, Governor of the Banque de France in this speech points to two lessons from the history of two centuries: It is a pleasure to speak today at this historical conference organised in…
Lessons from a small, open, developing, inflation targeter: Jamaica | Mostly Economics
Richard Byles, Governor of the Bank of Jamaica discusses lessons of inflation targeting from a small open developing economy: Good [afternoon]. Thank you for inviting me to participate in this forum. I will speak on Jamaica's experience in managing the post-COVID-19/Russia-Ukraine inflation shocks. This experience may be a useful case study among Latin America and…
Functions of Book Reviews in Economics | Mostly Economics
Julien Gardoz of Duke University in this paper examines the importance of book reviews in economics: This article examines the functions of book reviews in economics. Since most book reviews provide a description, an analysis, and an appraisal of a book's content, their first function is to highlight the book's existence, encourage or discourage readership,…
The Nordic model and income equality: Myths, facts, and policy lessons | Mostly Economics
Magne Mogstad, Kjell G Salvanes and Gaute Torsvik on Nordic model: Nordic countries appear to have developed a social and economic model that combines prosperity with equality. This column identifies four key pillars of the Nordic model: (1) substantial public investment in essential services, (2) influential labour unions, (3) high public expenditure on social insurance,…
Type I and Type II errors of Financial Markets Regulation | Mostly Economics
In statistical testing, Type I and Type II errors could lead to big problems. Type I error is when the defendant is deemed as guilty when she is innocent. Type II is when the defendant is deemed innocent when she is guilty. Both these errors create their own sets of problems. There is also a…
The Biggest Threat to Swiss Banking Center: Swiss Domestic Politics | Mostly Economics
Swiss upper house has backed a motion that caps bankers' pay: The Swiss upper house of parliament late on Monday narrowly backed a motion to limit bankers' total annual compensation to between 3 and 5 million Swiss francs ($3.4-5.7 million), a sum significantly below what the best-paid earn today. By a vote of 21 in favour…
The global drivers of private credit | Mostly Economics
Fernando Avalos, Sebastian Doerr and Gabor Pinter analyse the global drivers of private credit: Private credit has grown rapidly over the past two decades and expanded into more and more industries. Cross-country evidence shows that the footprint of private credit is larger in countries with lower policy rates, more stringent banking regulation and a less efficient banking sector.…
RBI History Fifth Volume (1997-2008) on RBI website | Mostly Economics
RBI has put up the fifth history volume covering the period 1997-2008 on its website. All the other four volumes are also on the website: Volume 1 (1935-1951) Volume 2 (1951-1967) Volume 3 (1967-1981) Volume 4 (1981-1997) Lots of history of all kinds in these five volumes.
Evolution of Inflation Targeting from the 1990s to the 2020s: Developments and Challenges | Mostly Economics
Frederic Mishkin & Michael Kiley in this NBER paper review evolution of Inflation Targeting: Since the initial launch of inflation targeting in the early 1990s in New Zealand and a few other countries, inflation targeting has become the predominant monetary policy strategy in large advanced and emerging market economies. Inflation targeting has been remarkably successful in anchoring…
The structural transformation of the public space: High street changes and populism | Mostly Economics
Stephane Wolton, Samira Gasimova, Ricardo Paccioretti and Giuseppe Palladino in this voxeu research discusses interlinkages between commercial spaces and politics: Independent shops and services lining high streets across the UK serve more than a commercial function. This column studies how different types of commercial spaces – from garages and convenience stores to pubs and bookshops…
Changing Dynamics of India’s Remittances – From Gulf to Advanced Economies | Mostly Economics
RBI's Bulletin (Mar-25 edition) has an article on changing nature of remittances to India. It is written by Dhirendra Gajbhiye, Sujata Kundu, Alisha George, Omkar Vinherkar, Yusra Anees and Jithin Baby. It is interesting to note that now share of remittances is higher from advanced economics (US. UK, Canada) replacing Gulf countries: This article analyses…
The early and free days of IIM Calcutta: A memoir by N. Krishnaji | Mostly Economics
N. Krishnaji, was a faculty in Statistics area at IIM Calcutta from 1965-73. He wrote a memoir of his life as an academic. TheIndiaForum carries an excerpt from the memoir: I joined IIMC in February 1965 as a research fellow, equivalent in rank to a university lecturer and was promoted within two years to the…
Saving Capitalism from Capitalists: twenty years later | Mostly Economics
Raguram Rajan and Luigi Zingales wrote this book titled Saving Capitalism from Capitalists which was published in 2003. In the Capitalism and Freedom podcast with John Hartley, Rajan discusses the book twenty years later: I want to talk just a little bit about an old book, actually, that you wrote a book in 2003. Titled…
A Teacher Writes to Students Series (41): Autistic Economics | Mostly Economics
A Teacher Writes to Students Series (41): Autistic Economics Annavajhula J C Bose, PhD Department of Economics (Retd.), SRCC, DU As pointed out by the World Economics Association, much of the economics profession has since long been afflicted, figuratively speaking, with a most stubborn Autism Spectrum Disorder—"a neurodevelopmental disorder characterized by repetitive, restricted, and inflexible…
Rarefied world of central bank chiefs who became PMs | Mostly Economics
Mark Carney was elected as Prime Minister of Canada. He joins this really rare list of individuals who first head central banks and then go onto become Prime Ministers/Presidents of their respective countries. My article in Moneycontrol where I look at individuals that became heads of governments. The article also looks at individuals that occupied…
Impact of pastoral visits of Pope John Paul II on international trade | Mostly Economics
Alexander Popov of ECB in this research looks at impact of Pope John Paul II visits to different countries on interenational trade: During his reign from 1979 to 2005, Pope John Paul II visited 129 countries, more than the 263 Popes before him combined. I document a significant increase in exports to trading partners with…
Economics of talent: Finding the next Ramanujan | Mostly Economics
Ruchir Agarwal and Patrick Gaule in this IMF F&D article discusses why finding talent at a young age is important for economic development. They cite Ramanujan as a case of indentifying talent: Before he became one of the greatest mathematicians in history, Srinivasa Ramanujan was a young clerk in India’s southern port city of Madras.…
Adam Smith’s capitalism demands constraints on markets, not blind faith in them | Mostly Economics
Oren Cass in IMF F&D (March 2025) edition reiterates what has been said multiple times but yet not understood: Adam Smith's invisible hand is not what economists have made it out to be. The academic economist’s dry prose usually benefits from an evocative metaphor. But we would all be better off if Adam Smith had…
Joint evolution of financial strain at banks and investment funds | Mostly Economics
Important paper by BIS economists Matteo Aquilina, Giulio Cornelli and Nikola Tarashev. The paper argues on how risks from one segment of financial sector spreads to other: Over the past two decades, the heft of non-bank financial intermediaries (NBFIs) has grown and so has their interdependence with banks. NBFIs provide funding to banks and count on banks to…
So many articles on Chagos islands and none on Manipur | Mostly Economics
Picking up from my post yesterday on how Manipur cries in every Parliament session but we all turn deaf to it. The Finance Minister even said that PM Narasimha Rao did not visit Manipur in 1993 riots defending current PM not going to the State. But do two wrongs make a right? Moreover, the same…
Every Parliament session Manipur cries but no one hears | Mostly Economics
It is truly sad that as a new Parliament Session starts, the issue of Manipur crisis comes up but no one cares. No one from the Government has the time to visit Manipur and resolve the crisis which has been raging since two years. It took governemnt two years to impose President's rule. The violence…
Reconnecting morality with political economy | Mostly Economics
Benjamin Enke in IMF's F&D (March 2025 edition): For much of the 20th century, the disciplines of moral psychology and economics were seen as distinct—each focused on separate concerns, with little cross-pollination. This wasn’t always the case. If we look back to philosophers such as Adam Smith and Karl Marx, discussions of political economy were…
Democracy Report 2024: Democracy Winning and Losing at the Ballot | Mostly Economics
V-Dem has released its Annual State of Democracy report for 2024. Key findings: Democracy in the World The level of democracy enjoyed by the average person in the world in 2023 is down to 1985-levels; by country-based averages, it is back to 1998. Since 2009 – almost 15 years in a row – the share…
Book review – Strictly Personal: Manmohan and Gursharan by Daman Singh | Mostly Economics
I just finished reading this book on life of Manmohan Singh and Gursharan Singh by their daughter Daman Singh. I picked this book really late as it was published 10 years ago in 2014. But I am really glad I picked this book. ‘Strictly Personal’ is easily one of the finest books a daughter has…
Understanding interest rate risk of banks | Mostly Economics
Jayson Danton and Stéphane Riederer in this SNB Economics Notes discusses how banks figure maturity risks: A fundamental economic function of the banking system is maturity transformation. This occurs when banks use short-term deposits (which can be withdrawn quickly by customers) to fund long-term loans (which are typically repaid much later by customers). Maturity transformation…
Book Review: Neoliberal Economic Policy and the Rise of Right-Wing Populism: Western Civilization at the Crossroads | Mostly Economics
Book Review John Komlos ed. 2024. Neoliberal Economic Policy and the Rise of Right-Wing Populism: Western Civilization at the Crossroads. Palgrave Macmillan. eBook. ISBN 978-3-031-74979-7. Annavajhula J C Bose, PhD Department of Economics (Retd.), SRCC, DU Palgrave Macmillan has brought out a book series in the name of Palgrave Insights into Apocalypse Economics. They focus…
35 years of flexible inflation targeting in New Zealand: Challenges and opportunities | Mostly Economics
Inflation targeting started in NZ in 1989 and has turned 35. The central bank organised a research conference to understand the challenges to flexible inflation targeting and the opportunities to polish it further in the post-pandemic world. Croaking Cassandra Blog has an interesting and damning post on Bernanke's speech at the conference: Former chairman of…
E-money and monetary policy transmission | Mostly Economics
Zixuan Huang, Amina Lahreche, Mika Saito and Ursula Wiriadinata in this voxeu article: The rise of e-money in low-income and emerging economies has transformed financial inclusion and monetary policy transmission. Case studies from sub-Saharan Africa show that e-money and banking sectors complement each other, strengthening monetary policy effectiveness. This column uses data from 47 countries…
Psychology in India: A Critical Perspective on its Growing Popularity in Universities | Mostly Economics
I have often wondered at this question: Why has psychology become popular in Indian Universities? It has been a sudden surge especially after the pandemic. Prof Rachana Johri of BML Munjal University in this TheIndiaForum article explores reasons for the rise: The search for oneself in these neoliberal times, a job market for psychologists, and…
Why is land so costly in India? | Mostly Economics
Prof Gurbachan Singh discusses high costs of land in India which eventually leads to high prices of real estate. Conventional wisdom is that the high price of land in India is mainly due to factors like scarcity of land, population size, black money, urbanisation, nuclear families, high stamp duty, vacant properties, actions of developers and…
Indian Family Business: Past, Present and Future | Mostly Economics
Uday Kotak's recent comments on State of Family Businesses in India stirred a storm. Kotak said scions of Indian Family Businesses are just interested in investing in stocks and not building businesses. My article in moneycontrol drawing from the fascinating history of India's family businesses discussed in works of Profs Dwijendra Tripathi and Tirthankar Roy.