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Amol Agrawal

Amol Agrawal

I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

Articles by Amol Agrawal

What explains the differences between rising stock markets and declining economic prospects?

2 days ago

Prof Robert Shiller in this Proj Synd piece:
The performance of stock markets, especially in the United States, during the coronavirus pandemic seems to defy logic. With cratering demand dragging down investment and employment, what could possibly be keeping share prices afloat?
The more economic fundamentals and market outcomes diverge, the deeper the mystery becomes, until one considers possible explanations based on crowd psychology, the virality of ideas, and the dynamics of narrative epidemics. After all, stock-market movements are driven largely by investors’ assessments of other investors’ evolving reaction to the news, rather than the news itself.
That is because most people have no way to evaluate the significance of economic or scientific news. Especially when mistrust of

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Central banks in parliaments: a text analysis of the parliamentary hearings of the Bank of England, the European Central Bank and the Federal Reserve

3 days ago

Nicolò Fraccaroli, Alessandro Giovannini and Jean-François Jamet in this ECB WP:
As the role of central banks expanded, demand for public scrutiny of their actions increased. This paper investigates whether parliamentary hearings, the main tool to hold central banks accountable, are fit for this purpose. Using text analysis, it detects the topics and sentiments in parliamentary hearings of the Bank of England, the European Central Bank and the Federal Reserve from 1999 to 2019.
It shows that, while central bank objectives play the most relevant role in determining the topic, unemployment is negatively associated with the focus of hearings on price stability. Sentiments are more negative when uncertainty is higher and when inflation is more distant from the central bank’s inflation

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Plague, prorogation and the suspension of the courts in fifteenth-century England

3 days ago

Fascinating post by  Dr Simon Payling on History of Parliament Blog:
On Wednesday 6 June 1464, at the beginning of Trinity term, a small piece of theatre was played out in Westminster Hall. Three justices of the court of common pleas ordered everyone present to hear the King’s command. The seal of a royal writ, dated ten days earlier, was then broken and the writ read aloud: the King, absent in the north campaigning against the Lancastrians, had heard of the plague raging in London and Westminster and decided to suspend the court for the whole of Trinity term. This sensible precaution reminds us that, although no visitation of the plague to these shores approached the devastating mortality of the Black Death of 1349, plague remained a recurring and unwelcome visitor into the fifteenth

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New Testament’s Matthew effect and modern finance: on the nexus between wealth inequality, financial development and financial technology

3 days ago

Jon Frost, Leonardo Gambacorta and Romina Gambacorta of BIS in this paper:
In the social sciences, the idea of the well endowed receiving further privilege, eg the rich getting richer, is often called the “Matthew effect” (New Testament Book of Matthew, 25:29). In economics, this effect is relevant particularly for wealth inequality. The effect could be amplified by financial development and technological advances that give investors access to better financial services or to assets with higher returns.

This paper analyses the role of financial development and financial technology in driving inequality in (returns to) wealth. Using micro data from the Survey on Household Income and Wealth (SHIW) conducted by the Bank of Italy for the period 1991-2016, we find evidence of the “Matthew

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Reserve Bank of NZ begins to build teams for money and payment futurists

3 days ago

I had written on how RBNZ is looking to recruit money futurists.
The central bank has moved further and appointed chiefs of these new departments:
Two appointments to senior leadership roles in the Reserve Bank’s Money Group show the Bank’s commitment to developing and preparing for the future of physical and electronic payments, Assistant Governor Christian Hawkesby says.
Ian Woolford has been appointed the Reserve Bank’s Head of Money and Cash, and Steve Gordon will head a new Payment Services Department.
Mr Hawkesby says both new roles stem from growth and developments within the Reserve Bank’s Banking Department.
“Two major strategic projects – the Payment Systems Replacement, and the Future of Cash – have resulted in new responsibilities and considerable advancements in thinking

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How the 1991 reforms changed our lives and who gets the credit?

4 days ago

Puja Mehra’s podcast Everyday Economics is rolling on.
The new podcast is with Mr. Jairam Ramesh who discusses 1991 reforms and also tells us how Indian political economy works or does not work.
One may agree/disagree with Mr. Jairam Ramesh but the conversation is quite interesting. How different political actors come together both by choice and reluctance. Indian political economy becomes even more interesting given the scale of diversity..

This entry was posted on July 8, 2020 at 6:35 pm and is filed under Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.

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Evolution of Monetary policy framework in India: Mid-1980s to today

4 days ago

Prof Pami Dua in a recent paper in Indian Economic Review:
In 2016, the monetary policy framework moved towards flexible inflation targeting and a six member Monetary Policy Committee (MPC) was constituted for setting the policy rate. With this step towards modernization of the monetary policy process, India joined the set of countries that have adopted inflation targeting as their monetary policy framework. The Consumer Price Index (CPI combined) inflation target was set by the Government of India at 4% with ± 2% tolerance band for the period from August 5, 2016 to March 31, 2021.
In this backdrop, the paper reviews the evolution of monetary policy frameworks in India since the mid-1980s. It also describes the monetary policy transmission process and its limitations in terms of lags

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Comparing the financial centres of Tokyo, Singapore, and Hong Kong in FX Markets

4 days ago

Washimi Kazuaki and Kadogawa Yoichi of BOJ in this research article:
In recent years, turnovers of Foreign Exchange (FX) trading in Singapore and Hong Kong SAR have outweighed those of Japan, and the gap between the two cities and Japan continues to stretch. The two cities consolidate trading of G10 currencies by institutional investors and others by advancing electronic trading.
Additionally, a number of treasury departments of overseas financial/non-financial firms are attracted to the two cities, contributing to the increasing trading of Asian currencies in tandem with expanding goods and services trades between China and the ASEAN countries.
this juncture, FX trading related to capital account transactions is relatively small in Asia partly due to capital control measures.

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Webinar: Ancient Indian Antecedents to Economic Thought

4 days ago

Prof Satish Deodhar of IIMA to speak on the topic on 11 July 2020 at 4 PM.
Interested folks can register here.

This entry was posted on July 8, 2020 at 10:29 am and is filed under Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
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Ukraine Central Bank moves from one crisis to another

4 days ago

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

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Why Japanese Businesses Are So Good at Surviving Crises

5 days ago

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

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Will Universities Learn from the current crisis?

5 days ago

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

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Revisiting the economic thought of Prof K.N.Raj

5 days ago

Good friend Prof Aex Thomas of APU makes a case for studying works of KN Raj and History of Economic Thought in general:
In economics, there are classic texts which are frequently mentioned but seldom read. The subfield of history of economic thought (HET hereafter) is one arena where these path-breaking texts are systematically studied. A close study of the classic works of Adam Smith, Karl Marx, Alfred Marshall, and John Maynard Keynes will make it abundantly clear that economic ideas do not evolve in a linear manner whatsoever, and that the work of Smith cannot be viewed as an inferior version of Marshall’s as is generally believed. While there exists some interest in systematically studying the works of Smith, Ricardo, Marx, and Keynes, the same cannot be said for the work of

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Why Hong Kong will remain an international financial centre, despite new security law

5 days ago

Fair bit of articles being written on the ongoing crisis in Hong Kong leading to the island city losing its premium status as an international fin centre.
Horace Yeung (University of Leicester) and Flora Huang (University of Derby) in this piece do not agree with this premise:
While we cannot underestimate some individuals’ fears that they may be arbitrarily detained under the new national security law, there is also evidence that the law will curb the social unrest that has been detrimental to business in Hong Kong. Crucially, our research supports the idea that Hong Kong’s legal system remains stronger than China’s for international business activity. This will ensure it has a competitive edge over China for the time being.
Under Article 8 of the Basic Law of Hong Kong, which serves

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How Hyderabad transformed into a modern city post the outbreak of plague in early 20th century

5 days ago

There are fair bit of articles on how Mumbai (and other cities) transformed post the plague of 1890s.
My promising student Aasha Eapen (who writes a blog as well) points me to this article on Hyderabad fortunes turning post the plague in 1911.

This entry was posted on July 7, 2020 at 12:44 pm and is filed under Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
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Central banker Musical Chairs at the London Bullion Market Association: Fed exits, Banque de France joins

6 days ago

Interesting article by Ronan Munly in Bullionstar. It reminds you how little the central banking world has changed from Liaquat Ahmed’s Lords of Finance world of 1920s:
For a group famous for its caution in appearing associated with and endorsing gold, Western central bankers seem to have made an exception when it comes to sitting on the board of directors of the world’s largest bullion bank gold cartel, the London Bullion Market Association (LBMA). But maybe that’s the point. Because, if central banks and their proxies are close to the action in the gold market, they will be able to control their interests, as well as influence and control others.
Which may explain why news just in reveals that Isabelle Strauss-Kahn, former Market Operations director of the Banque de France (BdF),

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Managing groundwater in India: rationing the commons

6 days ago

Nicholas Ryan and Anant Sudarshan in the new NBER WP:
Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use, in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average. The rationing regime is still grossly inefficient, because it misallocates water across farmers, lowering productivity. Pigouvian reform would increase agricultural surplus by 12% of household income, yet fall well short of a Pareto improvement over rationing.
Interesting!

This entry

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Business in Time of Spanish Influenza: Economic activity declines with and without lockdowns

6 days ago

Howard Bodenhorn of Clemson Univ in this NBER paper:
Mandated shutdowns of nonessential businesses during the COVID-19 crisis brought into sharp relief the tradeoff between public health and a healthy economy. This paper documents the short-run effects of shutdowns during the Spanish flu pandemic of 1918, which provides a useful counterpoint to choices made in 2020.
The 1918 closures were shorter and less sweeping, in part because the US was at war and the Wilson administration was unwilling to let public safety jeopardize the war’s prosecution. The result was widespread sickness, which pushed some businesses to shutdown voluntarily; others operated shorthanded.
Using hand-coded, high-frequency data (mostly weekly) this study reports three principal results.
First, retail sales

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Analysing fiscal conditions of India’s States..

6 days ago

Sangita Misra, Kirti Gupta and Pushpa Trivedi in this RBI research paper analyse fiscal conditions of India’s states pre-covid:
Recognising the increasing precedence of fiscal shocks leading to a deterioration in states’ debt due to the realisation of contingent liabilities, this study assesses the debt sustainability of Indian states by employing both conventional debt and augmented debt, obtained by incorporating information on states’ guarantees and their likely fallout on states’ budgets.
The study uses the standard indicator-based approach and an empirical panel data framework for the post-Fiscal Responsibility Legislation (FRL) period 2004-05 to 2017-18. Results indicate that states’ debt is just about sustainable with some potential signs of unsustainability. Guarantees given

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Late Soviet America

9 days ago

Prof Harold James in this damning Proj Synd piece:

Like the Soviet Union in its final years, the United States is reeling from catastrophic failures of leadership and long-suppressed socioeconomic tensions that have finally boiled over. For the rest of the world, the most important development is that the hegemony of the US dollar may finally be coming to an end.
Further:
In fact, many aspects of America’s current annus horribilis recall the final years of the Soviet Union, starting with the intensification of social and political conflict. In the Soviet case, long-suppressed ethnic rivalries and competing national aspirations quickly bubbled to the surface, pushing the entire country toward violence, secession, and disintegration. In the US, Trump’s response to nationwide protests

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Pandemic adds fuel to the central bank digital currencies race

10 days ago

My new piece in Moneycontrol.
I argue how the ongoing pandemic has led to a few central banks surging in the race to issue central bank digital currencies.

This entry was posted on July 2, 2020 at 6:26 pm and is filed under Central Banks / Monetary Policy, Economics – macro, micro etc, Financial Markets/ Finance. You can follow any responses to this entry through the RSS 2.0 feed.
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Impact of Leverage on Firms’ Investment: Decoding the Indian Experience

10 days ago

Avdhesh Kumar Shukla & Tara Shankar Shaw in this new RBI WP:
This paper examined the impact of firm’s leverage on corporate investment in India. The findings of the paper suggested that the high leverage of firms has an adverse impact on their capital expenditure. Also, the relationship between leverage and firm’s investment was found to be non-linear.
Leverage at higher level affects investment decisions much more adversely, particularly for firms with lower investment opportunities. Leverage may affect a firm’s investment behaviour in multiple ways. It constrains firm’s capacity to mobilize external resources for financing new projects. It may discourage shareholders from supporting higher capital expenditure through increased borrowings, as in a scenario of high leverage, major

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Government of India’s Special liquidity scheme for NBFCs/HFCs

10 days ago

RBI issued a press release on this special liquidity scheme announced by the government:
As per the Government decision, SBICAP which is a subsidiary of the State Bank of India has set up a SPV (SLS Trust) to manage this operation. The SPV will purchase the short-term papers from eligible NBFCs/HFCs, who shall utilise the proceeds under this scheme solely for the purpose of extinguishing existing liabilities. The instruments will be CPs and NCDs with a residual maturity of not more than three months and rated as investment grade. The facility will not be available for any paper issued after September 30, 2020 and the SPV would cease to make fresh purchases after September 30, 2020 and would recover all dues by December 31, 2020; or as may be modified subsequently under the scheme.

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Why were married women twice as likely to contract the Spanish Flu in 1918 as married men? Evidence from Malta

11 days ago

Historical evidence coming from across the world. Central Bank of Malta held a public lecture by Dr Mario Saliba on the impact of Spanish Flu in Maltese islands:
Why were married women twice as likely to contract the Spanish Flu in 1918 as married men? The answer to this question is one of many fascinating insights to be provided by Mario Saliba during a virtual public lecture.
In an academic paper that Dr Saliba published in 2018 with two Canadian anthropologists, the answer came down to the larger family size a century ago, which put women in constant contact with their children – who were found to carry the Spanish Flu virus for longer periods of time and also shed larger amounts of the virus, among other factors.
The Spanish Flu wreaked unprecedented havoc and killed over 40

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Prison Labor: The Price of Prisons and the Lasting Effects of Incarceration

11 days ago

Belinda Archibong (Barnard College) and Nonso Obikili (Stellenbosch University) in this paper:
Institutions of justice, like prisons, can be used to serve economic and other extra- judicial interests, with lasting deleterious effects. We study the effects on incarceration when prisoners are used primarily as a source of labor using evidence from British colonial Nigeria. We digitized sixty-five years of archival records on prisons from 1920 to 1995 and provide new estimates on the value of prison labor and the effects of labor demand shocks on incarceration. We find that prison labor was economically valuable to the colonial regime, making up a significant share of colonial public works expendi- ture. Positive economic shocks increased incarceration rates over the colonial period.

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How Patanjali’s Coronil and Swasari make mockery of medical regulation in India

11 days ago

Damning piece by Leroy Leo and Goutam Das in Mint:
Besides exaggerated claims, Patanjali’s conduct could have fallen short of both legal and ethical boundaries. The company picked speed over scientific rigour, fuelling doubts on the quality of its clinical trials. In its application of clinical trial with the Clinical Trials Registry of India (CTRI), the company declared that its first patient was enrolled on 29 May. The estimated duration of trial mentioned two months but by 23 June, Patanjali was ready with the medicine, its packaging and marketing plans.
At the conference, Ramdev said the medicines would be available in seven days and an app had been readied to order home deliveries. Most of the other trials have a far longer time window—the Dabur study, which involves multiple

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Bank of England apology for slave trade

11 days ago

I somehow missed this statement from Bank of England:

There can be no doubt that the eighteenth and nineteenth century slave trade was an unacceptable part of British history. As an institution, the Bank of England was never itself directly involved in the slave trade, but is aware of some inexcusable connections involving former Governors and Directors and apologises for them.

The Bank has commenced a thorough review of its collection of images of former Governors and Directors to ensure none with any such involvement in the slave trade remain on display anywhere in the Bank.

The Bank is committed to improving diversity and is actively engaging with staff, particularly with our BAME colleagues, to help us identify and shape concrete steps that can be taken now to progress the

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Why didn’t Gandhi pay much attention to Spanish Flu?

13 days ago

There is little doubt that Spanish Flu for all its severity has missed most history books. The Flu occurred during the momentous period of WWI and added to the ongoing tragedy in world history in terms of lost lives and tarnished families. Yet, it barely features in historical discussions.
Thomas Weber of La Trobe University and Dennis Dalton of Barnard College add to this discussion in this interesting EPW paper. They look at Mahatma Gandhi’s letters during the period to figure what was he thinking and writing during the pandemic. Despite his own family getting infected, Gandhi paid very little attention to pandemic:
When David Arnold urged historians in his 2018 paper to study the 1918 flu pandemic, he could not have known that only two years later his admonition would prove so

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Conversation with Prof Govinda Rao on Indian Economy

13 days ago

The youtube recording of the conversation is here.
Prof Govinda Rao touched on several ailments facing Indian economy. It is going to be a long journey towards normalcy.

This entry was posted on June 29, 2020 at 1:09 pm and is filed under Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
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Conversation on Relevance of Business History with Lakshmi Subramanian

13 days ago

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.

This entry was posted on June 29, 2020 at 1:02 pm and is filed under Discussion, Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
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