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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

Will RBI’s new inflation forecasting model help?

6 days ago

New piece in Moneycontrol (Behind the paywall):
The tighter-than-required monetary policy during 2016-18 is often criticized for derailing Indian growth story; that’s why the new forecasting model assumes importance..

This entry was posted on April 9, 2021 at 6:34 pm and is filed under Academic research & research papers, Central Banks / Monetary Policy, Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
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The Man Who Discovered Capitalism: A Documentary on Schumpeter for Use in the Classroom

6 days ago

John T. Dalton and Andrew Logan of Wake Forest University in this paper review the documentary on Schumpeter:

We describe how the 2016 documentary The Man Who Discovered Capitalism can be used in the classroom to provide an entry point to the life and economics of Joseph A. Schumpeter, whose work on innovation, entrepreneurship, and creative destruction remains relevant for students today.
We summarize the key ideas conveyed in the documentary and offer four criticisms: its failure to capture the role of fin-de-siecle Vienna on Schumpeter’s intellectual development, its incomplete understanding of Schumpeter’s theory of innovation, its overstatement of Keynes’s influence relative to Schumpeter, and the overly generous credit it gives to government for spurring innovation.
We show

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Measuring human capital: Learning matters more than schooling

6 days ago

Noam Angrist, Simeon Djankov, Pinelopi Goldberg and Harry Patrinos in this voxeu research:

Human capital is a critical component of economic development. But the links between growth and human capital – when measured by years of schooling – are weak. This column introduces a better measurement, using a database that directly measures learning and represents 98% of the global population. The authors find that the link between economic development and human capital is strong when measured in this way. They also show that global progress in learning has been limited over the past two decades, even as enrolment in primary and secondary education has increased.

This should be obvious to humanity. But isn’t perhaps and needs research to show the obvious…

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How high-speed rail changes the spatial distribution of economic activity: Evidence from Japan’s Shinkansen

7 days ago

Kazunobu Hayakawa, Hans Koster, Takatoshi Tabuchi and Jacques-François Thisse in this voxeu research:
The economic and social consequences of investments in transport infrastructure generate heated academic and policy debates because they typically involve costly investments that are supposed to yield high payoffs. Particularly telling examples of large transport infrastructure investments are investments in high-speed rail.
This column shows that the Shinkansen has had a substantial effect on Japan’s spatial distribution of employment. The relative position of municipalities within the network and their underlying location fundamentals are essential in understanding why the effects of an extensive infrastructure are positive or negative at the local level.

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The potato changed the World’s history

7 days ago

Shivani Krishnakumar in Madras Courier:
Potato, Batata, Aloo, Bangala Dumpa–whatever you call it–today, the potato is a staple food in cuisines across the world. But four centuries ago, potatoes were not used for cooking. Instead, people used potato flowers to decorate themselves.
Initially, potatoes were loathed; they were considered to be the source of leprosy. But once people started using potatoes in their cuisines, the potato, in its own way, started changing the course of human history. Today the potato takes a large share of responsibility for the phenomenal rise in human population.

This entry was posted on April 8, 2021 at 12:00 pm and is filed under Discussion. You can follow any responses to this entry through the

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Supervising cryptoassets for anti-money laundering

7 days ago

Rodrigo Coelho, Jonathan Fishman and Denise Garcia Ocampo in this BIS article:
Although certain cryptoassets have the potential to make payments and transfers more efficient, some of their features may heighten money laundering/terrorist financing (ML/TF) risks. In particular, the speed of transactions, global reach, potential for anonymous activity and the potential for transactions to take place without financial intermediaries make cryptoassets vulnerable to misuse. In fact, the scale of illicit use of cryptoassets is already significant, highlighting the importance of AML/CFT regulation and supervision, as well as law enforcement, in this area.
The Financial Action Task Force has acted swiftly with a view to preventing the misuse of cryptoassets for ML/TF. However, the

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Europe’s growth gap: reconciling Keynes and Schumpeter

8 days ago

Governor François Villeroy de Galhau of Banque De France in this speech points to growing growth gaps between Europe and US.
How to bridge the gap? Take advice of Keynes or Schumpeter?

After the diagnosis, I will now move to potential explanations and cures. For that, let us call to mind two of our most famous economists of the 20th century: Keynes and Schumpeter, who are viewed as opposed in terms of policy prescription.
John Maynard Keynes emphasised the importance of both macroeconomic active policies and the welfare state for citizens.  Joseph Aloïs Schumpeter focused on what causes dynamism and innovation in market economies. As you know, he was born in Europe but passed away in America – and it’s probably no coincidence.
Accordingly, I would like to elaborate on three

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How effective is e-NAM in integrating food commodity prices in India? Evidence from Onion Market

8 days ago

Rudrani Bhattacharya and Sabarni Chowdhury in this NIPFP paper:

A series of market distortionary rules and regulations hinder development of an integrated agricultural market in India. In order to ensure greater transparency and uniformity of food commodity prices across states, various reform measures have to be undertaken to developagriculture marketing. These measures concentrate on the numerous areas, specifically infrastructure development, information provision, improving the role of private sector and decreasing government sector intervention, training of farmers and traders in marketing and postharvest issues, and most importantly creating a competitive national market for food commodities.
The Indian government established e-NAM as a first step toward inducing competition in

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RBI’s Financial Inclusion Index

8 days ago

RBI in Apr-21 policy:
Financial Inclusion has been viewed as a key enabler for achieving inclusive and sustainable development worldwide. This has been a thrust area for Government, Reserve Bank and other regulators, with a number of steps having been taken and significant progress made over the years. To measure the extent of financial inclusion in the country, the Reserve Bank will construct and periodically publish a “Financial Inclusion Index” (FI Index). The FI Index would be based on multiple parameters and shall reflect the broadening and deepening of financial inclusion in the country. To begin with, the FI Index will be published annually in July for the financial year ending previous March.
This follows RBI’s announcement of digital payments index in Feb-20 policy which

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RBI rejigs Deputy Governors’ portfolio yet again..

9 days ago

RBI rejigs the Deputy Governors’ (DG) Portfolio yet again. Shri BP Kanungo retired and his portfolio was allocated to the three DGs.
Since July 23, 2019, when Viral Acharya left the RBI, the central bank has reshuffled the DG portfolio four times with three of these reshuffles in 2020 alone.  The reshuffling happens as Government is unable to appoint a replacement for a retiring/resigning DG.
In an earlier piece, I had written about this constant rejigging and even suggested ways to avoid this…

This entry was posted on April 6, 2021 at 5:16 pm and is filed under Academic research & research papers, Central Banks / Monetary Policy, Economics – macro, micro etc, Financial Markets/ Finance, Indian Economy/Financial Markets. You

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The way Nigeria selects vice-chancellors is deeply flawed. But it can be fixed

9 days ago

Prof Ayodeji Olukoju of University of Lagos in this Conversation piece on the State of Universities in Nigeria:

Why are some universities in crisis over appointments?
The intrusion of vested interests is the fundamental cause.
Take the role of state governors. There are 36 states in Nigeria. In most cases the governors regard the post as another political appointment preserved for family, friends, loyalists or their surrogates.
Another consideration for governors is that to win – or retain – power they must nurture the support of particular communities. This means that considerations such as ethnicity, sub-ethnicity, senatorial zone balancing, home town of origin, nepotism and religion are at work.
On another level, chairmen and influential members of a university’s governing

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A global minimum corporate tax rate..

9 days ago

Janet Yellen’s remarks yday (5-Apr-2021) attracted a lot of attention. She mentioned the need to have a global minimum tax.
She started with saying “America is strongest when we engage with the world” and points the role US has played in world polity and economy:
When I was born, the United States was still recovering from the Great Depression and World War II. These tragedies cost countless lives; too many families lost nearly everything. But from the devastation we learned an invaluable lesson: the United States must not go it alone.
In the aftermath of the destruction, the United States built strong political and security alliances that have helped keep our country safe and helped our economies flourish. We created global institutions, such as the United Nations, and financial

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Will bitcoin follow the mania, panic and crash trajectory?

9 days ago

My new piece in Hindustan Times.
Bitcoin’s current surge is difficult to decipher. If the world was preferring bitcoin as a currency, one could still understand this frenzy. But bitcoin’s user base is still insignificant

This entry was posted on April 6, 2021 at 10:39 am and is filed under Academic research & research papers, 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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Could Index Funds Be ‘Worse Than Marxism’?

9 days ago

Annie Lowrey in this Atlantic piece says that economists and policy makers are worried that the Vanguard model of passive investment is hurting markets.
In the 1970s, John Bogle pioneered ETFs as a low cost option for retail stock investors. It was seen as a kind of financial revolution.
The revolution has become something else since then. and have grown really big to control 20-30% of US stock markets. The Big 3 ETF companies constitute 90% of ETF market.   Lowrey’s article has many more details.
To see ETFs which to certain extent was seen as this uber capitalism idea to now be compared as Marxism is like full circle…
How all good things eventually become bad things.

This entry was posted on April 6, 2021 at 10:29 am and is filed

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Rest in Peace: Prof Robert Mundell

10 days ago

Prof Robert  Mundell passed away in Italy at 88. He along with Marcus Fleming of IMF gave us a framework to think about monetary policy and exchange rate systems.  He is also seen as father of Euro currency. Mundell was awarded the Nobel Prize in 1999 ironically in the same year Euro was established as a currency.
Brian Domitrovic pays a tribute.

This entry was posted on April 5, 2021 at 5:54 pm and is filed under Central Banks / Monetary Policy, Discussion, Economics – macro, micro etc. You can follow any responses to this entry through the RSS 2.0 feed.
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Surviving a Mass Shooting

10 days ago

Prashant Bharadwaj, Manudeep Bhuller, Katrine V. Løken & Mirjam Wentzel in this paper:
We use data on all middle and high school-aged children who survived a mass shooting incident on July 22, 2011 in Utøya, Norway, to understand how such events affect survivors, their families, and their peers.
Using a difference-in-differences design to compare survivors to a matched control group, we find that in the short run children who survive have substantially lower GPA (nearly 0.5 SD), increased health visits, and more mental health diagnoses (nearly 400% increase). In the medium run, survivors have fewer years of schooling completed and lower labor force participation.
Parents and siblings of survivors are also impacted, experiencing substantial increases in doctor visits and mental

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A global database on central banks’ monetary responses to Covid-19

10 days ago

Carlos Cantú, Paolo Cavallino, Fiorella De Fiore and James Yetman in this BIS paper:
The Covid-19 pandemic has been a global shock of unprecedented size that has hit most countries around the world. Central banks have responded quickly, on a massive scale. We present a novel database that provides information on central banks’ responses to Covid-19 in 39 economies, including both advanced and emerging market economies. Monetary policy announcements are listed and classified under five types of tools: interest rate measures, reserve policies, lending operations, asset purchase programmes and foreign exchange operations. Within each category, the database provides additional information such as maturity, eligible counterparties, types of assets and the availability of fiscal backup. It

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All Apologies for Democracy

10 days ago

Prof Harold James in this Proj Syndicate piece:

Recent mistakes by elected governments underscore the unique difficulties that democracies face when dealing with a problem as large and complex as a pandemic. Nonetheless, the COVID-19 crisis has offered clear lessons, validating two classic answers to the question of what role the state should fill.
….
There are no easy answers. But the COVID-19 crisis may offer two generalizable lessons. First, the more rules-based the system, the more robustly it can manage criticism. Lockdowns driven by clear, predetermined criteria are one straightforward way to contain not just the virus but also the ensuing blame and cynicism.
Second, the problem of vaccine scarcity and unfair allocation can most obviously be addressed by producing as many doses

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The initial deposit decision and the occurrence of bank runs

10 days ago

Johan de Jong of University of Amsterdam models bank runs in a different setting:

In studies of bank runs the initial deposit decision is typically not taken into account. However, it is unlikely that people will entrust money to a bank that they expect to fail in the near future. The aim of this study is to investigate to what extent this mechanism prevents bank runs. It introduces an experiment in which participants first have to choose if they want to receive their endowments as a deposit in a `risky’ bank that pays a high interest or a `safe’ bank that pays a lower interest. 

After this decision they can withdraw the money from their account or leave it in to receive the interest. The availability of different deposit options leads to a very clear theoretical prediction: all

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US Senator Pat Toomey accuses Federal Reserve has overstepped by doing research on social issues

13 days ago

This is an interesting letter by US Senator Pat Toomey to San Francisco Fed chief Mary Daly:
I am writing regarding the sudden pivot of the Federal Reserve Bank of San Francisco (FRBSF) toward publishing politically-charged research on environmental, social, and governance (ESG) topics like climate change and racial justice.
Over the past century, research within the Federal Reserve System (Federal Reserve) has been nonpartisan, independent, and broadly aimed at analyzing high-level economic data such as capital flows, asset prices, and employment, in support of the Federal Reserve’s monetary andregulatory policy duties.
Recently, however, several Federal Reserve Banks, including the FRBSF, have increasingly been engaged in research on social policy topics reflective of the political

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Eastern Carribean Central Bank becomes first central bank to issue digital currency in a currency union

13 days ago

Phew, The initial CBDC race is being won by most unlikeliest of countries.
After Bahamas becoming first to issue CBDC, ECCB becomes first to issue a CBDC in a currency union.
On 31 March, ‘DCash’, designed and developed by the international fintech company, Bitt, in partnership with the Eastern Caribbean Central Bank (ECCB), became the world’s first retail central bank digital currency (CBDC) to be publicly issued within a formal currency union.
Governor of the ECCB, Timothy N. J.  Antoine, conducted DCash’s first cross-border transactions by sending $100 DCash from the ECCB’s Headquarters in Saint Christopher (St. Kitts) and Nevis to DCash Wallet holders in the three other pilot countries: Antigua and Barbuda, Grenada and Saint Lucia.
This historic transaction was the climax of over

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The Individual Failings of Economics

13 days ago

Prof Ricardo Hausmann in Proj Syndicate:

In recent decades, economics has gone from defining itself as a set of questions to defining itself as a set of methods, all based on individuals making decisions. By doing so, it has undermined its own ability to make progress.

This entry was posted on April 2, 2021 at 4:25 pm and is filed under Academic research & research papers, Economics – macro, micro etc, Economist. You can follow any responses to this entry through the RSS 2.0 feed.
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20 years of American banking history in 67 tables and charts

13 days ago

Paul Kupiec of AEI in this paper:
I review 20 years of financial data and highlight important changes in the banking industry. Post financial crisis laws and regulations and new Federal Reserve monetary policies have left a lasting impact on the industry. By 2021, the number of independent depository institutions declined to just over half of the number that existed in 2000, and the assets and activities of the industry have become much more concentrated in a few large “systemically important” institutions.
Moreover, the characteristics of the largest banks has changed. In 2000, they invested 57.5 percent of their assets in private sector business and consumer loans. By 2021, that share fell to a historically low 40 percent. In response to higher regulatory capital requirements and

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100 years of Imperial Bank of India

13 days ago

On 27 Jan 1921, the three Presidency Banks were merged into one bank and named the bank as Imperial Bank of India. The Imperial bank of India was nationalised and renamed as State Bank of India in 1955.
The Imperial Bank of India had a very interesting history of its own.

For a long time there was thinking of setting a State Bank to manage the central banking operations in India. The discussion veered from setting a new central bank or to merge the three Presidency Banks into one entity and give it central banking functions. The latter option was favored by none other than Lord Keynes who also suggested the merged entity be called Imperial Bank of India. Ironically, Keynes drew comparisons from Banque De France which served the dual function of commercial and central banking and not

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Knowledge and Humanity: The History of Economic Thought as a Refined Liberal Art

13 days ago

Kevin Quinn in this Econ Journal Watch article:

Taking the idea of economics as a moral science seriously, as practiced by our greatest predecessors, underwrites an intimate connection between doing the history of economic thought and doing economics. Economics has always entailed moral concerns, and moral philosophy is not, pace positivist dogma, a realm where reasoned inquiry is out of place. The study of economic thought, further, can bridge ideological divides, uniting co-inquirers in reverence for the thinkers and the texts who made and continue to make our discipline.

Well put…

This entry was posted on April 2, 2021 at 11:46 am and is filed under Academic research & research papers, Economics – macro, micro etc. You

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World Development Report 2021: Data, Data and Data

15 days ago

World Development Report, flagship document of World Bank in out with the 2021 edition. This one focuses on Data for better lives:
Today’s unprecedented growth of data and their ubiquity in our lives are signs that the data revolution is transforming the world. And yet much of the value of data remains untapped. Data collected for one purpose have the potential to generate economic and social value in applications far beyond those originally anticipated. But many barriers stand in the way, ranging from misaligned incentives and incompatible data systems to a fundamental lack of trust. 
World Development Report 2021: Data for Better Lives explores the tremendous potential of the changing data landscape to improve the lives of poor people, while also acknowledging its potential to open

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Confronting the Hazards of Rising Leverage

15 days ago

IMF’s Global Financial Stability Report-Apr 2021 has two chapters – One on rising leverage in non-financial sector and other on commercial real estate.
IMF economists in this blogpost explain the rising leverage bit:
Leverage, the ability to borrow, is a double-edged sword. It can boost economic growth by allowing firms to invest in machinery to expand their scale of production, or by allowing people to purchase homes and cars or invest in education. During economic crises, it can play a particularly important role by providing a bridge to the economic recovery.
……
Even before the COVID-19 crisis, leverage in the nonfinancial private sector—comprising households and nonfinancial firms—had been increasing steadily in many countries. From 2010–19, this sector’s global leverage rose from

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Don’t Let Financial Regulators Dream Up Climate Solutions

16 days ago

There is a rush of central banks responding to climate risks.
John Cochrane provides a contrarian view and says they shouldn’t get into climate change:

Climate means the overall pattern of weather—its averages and its range of ups and downs. Risk means unforeseen events. We know exactly where the climate is going over the horizon that financial regulation can contemplate. Weather is risky, but the range of weather over the next decade or so is well understood. More importantly, even the biggest floods, hurricanes, and heat waves have essentially no impact on our financial system.
Moreover, the financial system is only at risk when banks as a whole lose so much, and so suddenly, that they blow through their loss reserves and capital, leading to a run on their short-term debt. That a

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Getting Out the Vote: Behind the Scenes of an FOMC Meeting

16 days ago

Charles Davidson of Atlanta Fed in this post takes us through the behind the scenes of an FOMC Meeting.

Although meticulously planned, the committee’s meetings vary in length from six-and-a-half to roughly 10 hours on the first day, depending on economic circumstances and how much Fed action needs to be dissected and discussed. The second-day sessions are shorter because the FOMC statement must be approved and issued publicly by 2 p.m. eastern time, and Fed chair Jerome Powell holds a news conference at 2:30 p.m.
While the six governors—a full complement is seven, but as of March one seat on the Board sat open—and the 12 presidents are the actual policymakers, they are not alone in FOMC sessions. Committee members are joined by five dozen or so staff, including economists and

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How (and why) economists ignored the Spanish Flu Pandemic in 1918–20?

16 days ago

This is a big question: How (and why) economists ignored the Spanish Flu Pandemic in 1918–20?
Mauro Boianovsky and Guido Erreygers in this paper try and figure the answer:

The current COVID-19 pandemic has attracted significant attention from epidemiologists and economists alike. This differs from the 1918-19 Spanish Influenza pandemic, when academic economists hardly paid attention to its economic features, despite its very high mortality toll. We examine the reasons for that, by contrasting the ways epidemiologists and economists reacted to the Spanish Flu at the time and retrospectively within the next 25 years or so.
Our investigation indicates that economists did not pay close attention to the Spanish Influenza 1918 outbreak and its economic impact at the time. Thismay be

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