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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

History of Machine Learning in Finance and Economics

3 days ago

Derek Snow in this piece:
Finance and Economics have been slow to adopt modern machine learning techniques. Nevertheless, the researchers and practitioners in these respective domains have been essential in laying the bedrock of what we now refer to as machine learning. The use of mathematics in the service of social and economic analysis dates back to the 17th century. Then, mainly in German universities, a style of instruction emerged which dealt explicitly with the detailed presentation of data as it relates to public administration. Gottfried Achenwall lectured in this fashion in the mid-18th century, coining the term statistics. By the 19th century, we saw a flurry of economic statistics, some of which gave rise to statistical learning methods. Then at the start of the 20th

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Why the era of low inflation could last for 50 years?

3 days ago

Lord Meghnad Desai in this OMFIF piece:
Have we entered an era of zero or even negative inflation? If so, what are the reasons and how long will it last? Certainly, the link between government borrowing and inflation is broken.
Is this low inflation phase an exception or is it the new ruling financial environment? I am going to stick my neck out and say it will last for 50 years.
The elements of the low inflation economy have been maturing over the last 50 years – since the collapse of the dollar standard and oil price shock. Manufacturing has moved to Asia, away from developed countries. Services, transformed by technology, are enjoying rising productivity with better products being sold at lower prices. The prospect of inflation caused by the growth of unit labour costs is

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The rise and sudden decline of North Carolina furniture making

3 days ago

John Mullin in this new Richmond Fed research article:
It happened so quickly. In just 10 years, between 1999 and 2009, North Carolina’s furniture manufacturing industry lost more than half of its jobs. The chief culprit was increased competition from lower-cost furniture imported from Asia — mostly China. The U.S.-China Bilateral WTO Agreement, signed in November 1999, had opened the door to Chinese imports by lowering U.S. tariff barriers and easing the way for China to join the World Trade Organization (WTO). At the time, proponents of the agreement predicted that it would have a relatively modest effect on U.S. manufacturing imports and jobs. Studies of the subsequent history, however, strongly suggest that these predictions were incorrect. Increased imports from China turned out

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Conversation Series: The Future of the Industrial Public Sector: Is It In The Public Good?

3 days ago

The next conversation at Ahmedabad University is with Prof Rohit Chandra of IIT Delhi.  Topic is Public Sector Organisations.
Is there a reason why governments get into industrial production? Shouldn’t governments govern, and leave industrial production to the private sector? Why did the Indian government invest in the public sector, and why is it now disinvesting?
In the last few years, we have seen significant shifts in how the Indian government deals with the industrial and public sectors. There has been heightened policy movement around privatisation, worker retrenchment, disinvestment, greater dividends, and state assets sale. Meanwhile, select well-performing PSUs are being used as vehicles of countercyclical capital investment, employment expansion, national technology choice

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RBI’s Occasional Paper Series available online since their start in 1976

4 days ago

This bog has been pointing out how RBI’s website has loads of historic information, reports, databases and so on. RBI has put up its Annual Reports, Banking data, RBI’s several Reports and Trend and Progress of Banking since 1949.
I just discovered RBI has put up its Occasional Paper Series as well. The first series started in 1976.
The way to figure the archive is the same.
Click on All Volumes and Issues on the left tab.
Again click on the link Occasional Papers – All Volumes and Issues
You see list of years on the right end.
Click on Archives and then 1997
There you have all the list of papers since 1976.
The first series has this bit from former GD Dr RK Hazari:
The Reserve Bank of India has been publishing a monthly BuI1etin regularly which carries statistical data, studies of

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The Political Effects of Immigration: Culture or Economics?

4 days ago

Late Prof Alberto Alesina and Prof Marco Tabellini of HBS in this paper:
We review the growing literature on the political effects of immigration. After a brief summary of the economics of immigration, we turn to the main focus of the paper: how immigrants influence electoral outcomes in receiving countries, and why. We start from the “standard” view that immigration triggers political backlash and raises support for nativist, anti-immigrant political parties. We present evidence from a variety of studies that the causes of natives’ political discontent are unlikely to have (solely) economic roots, but are instead more tightly linked to cultural and social concerns. Next, we discuss works that paint a more nuanced picture of the effects of immigration, which, in some cases, can move

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The comeback path for DFIs is strewn with strategic challenges

5 days ago

Niranjan Rajadhyaksha of Cafe Economics in this new Mint piece:
Are development finance institutions (DFIs) about to make a comeback in the Indian financial landscape? The first hint was offered by finance minister Nirmala Sitharaman in her July 2019 budget speech. She spoke about the need for a specialist DFI to channel funds to the ₹1 trillion of infrastructure projects planned over the next five years. Not much happened after that. Then K.V. Kamath, who led the successful transition of the erstwhile ICICI from a development bank to a universal one, said in an interview to Bloomberg Quint in early December that India may need to consider a new DFI.

These statements could be mere straws in the wind. They come nearly two decades after India decided that its financial system was

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Pandemic creates a new economic channel: scarring effect

6 days ago

Julian Kozlowski of St Louis Fed in this research article introduces a new channel which impacts economic activity – scarring effect.
What are the long-run economic costs of COVID-19? While the virus will eventually pass, an event of this magnitude could leave lasting effects. A shift in confidence and fear could prevent firms and consumers from rebounding to their old investment and spending habits. A recent paper (Kozlowski, Veldkamp, and Venkateswaran, 2020a) formalizes this discussion and quantifies these effects. The authors use a standard economic and epidemiological framework, with one novel channel: a “scarring effect.” Scarring is a persistent change in beliefs about the probability of an extreme, negative shock to the economy.  
……
The work by Kozlowski, Veldkamp, and

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Economic uncertainty and divisive politics: evidence from Spain 1905-45

6 days ago

Sandra García-Uribe, Hannes Mueller and Carlos San in this Bank of Spain working paper:
This article exploits two newspaper archives to track economic policy uncertainty in Spain in 1905-1945, a period of extreme political polarization. We fi nd that the outbreak of the civil war in 1936 was anticipated by a striking upward level shift of uncertaintyin both newspapers. We study the dynamics behind this shift and provide evidence of a strong empirical link between increasing uncertainty and the rise of divisive political issues at the time: socio-economic conflict, regional separatism, power of the military, and role of the church. This holds even when we exploit variation in content at the newspaper level.

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Personnel Management and School Productivity: Evidence from India

7 days ago

Renata Lemos, Karthik Muralidharan & Daniela Scur in this NBER paper:

This paper uses new data to study school management and productivity in India. We report four main results. First, management quality in public schools is low, and ~2σ below high-income countries with comparable data. Second, private schools have higher management quality, driven by much stronger people management. Third, people management quality is correlated with both independent measures of teaching practice, as well as school productivity measured by student value added. Fourth, private school teacher pay is positively correlated with teacher effectiveness, and better-managed private schools are more likely to retain more effective teachers. Neither pattern is seen in public schools.

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Creative destruction in India’s stock markets will yield better results

7 days ago

SEBI issued a discussion paper (DP) recently. DP proposes opening up the stock exchange and depository space to competition.
My Moneycontrol piece on the proposal.

This entry was posted on January 11, 2021 at 2:48 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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The economic impact of ancient colonisation

7 days ago

Dimitris K. Chronopoulos, Sotiris Kampanelis, Daniel Oto-Peralías and John O.S. Wilson in this voxeu research:

The enduring impact of ancient colonialism can still be felt in the economic geography of the Mediterranean region. This column combines historical data on ancient colonies with current data on economic outcomes to show that areas once colonised by the Phoenicians, Greeks, and Etruscans have higher population densities and enhanced economic activity to this day – effects due more to the colonisation episode than to geographic attributes. The impact of ancient colonialism can thus be traced back more than two millennia, to the origin of the Mediterranean urban system.

This entry was posted on January 11, 2021 at 10:33

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Inflation targeting in India and sudden capital flows

10 days ago

Prof Gurbachan Singh of ISI in this I4I piece proposes two fiscal policy measures which will help RBI target inflation and take care of sudden capital flows:
Current law in India mandates a review of the target inflation rate by 31 March 2021 for a five-year period. Several critics have called for abandoning the flexible inflation targeting regime altogether. In this post, Gurbachan Singh shows that flexible inflation targeting can accentuate the problem of sudden capital flows, and that the current monetary policy framework can be substantially improved by including two ‘new’ policy instruments that can be used by the Ministry of Finance rather than the RBI.

This entry was posted on January 8, 2021 at 7:21 pm and is filed under

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RBI strengthening its Banking supervision: College of Supervisors (CoS)

10 days ago

RBI continues to take steps to strengthen its banking supervision function. It had set up a College of Supervisors in May-20 and is now fully functional
From RBI’s press release 2 days back:
As part of the measures to further strengthen Supervision over regulated entities, Reserve Bank had set up a College of Supervisors (CoS) to augment and reinforce supervisory skills among its regulatory and supervisory staff both at entry level and on a continuous basis. This was done to facilitate the development of unified and focused supervision by providing training and other developmental inputs to the concerned staff.
While the CoS was functioning in a limited way in virtual mode since May 2020, it is now being fully operationalised. The CoS will have a full-time Director supported by an

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The digital economy and the euro area

11 days ago

Robert Anderton, Valerie Jarvis, Vincent Labhard, Filippos Petroulakis, Ieva Rubene and Lara Vivian of ECB in this piece:
Digitalisation – the diffusion of digital technologies leading to a digital economy – is “virtually everywhere”. It transforms patterns of consumption and production, business models, preferences and relative prices, and thereby entire economies, making it an important issue from a central banking perspective. Some of the key effects of digitalisation relevant to monetary policy relate to output and productivity, labour markets, wages and prices.
The impact of digitalisation on the economy is a function, inter alia, of national economic structure and economic policies, institutions and governance. However, it is not clear whether digitalisation is going to deepen

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Ten Hours that Shook America

11 days ago

What a morning. Things have been so downhill in USA, that nothing really surprises you.
Prof Nina L. Khrushcheva of The New School in the Proj Synd piece looks at 10 hrs that shook the country and the world:

The storming of the US Capitol by Donald Trump’s supporters in a last-ditch effort to overturn the result of the 2020 election was as predictable as it was shocking. Four years of Republican complicity in the face of Trump’s erosion of US democracy have brought the country to its most fraught moment since the Civil War.

This entry was posted on January 7, 2021 at 1:05 pm and is filed under Discussion. You can follow any responses to this entry through the RSS 2.0 feed.
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A Review of Nudges: Definitions, Justifications, Effectiveness

11 days ago

Luca Congiu  and Ivan Moscati of University of Insubria (Italy) in this research piece:

In an influential book published in 2008, Thaler and Sunstein suggested a novel approach to policy making based on the notion of a ‘nudge.’ Roughly speaking, a nudge is defined as an aspect of the decisional context that steers people’s decisions by acting on their cognitive biases. The book generated an intense debate, over the course of which concerns were raised about: (1) the exact definition of nudges, (2) their ethical justifiability, and (3) their effectiveness. In this paper, we review the nudge literature by focusing on these three concerns.

This entry was posted on January 7, 2021 at 12:57 pm and is filed under Academic research &

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Best of Mankiw: Errors and Tangles in the World’s Best-Selling Economics Textbooks

12 days ago

Prof Peter Bofinger of Würzburg University in this post on INET economics:
It is always surprising what reactions a few tweets can trigger. My now ten-part Twitter series (summarized here) on key passages from the introductory book (Mankiw 2015) and the macroeconomics book (Mankiw 2019) by N. Gregory Mankiw has met with an incredibly great response. I did not expect it at all. But considering that these textbooks have reached a worldwide circulation of about 4 million according to Mankiw’s own data (Mankiw 2020b), there are simply a great many people who have come into contact with this book, voluntarily or involuntarily, and have had their own experiences with it.
In the series, I had tweeted un- or sparsely annotated “Principles” from Mankiw’s books under the ironic title “Best of

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Does Brazil’s Campos Neto really deserve to be central banker of the year?

12 days ago

This article is behind the paywall but one gets the drift.
The game of central banking is being played in such a way that whatever you do you will be criticised.

This entry was posted on January 6, 2021 at 4:27 pm and is filed under Central Banks / Monetary Policy. You can follow any responses to this entry through the RSS 2.0 feed.
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Monetary Policy Transmission in India: New Evidence from Firm-Bank Matched Data

12 days ago

Saurabh Ghosh, Abhinav Narayanan and Pranav Garg in this new RBI paper:
Monetary policy transmission has remained a pivotal topic of interest across all central bankers. Empirically, however, it is hard to dis-entangle the effects of a policy change on firms’ investment demand, banks’ credit supply and their interactions. This paper uses a unique firm-bank matched data set from India to provide new insights into the monetary policy transmission mechanism. The findings of the paper indicate that monetary policy transmission works with a lag for bank lending. For firms, aggregate demand conditions in the market may drive investment demand which may, in turn, be correlated with the monetary policy easing cycle. However, final credit flows from banks depend on the liquidity position of

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India’s inflation is not just a monetary phenomenon but a regulatory phenomenon too

12 days ago

V. Anantha Naageswaran (who writes the Gold Standard Blog) in this new Mint piece looks at the Indian regulatory maze. He says apart from the maze killing appetite for investment and employment, it also leads to higher inflation:
In the coming decade, as India’s government aspires for brisk economic growth, it must figure out how not to stand in the way of capital formation and employment generation, especially in the MSME sector. As things stand, Indian rules are killers of both those goals. These act as barriers against the creation of new capacity and also market competition, both of which keep prices and their increases reasonable.
The inflation-generating process in India is also clear. It is not a monetary phenomenon. It is a regulatory phenomenon. Inflation is caused by too

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Fast and Slow in “The Queen’s Gambit”

13 days ago

Ken Rogoff on the recent Netflix series on chess and rise of online chess:

Super-fast computer programs and massive databases have had a profound impact on professional chess in recent years. But, despite the threat of cheating, the game is currently in remarkable creative and economic health – not least because it is fantastically suited to the online world.

This entry was posted on January 5, 2021 at 3:31 pm and is filed under Academic research & research papers. You can follow any responses to this entry through the RSS 2.0 feed.
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Reserve Bank of India introduces the RBI-Digital Payments Index

17 days ago

In Feb-2020 policy, RBI had announced it will start a Digital Payments Index. RBI has started with the exercise:
As announced in the Statement on Developmental and Regulatory Policies as part of the Sixth Bi-monthly Monetary Policy Statement for 2019-20 dated February 06, 2020, the Reserve Bank of India has constructed a composite Digital Payments Index (DPI) to capture the extent of digitisation of payments across the country.
The RBI-DPI comprises of 5 broad parameters that enable measurement of deepening and penetration of digital payments in the country over different time periods. These parameters are – (i) Payment Enablers (weight 25%), (ii) Payment Infrastructure – Demand-side factors (10%), (iii) Payment Infrastructure – Supply-side factors (15%), (iv) Payment Performance

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Last day of 2020: RBI continues to issue directions for failed cooperative banks

18 days ago

What an year for Indian banking. Full of drama and hype.
Even on the last day of 2020, RBI issued directions for 2 coop banks which had failed earlier
Vasantdada Nagari Sahakari Bank Ltd Dist. Osmanabad, Maharashtra: failed in 2016 and directions have been extended ever since
Maratha Sahakari Bank Ltd., Mumbai, Maharashtra: failed in 2017 and directions extended ever since
What will the year 2021 hold for banking in India?

This entry was posted on December 31, 2020 at 9:46 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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Vernacularisation and linguistic democratisation

18 days ago

Interesting research by Christine Binzel, Andreas Link, Rajesh Ramachandran:

The use of a language in written and formal contexts that is distinct from the languages used in everyday communication – such as Latin in early modern Europe and Standard Arabic in the Arabic-speaking world, both past and present – comes with benefits, but also with costs. Drawing on publishing data from early modern Europe, this column shows that the Protestant Reformation led to a sudden and sharp rise in vernacular printing, such that by the end of the 16th century, the majority of works were printed in spoken tongues rather than in Latin. This transformation allowed broader segments of society to access knowledge. It also diversified the composition of authors and book content and had long-term

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The Missing Link in Economic Development: Look beyond incentives

18 days ago

Prof Ricardo Hausmann in this Proj Synd piece:

Like the proverbial man with a hammer who sees every problem as a nail, economists study the world through the lens of incentives, and have developed a rich understanding of how market participants make decisions. But although incentives are important, developing countries must do more than institute the right ones.
Though economics can capture many of the subtleties of incentives, it has developed a relatively narrower palette with which to describe capabilities and how they grow. But capabilities clearly matter. If someone is not doing something that we as a society value, it might be because they can’t, not because they don’t want to. This weakness in economics has far-reaching implications for our understanding of economic growth and

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Maradona’s goals and Argentina’s economic instability

20 days ago

Prof Vivek Moorthy of IIMB in Mint:
The demise of Diego Maradona last month incidentally brought to the fore the topic of monetary policy in Argentina. The governor of Bank of England in 2005, Mervyn King, in a lecture staunchly supporting inflation targeting, had used Maradona’s (invisible) ‘Hand of God’ goal, and his unexpected tactics in his second goal in Argentina’s spectacular 1986 win against England, to elucidate concepts related to inflation expectations. Lord Mervyn King’s comments were alluded to in newspaper editorials, and in Mint too, last month.

Since India embarked upon inflation targeting in 2016, it is worthwhile to follow the twists and turns in Argentina’s economy over decades, and draw vital lessons from it. Argentina, an economic powerhouse and huge agricultural

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Franklin Templeton using nudging for e-voting: Green for Yes, Red for No

20 days ago

Interesting bit from Moneylife.
FT India had goofed up its 6 debt funds and asked unitholders to vote for future of the schemes.   However, it has used interesting nudging techniques to push voters to select the winding option:
The e-voting of unit-holders of six debt schemes of Franklin Templeton Mutual Fund (FTMF), which started on 26th December and would conclude on 29 December 2020, appears to be turned into a farce by FTMF, especially when the market regulator has been playing the role of a mute spectator. The Securities and Exchange Board of India (SEBI) has appointed TS Krishnamurthy, former chief election commissioner (CEC) as observer for the e-voting process and issued a statement on 26th December when the e-voting process had commenced. This move came a day after the

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RBI’s inflation target at 4%: If it ain’t broke, don’t fix it

20 days ago

This new RBI research by DG Michael Patra and Hemendra Behera is creating a lot of buzz in media:
This paper began with a question that goes to the root of FIT in India – is the choice of the target for inflation consistent with its trend? A target set below the trend imparts a deflationary bias to monetary policy because it will go into overkill relative what the economy can intrinsically bear in order to achieve the target. Analogously, a target that is fixed above trend renders monetary policy too expansionary and prone to inflationary shocks and unanchored expectations.
Trend inflation is an empirical question and choice of methodology is crucial if the estimate of trend inflation has to be precise. Within the proliferation of work on the subject, there is a loose consensus that

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Digital Transformation – The Case of South India Bank

20 days ago

International Finance Corporation helped South Indian Bank transform digitally.
IFC released a report on the digital transition of SIB:
In 2016, IFC began a new project with South Indian Bank (SIB), a mid-sized private bank (currently the third-largest in southern India), to strengthen its digital capabilities. By doing so, the bank aimed to transform its retail and small and medium enterprise businesses (SMEs) to drive customer engagement and to mobilize deposits.
SIB partnered with IFC to implement the strategy, which more specifically was designed to boost new accounts, to increase existing customers’ account usage, and to grow the bank’s portfolio. Implementation required leveraging technology and digital channels to target retail and SME customers while also seeking new

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