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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

Chaebols and firm dynamics in the Republic of Korea

3 days ago

Philippe Aghion, Sergei Guriev and Kangchul Jo in this piece:

Moving from low- to high-income status implies that countries escape the middle-income trap. This implies institutional reform to create innovation-based growth. The column uses firm-level data to show how the Korean government’s chaebol reforms in the late 1990s transformed the economy from an investment-based to an innovation-based model. There are lessons here for China.

This entry was posted on November 8, 2019 at 5:34 pm and is filed under Academic research & research papers, Economics – macro, micro etc. You can follow any responses to this entry through the RSS 2.0 feed.
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30 years of Fall of Berlin Wall: Some links

3 days ago

It was on Nov 8 1989 that Berlin Wall fell, marking 2019 as 30 years of the event. Some links:
George Soros writes how after the fall international cooperation became the norm but we now see rise of nationalism
Christine Lagarde honors Wolfgang Schauble who as Minister of the Interior handled the reunification.
Doug Bandow on the history of Berlin Wall and its fall

This entry was posted on November 8, 2019 at 5:26 pm and is filed under Discussion. You can follow any responses to this entry through the RSS 2.0 feed.
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The End of Neoliberalism and the Rebirth of History

3 days ago

Joseph Stiglitz in Proj Syndicate:

For 40 years, elites in rich and poor countries alike promised that neoliberal policies would lead to faster economic growth, and that the benefits would trickle down so that everyone, including the poorest, would be better off. Now that the evidence is in, is it any wonder that trust in elites and confidence in democracy have plummeted?
Neoliberal was hardly liberal and was actually intolerant to other views, The biggest victim was macroeconomics:
The reality is that, despite its name, the era of neoliberalism was far from liberal. It imposed an intellectual orthodoxy whose guardians were utterly intolerant of dissent. Economists with heterodox views were treated as heretics to be shunned, or at best shunted off to a few isolated institutions.

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The impact of negative interest rates on banks and firms

3 days ago

I had blogged about impact of negative interest rates on pension markets.
Carlo Altavilla, Lorenzo Burlon, Mariassunta Giannetti and Sarah Holton write about impact of negative interest rates (NIRP) on banks and firms:
Economists and policymakers continue to question the effectiveness of monetary policy when an economy faces near-zero or sub-zero interest rates. Sceptics argue that central banks cannot stimulate lending, and may indeed decrease the loan supply, by setting negative interest rates. This column shows that negative rates do not impede the transmission of monetary policy from banks to deposit holders because firms do not withdraw cash in response to negative rates the way households might. In fact, sub-zero rates may even stimulate the economy by encouraging firms to

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The Road to Serfdom at 75: When central bankers reflect on lessons from Hayek

4 days ago

Yale Univ recently organised a conference on the 75 years of Hayek’s book : Road to serfdom. I had pointed to a fascinating paper on the Book’s 75 years earlier.
One of the speakers in the Yale event was Randall Quarles, Vice chair of Federal Reserve.
In his speech he reflects on lessons from Hayek:
The financial crisis, and the deep recession that followed it, prompted changes in the United States’ regulatory framework. These changes have been designed to make the financial system more resilient than it was before the crisis. By creating appropriate incentives and rules, they should also encourage financial markets to price risk more appropriately than they did in the years leading up to the crisis—for example, by reducing the danger of investor complacency regarding the riskiness of

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Demonetisation in Kenya: A step in fight against corruption (corruption by whom?)

4 days ago

Tomorrow is 3 years of India’s demonetisation.
Kenya also recently went thorough its own demonetisation but it was more gradual compared to that of India. India could deposit old notes in banks in 50 days where as in Kenya it was over 4 months (1 Jun 2019 to 30 Sep 2019). They also demonetised Kenyan Shilling 1000 notes just like INR 1000 (and Rs 500) in India. To compare, 1000 KeSh = INR 690.
Unlike RBI which was totally silent on demonetisation, Kenyan central bank governor Patrick Njoroge has written an article on the demon policy:
On September 30, 2019, the withdrawal of the old series Ksh.1,000 notes was successfully concluded. This demonetisation commenced on June 1, 2019, following the launch of Kenya’s new generation notes. The new notes symbolize green energy, agriculture,

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How low/negative interest rates are impacting pension industry? The Swiss case

4 days ago

I had blogged about Denmark central banker being concerned about impact of low interest rates on pensions.
Thomas Jordan, head of Swiss National Bank, in this speech speaks on issues facing pension funds industry. The situation even more acute in Swissland as it has negative interest rates:

The first challenge that you as pension fund managers have faced for some considerable time now is the persistently low level of interest rates. These low rates are prevalent not only in Switzerland, but in all the major currency areas. For the pension funds, which traditionally have large holdings of interest-bearing investments, this situation naturally means lower investment income. In other words, the share of the ‘third contributor’ – the capital market – has diminished considerably. This

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From Greenspan standard to Draghi standard

5 days ago

My new piece in moneycontrol (behind paywall), reflecting on tenure of Maro Draghi.
I argue how we have moved from Greenspan standard to perhaps a Draghi standard.
In the famous 2005 Jackson Hole conference, Alan Blinder and Ricardo Reis summarised the (Alan) Greenspan standard as 11 principles:
Keep your options open
Don’t let yourself get trapped in doctrinal straitackets
Avoid policy reversals
Forecasts and models though necessary are unreliable
Act preemptively when you can
Risk management works better in practice than formal optimisation procedures
Recessions should be avoided or kept short
Most oil shocks should not cause recessions
DOnt try to burst bubbles, mop up after
The short term real interest rate, relative to its neutral value is viable and sensible indicator of stand

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Why Modern Money Theory needs to be taken seriously

7 days ago

Ajit Ranade had earlier written an article in Mint on MMT.
Prof Sashi Sivramkrishna writtes a rebuttal piece arguing why we need to take MMT seriously:
In just four minutes of reading time, Ajit Ranade’s opinion piece, The Inexplicable Allure Of Modern Monetary Theory, published in Mint on 21 October, attempts to bring down Modern Money Theory (MMT), a school of thought that presents a cogent alternative to the mainstream neoliberal macroeconomic discourse by fundamentally reassessing the notion of money, the modern monetary system, and the role of the state in a free-market capitalist economy. Arguably, Ranade’s article conveys an inadequate interpretation of its essential propositions, nuances and relevant policy implications.
MMT asserts that economically sovereign states decide

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RBI’s Sandbox: First theme is digital payments

7 days ago

RBI had announced starting its own sandbox on the lines of other central banks. The idea is to bring technology, banking and regulation in a lab setting for experimentation.
The first theme under the sandbox is digital payments:
The Reserve Bank announces the opening of first cohort under the Regulatory Sandbox (RS) with ‘Retail Payments’, as its theme. The adoption of ‘Retail Payments’ as the theme is expected to spur innovation in digital payments space and help in offering payment services to the unserved and underserved segment of the population. Migration to digital modes of making a payment can obviate some of the costs associated with a cash economy and can give customers a friction-free experience. The innovative products/services which, among others, shall be considered for

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Japan enters rehab for cash addiction

7 days ago

Mr Burkhard Balz of the Deutsche Bundesbank in a recent speech compared why Germany and Japan both love cash:

I have to admit that, compared with the metropolis of Tokyo, my place of work – Frankfurt – feels like a village, to say nothing of my hometown of Stadthagen west of Hanover in charming Lower Saxony.
Tokyo and Frankfurt, or rather Japan and Germany, are some 10,000 km – a 12-hour flight – apart, and they each have their own distinct culture with many special features. At the same time, our two countries share multiple ties and have a high degree of mutual appreciation. I also have the impression that the Japanese and Germans are not that dissimilar in many respects:
1) The Japanese are known for being very thorough and passionate about order, making them very similar to the

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The art and science of reverse swing

11 days ago

Greg Baum wrote this interesting piece on 30-July-2019 on the art and science of reverse swing.
Reverse swing, as the name suggests, moves in the opposite direction to conventional swing. Instead of the ball drifting towards its rougher side, it veers towards the smooth. Typically, a ball needs to be older, and thoroughly knocked about, before it arrives in “the zone” to reverse; and it takes a faster bowler to inject enough velocity that the effect will take hold.
In Simon Jones and Andrew Flintoff, England possessed two fast bowlers with the speed and skill to exploit reverse swing. But all the bowlers, spinner Ashley Giles included, bought into the plan to care for the ball as it aged, polishing one “slightly rough” side while allowing the other to become, as Cooley puts it, “super

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How Asia transformed from the poorest continent in the world into a global economic powerhouse

11 days ago

Prof Deepak Nayyar who has recently written a book Resurgent Asia. He sums up some of the findings in the article:
In 1820, Asia accounted for two-thirds of the world’s population and more than one-half of global income. The subsequent decline of Asia was attributed to its integration with a world economy shaped by colonialism and driven by imperialism.
By the late 1960s, Asia was the poorest continent in the world when it came to income levels, marginal except for its large population. Its social indicators of development, among the worst anywhere, epitomised its underdevelopment. The deep pessimism about Asia’s economic prospects, voiced by the Swedish economist Gunnar Myrdal in his 1968 book Asian Drama, was widespread at the time.
In the half century since then, Asia has witnessed

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Between nudge and sludge are lessons for India

11 days ago

Nice Mint piece by Puja Mehra differentiating between nudge and sludge:
Sludge is excessive or unjustified friction such as paperwork burden that slows or halts a behaviour or action. It makes life difficult to navigate and can be frustrating
The nudge philosophy is that the chosen option makes choosers better off as judged by themselves
Sludge often has costs far in excess of benefits and can hurt the most vulnerable members of society. Sunstein says firms, universities and government agencies should regularly conduct sludge audits to catalogue the costs of sludge and decide when and how to reduce it. The streamlined passport issuing service in India, designed to speed up processes, may have followed an informal kind of sludge audit.

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Fewer women staff? Central banks are serious about it

11 days ago

My new piece in moneycontrol.
I reflect on the lessons from the recent ECB conference on Gender and career progression.
The conference will feature research on issues that women face in career advancement and on initiatives to address the gender gap. The conference is the second in a series organised jointly by the European Central Bank, the Bank of England and the Federal Reserve Board.

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This entry was posted on October 31, 2019 at 4:14 pm and is filed under Central Banks / Monetary Policy, Economics – macro, micro etc. You can follow any responses to this entry through the RSS 2.0 feed.
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Lessons from fungi on markets, economics and inequality

12 days ago

Fascinating Ted talk by Toby Kiers, a microbiologist:

So I stand before you as an evolutionary biologist, a professor of evolutionary biology, which sounds like a rather fancy title, if I may say so myself. And I’m going to talk about two topics that aren’t normally talked about together, and that’s market economies and fungi. Or is it fun-GUY, or, as we say in Europe now, fun-GEE? There’s still no consensus on how to say this word.
So I want you to imagine a market economy that’s 400 million years old, one that’s so ubiquitous that it operates in almost every ecosystem of the world, so huge that it can connect millions of traders simultaneously, and so persistent that it survived mass extinctions. It’s here, right now, under our feet. You just can’t see it. And unlike human

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Making the best out of second-best climate policies

12 days ago

Economists like Prof Avinash Dixit and Dani Rodrik often say second best is the best. We always hope for the best economic outcomes which is not really possible. By focusing on the best of the second best, is as good.
Olli Rehn Governor of the Bank of Finland says the same in this speech:
While street demonstrations and citizen activism play an important role in pressing for more ambitious climate action, what we need in terms of public policy is consistent, systemic and rational policy solutions to achieve effective concrete results.
Systemic in the sense that they need to cover and bite in energy production, transport fuels and manufacturing industries widely. Rational in the sense that they need to lean on insights based on theory and evidence – “In science we trust”. Economics can

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Rise of populism and economic natonalism

12 days ago

Those who think financial crisis are just about decline of markets and their resolution are mistaken. It has wider implications for society as we are seeing across the world. There is rise of populism and economic nationalism in major parts of the world.
Voxeu.org has dedicated a webpage for articles on the topic. Sergei Guriev introduces the debate and sums up views of three experts who have written on the forum.
Latest edition of Journal of Economic Perspectives has a symposium and 4 articles on the topic:
Symposium on Modern Populism
“On Latin American Populism, and Its Echoes around the World,” by Sebastian Edwards
In this article, I discuss the ways in which populist experiments have evolved historically. Populists are charismatic leaders who use a fiery rhetoric to pitch the

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The consequences for macroeconomics during the past 60 years: Defending temple of macroeconomics

12 days ago

The new edition of Journal of Economic Perspectives is out (HT: Niranjan Rajadhyaksha). The editor Tim Taylor blogs about it
Apart from papers on populism, it has this fascinating paper by Prof George Akerlof on macro during the last 60 years.
This article explores the development of Keynesian macroeconomics in its early years, and especially in the Big Bang period immediately after the publication of The General Theory. In this period, as standard macroeconomics evolved into the “Keynesian-neoclassical synthesis,” its promoters discarded many of the insights of The General Theory. The paradigm that was adopted had some advantages. But its simplifications have had serious consequences—including immense regulatory inertia in response to massive changes in the financial system and

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40th anniversary of Sukhamoy Chakravarty paper: Debates raised in the paper resonate today

12 days ago

The academia in west celebrates and reflects on anniversaries of famous research papers. For instance, Friedman’s 1968 paper on limits of monetary policy, Douglass North’s 1968 paper on shipping productivity and so on.
We in India first barely have a list of such papers and second there is hardly any reflection on their anniversaries.
In this aspect, it is really nice to read this Mint article by Niranjan Rajyadhaksha (who else) who reflects on 40th anniversary of a research paper by Sukhaomoy Chakravarty. The paper was titled as On the Question of Home Market and Prospects for Indian Growth and was published in EPW.
Niranajan writes:

Economics is a discipline without a good sense of its own history. This is unfortunate because the past can often illuminate the present, especially in

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Impact of 3D printing on international trade..

13 days ago

There are concerns that 3D printing will lead to decline in trade as people begin to produce traded goods locally.
Caroline Freund, Alen Mulabdic and Michele Ruta in this research debunk this thought:

The conventional wisdom is that 3D printing will shorten supply chains and reduce world trade. This column examines the trade effects of the shift to 3D printing in the production of hearing aids. It shows that adopting the new technology in production increased trade by roughly 60% as production costs came down. An analysis of 35 other products that are increasingly produced using 3D printing also finds positive effects but suggests that product characteristics such as bulkiness can affect the relationship between 3D printing and trade. 
Hmm.
The full paper is here.

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Mario Draghi’s farewell

13 days ago

The event is on youtube. The event starts with a musical performance, followed by remarks from Angela Merkel, Emmanuel Macron, Sergio Mattarella (President of Italy). Not sure whether previous ECB Presidents got similar farewell too. 
Here are Draghi’s remarks where he reviews the developments in 20 years of the monetary union. In the end he bids farewell:
The time has come for me to hand over to Christine Lagarde. I have every confidence that you will be a superb leader of the ECB.
My goal has always been to comply with the mandate enshrined in the Treaty, pursued in total independence, and carried out through an institution that has developed into a modern central bank capable of managing any challenge.
It has been a privilege and an honour to have the opportunity to do so.

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Why Rich Cities Rebel?

13 days ago

Santiago, the richest city of Chile and Latin America recently erupted in protests.
Andres Velasco look at the reasons behind the protests:

Why are millions of Chileans still marching in protest, ten days after the violence erupted?
For starters, Chile is not alone. In the last decade, places as diverse as Great Britain, Brazil, France, Hong Kong, and Ecuador have experienced similar episodes. Whatever the immediate local trigger, the scope, intensity, and often the violence of the ensuing protests seemed out of proportion with the initial cause. Rapid social change fuels tensions and contradictions in modern societies – even rich and successful ones – that seem to keep them barely a step or two from mayhem.
In Chile, an obvious suspect is monopoly abuses. While general price

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Happy Deepawali wishes to all..

15 days ago

Wishing all Mostly Economics visitors  very Happy Deepawali. Enjoy the festival and may all of you have a great year.

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This entry was posted on October 28, 2019 at 11:28 am 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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Memoirs of Sir Thomas Roe: 400 years of Indian & England

17 days ago

Lubbaba Al Azmi in this Madras Courier piece narrates the fascinating history..
400 years ago, Sir Thomas Roe landed in the Mughal court. As a British Ambassador, he tried to engage with Jahangir, the Mughal emperor, and attempted to build a trade relationship. However, his diplomacy did not cut the ice; it ended up being a failure.
But Thomas Roe has meticulously documented his efforts in his memoirs which are, till today, available in the British Library, London. A research scholar  Lubaaba Al-Azmi revisits his memoirs and writes about what it’s like to peruse through them.

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This entry was posted on October 25, 2019 at 2:34 pm and is filed under Discussion. You can

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Bank of Japan holds assets worth 100% of its GDP!

17 days ago

Chris Nealy of St Louis Fed in this piece:

The 2007-09 Financial Crisis and its aftermath reduced inflation to undesirably low levels and raised unemployment to very high levels in many countries. With short-term interest rates at or near zero, conventional monetary policy was limited, and so central banks searched for new ways to stimulate their economies. One such measure was large central bank purchases of long-term bonds to lower long-term yields. Increases in central bank assets are a rough measure of these long-bond purchases. To compare such measures across countries, it makes sense to divide central bank asset holdings by gross domestic product (GDP). This essay compares international asset holdings as a percentage of GDP by major central banks and explains the reasons for

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Doing Business Rankings: How the World Bank influences national regulatory policy..

18 days ago

India jumping to 63rd rank in Doing Business Rankings is talk of the town.
Beth Simmons (Wharton), Judith G. Kelley (Duke University) and Rush Doshi (Brookings Institution) in a paper discuss how these rankings influence policy.
In this [email protected] discussion, the authors discuss key ideas behind the paper:
[email protected]: Do you know from the work that you did if these global performance indicators are really one of the determining factors in policy change, or are they part of a larger process that these countries are undertaking? 
Kelley: We have talked with folks inside the bank who are very passionate about what they do and believe that they are promoting a set of good policies. And we find that they report that they worked very closely with policymakers in these countries. What

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Two new museums: RBI in Kolkata and Vijaya Bank in Bangalore

18 days ago

I had blogged about RBI opening a new museum in Kolkata.
Upala Sen reviews the museum in Telegraph
Vijaya Bank which was merged with Bank of Baroda has a museum in Bangalore. Earlier there were concerns that Directors Portraits were removed from the founder branch in Mangalore. They have been put in the museum.

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This entry was posted on October 24, 2019 at 4:56 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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Can a West African Currency Union Work? (Euro to Eco)

18 days ago

I had blogged about the West African countries trying to form a monetary union. The name of the proposed currency is Eco.
Simplice A. Asongu of the African Governance and Development Institute in this piece try to figure the idea:

The eurozone’s experience showed how unruly currency unions can be, and how important it is to continue experimenting and adapting. A currency union comprising the 15 members of the Economic Community of West African States will be no different – but that doesn’t mean it can’t work.

Apart from the convergence critieria (which most do not meet), there is the French angle:
Complicating matters further is the extent to which outside forces, especially France, will shape the currency union’s trajectory. ECOWAS includes eight Francophone countries – Benin,

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The Phillips curve: Dead or alive

18 days ago

The title sounds like the Bon Jovi song: Wanted Dead or Alive 🙂
Peter Hooper, Frederic S. Mishkin and Amir Sufi in this piece says Philips Curve is alive:

The apparent flattening of the Phillips curve has led some to claim that it is dead. The column uses data from US states and metropolitan areas to suggest a steeper slope, with non-linearities in tight labour markets. We have been here before – in the 1960s, similar low and stable inflation expectations led to the great inflation of the 1970s. 

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This entry was posted on October 24, 2019 at 2:08 pm and is filed under Central Banks / Monetary Policy, Economics – macro, micro etc. You can follow any responses to

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