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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 Happens When Economics Doesn’t Reflect the Real World?

15 hours ago

Prof Anwar Shaikh in this INET video talks about the shortcomings of neoclassical economics. More importantly, he discusses the alternative frameworks as discussed in his book Capitalism: Competition, Conflict, Crises.

This entry was posted on January 22, 2020 at 3:13 pm and is filed under 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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Central bank group to assess potential cases for central bank digital currencies

15 hours ago

I wrote this piece on how central banks after ignoring and threatening digital currencies have warmed upto the idea of central bank digital currencies. It reminds me of this famous hindi movie song.
Yesterday 6 central banks signed an agreement to study digital currencies:
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS), have created a group to share experience as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.
The group will assess CBDC use cases; economic, functional and technical design choices, including cross border interoperability; and the sharing of knowledge on emerging

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Seigniorage through periodic recoinage: When the validity of money was restricted in time

16 hours ago

Roger Svensson and Andreas Westermark have this superb piece on monetary history. Call it demonetisation of coins:

For almost 200 years, old coins were frequently declared invalid in large part of medieval Europe and had to be exchanged for new ones for an exchange fee. This column shows that frequent recoinage generates incomes for the minting authority when the tax level is low enough and the punishment for using invalid coins is high enough, and when there is a limited coin volume in circulation and also an exchange monopoly. The system is equivalent to the 20th-century idea known as the Gesell tax. 

This entry was posted on January 22, 2020 at 2:12 pm and is filed under Central Banks / Monetary Policy, Economics – macro,

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Inclusive American Economic History: Containing Slaves, Freedmen, Jim Crow Laws, and the Great Migration

16 hours ago

Fascinating paper by Trevon Logan and Peter Temin:
In this paper, we combine white and black economic histories of the United States from its formation to the present.
The Constitutional compromises between slave and free states set the stage for rapid economic growth as cotton from Southern slave states provided the raw material for the emerging cotton industry in the North. The cooperation between states also set up tensions that intensified over time as the addition of new states reiterated the Constitutional compromise over and over again with increasing acrimony.
This tension led to the Civil War that brought with it the 13th Amendment freeing slaves. But Reconstruction after the war proved to be only a temporary reprieve for African Americans. Despite all the carnage and death

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RBI releases Board Minutes

2 days ago

After a long wait and requests, RBI has begun to release its Board Minutes:
The Reserve Bank of India (RBI) has been, over the years, taking steps to enhance transparency with regard to its functioning. The minutes of the meetings of the RBI’s Central Board of Directors (Central Board) have evinced considerable public interest and some of these have been shared with persons who sought them under the Right to Information Act 2005 (RTI Act). As a measure of further enhancing public awareness about the functioning of the RBI, it has been decided to place the minutes of the meetings of the Central Board on the RBI’s website in terms of provisions of Section 4 of the RTI Act, after appropriately severing information that is permitted to be severed as per the Act. Accordingly, the minutes

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The Green Swan: Central banking and financial stability in the age of climate change

2 days ago

Kudos to BIS for bringing a report with such an innovative title. Taleb made his point about financial risks via his boo titled Black Swan and BIS is doing the same highlighting climate risks with the title Green swan!
The report is written by 4 scholars – Patrick Bolton, Morgan Després, Luiz Awazu Pereira da Silva, Frédéric Samama and Romain Svartzman:

Climate change poses new challenges to central banks, regulators and supervisors. This book reviews ways of addressing these new risks within central banks’ financial stability mandate. However, integrating climate-related risk analysis into financial stability monitoring is particularly challenging because of the radical uncertainty associated with a physical, social and economic phenomenon that is constantly changing and involves

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Despite its limited success, RBI needs to persevere with Operation Twist

3 days ago

Aparna Iyer of Mint reviews RBI’s Operation Twist:

The yield on the 10-year AAA-rated corporate bond has fallen by about 10 basis points, taking its cue from the sovereign bond market. Surely, the larger objective to bring down long-term costs for the industry seems to have been achieved to some extent.
So, can Operation Twist be termed as a success?
Yes and no. Borrowing costs have come down, but private companies hardly borrow from the 10-year and above maturity. More than 60% of the borrowings by private firms are typically up to the tenure of five years. Therefore, the central bank may have missed its mark here.
(Graphic: Santosh Sharma/Mint)“Corporates and non-bank finance companies borrow mostly in the 3-year and 5-year tenure. But, here, yields haven’t really come down and,

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Vijai Super — the scooter that became popular way before Hamara Bajaj

3 days ago

Bajaj Auto finally bit the scooter bullet and relaunched Chetak Scooter in a new avatar last week.
Unnati Sharma in thus interesting piece writes on history of Vijai Super, the scooter that was popular before Chetak:

Illustration by Soham Sen | ThePrint
“The best deals on wheels” — ask any vintage automobile enthusiast and they will not deny this claim in advertisements of Vijai Super/Deluxe Scooter. When the Indian men’s cricket team won the World Cup for the first time in 1983, the government gifted each member of the winning team a Vijai Super Scooter.
For Indians growing up in the 1970s and ’80s, Vijai Super was a prized possession. Years before Bajaj became near-ubiquitous, Vijai gave Indians the joy of scooter riding. It was the first time, for many middle-class families, that

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Trying a hand at podcasting

3 days ago

My first attempt at podcasting with a dear friend Vivek Narayan who is a Doctor based in US.
Never realised that the medium could be so much fun. Thanks Vivek for all the editing!
More to follow.

This entry was posted on January 20, 2020 at 9:41 am and is filed under Discussion. You can follow any responses to this entry through the RSS 2.0 feed.
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More on Govt’s usage of WMA..

5 days ago

Following my earlier posts on WMA: one, two, three.
The above analysis basically used weekly data. We now have some daily data on WMA as well drawn from the quarterly Public Debt Management Report released by Finance Ministry and RBI’s Annual Report
Earlier the PDM reports basically said whether WMA was used in the quarter or not. Since 2018 (or so), the reports also tells us how many days in the quarter WMA was used. This is how it looks:

Year
Quarter
No of days WMA was used
CMB issued
2018
Apr-Jun
28
65000
2018
Jul-Sep
59
20000
2018
Oct-Dec
NA (most likely 50)
45000
2019
Jan-Mar
36
60000
2019
Apr-Jun
19
0
2019
Jul-Sep
43
50000
Somehow the reports of Oct-Dec quarter are not available. But we know from weekly WSS that WMA was used twice in Oct-2018 month.  The data for Q3 and Q4 are

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History of RBI’s Ways and Means Advances to Central Government: Old Wine in New Bottle?

5 days ago

Good friend Niranjan pointed to me how WMA was started as a way to bridge the “short-term gap” between Government’s receipts and expenses. This piece tracks the short history of WMA

WMA was started from Apr-1997. Why 1997? Well, in 1997 the Government and RBI signed an agreement to get rid of automatic monetisation of government deficits. Before 1994, if the Government had a deficit, it just issued ad-hoc T-Bills which were held by RBI.
In the 1996-97 Budget Speech, then FM P Chidambaram announced:
Hon’ble Members are aware that in September 1994 an agreement was signed between the Central Government and the RBI to phase out the system ofad-hoc treasury bills by 1997-98. The experience last year and in the current year so far has shown the difficulty of staying below the within-year

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Cambodia is criminalizing democracy by suppressing opposition

5 days ago

Sam Rainsy, acting president of the Cambodia National Rescue Party has a hard hitting piece on state of affairs in Cambodia:

There can be no democracy without a credible opposition, and in today’s Cambodia, there can be no credible opposition without the Cambodia National Rescue Party. It is thus vital that the international community not allow Prime Minister Hun Sen to use fabricated treason charges to suppress the CNRP.

Damn! So many such news all around the world…

This entry was posted on January 17, 2020 at 7:53 pm and is filed under Discussion. You can follow any responses to this entry through the RSS 2.0 feed.
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RBI update: WMA declines from 130171 cr to 60605 cr..

5 days ago

Following from my last article, WMA for the week ended 10-Jan-2020 declined to Rs 60605 cr. It was at a record 130171 cr on the week ended 3-Jan-2020.
WMA on asset side is usually linked with reverse repo (included in Deposits – Others) on liabilities side. This is because as WMA increases, liquidity in the system increases leading to rise in reverse repo. And the opposite happens in case of reversal.
Thus, as WMA has declined on the Assets side, Reverse Repo on the Liabilities side has declined by 93197 cr.  For tracking all the changes exactly, we need a detailed balance sheet which we do not get in WSS.

This entry was posted on January 17, 2020 at 7:29 pm and is filed under Indian Economy/Financial Markets. You can follow

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The puzzle of inflation going up despite low demand in India

6 days ago

Prof Himanshu of JNU in this Mint piece:
Why is inflation rising? Most commentators have highlighted the rise in onion prices, which did contribute to vegetable inflation. However, data also shows a sharp rise in inflation in almost all vegetables along with cereals (mainly wheat and coarse cereals), pulses and personal care items. Clearly, the inflation story is not just an onion story, and is far more widespread and serious. However, attributing this to seasonal factors would be missing the forest for the trees. Untimely rains, drought in some regions and crop losses due to local factors did contribute to supply shocks, but this is not enough to explain the sharp rise in overall inflation, or even food inflation, given the small weight of these crops in the consumption basket.

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The evolution of monetary policy frameworks in the post-crisis environment

6 days ago

Anna Samarina and Nikos Apokoritis in this voxeu piece:

Monetary policy frameworks have evolved since the global crisis. The column investigates the changes for 14 advanced economy central banks. Banks are defining lower, more narrow inflation targets. Transparency and commitment have been enhanced, and the monetary policy toolkit has been expanded.
…..
Several conclusions can be drawn about the evolution of monetary policy frameworks after the crisis. First, no central bank has formally abandoned its existing framework so far. However, the design of monetary policy strategy has been high on the central bank agenda in recent years. The Fed is about to conclude a review of its framework and the review of the ECB’s monetary policy strategy has been implicitly announced. The revision

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Efficacy of Credit Ratings in Assessing Asset Quality: An Analysis of Large Borrowers

7 days ago

RBI Bulletin Jan-2020 has an article by Sukhbir Singh and Pallavi Chavan:
Using data on credit ratings from the Central Repository of Information on Large Credits (CRILC) mapped with Prowess, this article examines the efficacy of ratings in facilitating a sound and timely assessment of the asset quality of large borrowers. About one-fourth of the sampled Non-Performing Asset (NPA) exposure from CRILC was found to be in investment grade a quarter before slipping into the NPA category. The percentage of NPA exposure with an investment grade rating just before turning nonperforming varied across Credit Rating Agencies (CRAs) with three out of the six CRAs covered in the study showing a relatively high concentration of such exposure.
CRAs have a tough clean up job at hand!

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Is America Going Fascist?

7 days ago

WHo would have thought this question would be asked and needs to be answered.
Daron Acemoglu in this piece warns against this typecasting as it polarises the society further:

Given US President Donald Trump’s propensity for racist, divisive rhetoric, it is easy to see why so many of his opponents would describe him as a modern-day Benito Mussolini or Adolf Hitler. But by implying that all Trump supporters are irredeemable extremists, such rhetoric merely plays into his hands.
….
The most promising strategies for resisting and defeating Trump are nothing like those required to fight twentieth-century fascist movements. Once Mussolini and Hitler took power, there simply was no way to stop them by working within the system. By contrast, the most effective way to combat Trump is through

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Government under fiscal pressure: WMA trends suggest so

8 days ago

My new piece in moneycontrol:
The frequency with which RBI is advancing loans to the Centre is a reminder that public finances need to be set right at the earliest

This entry was posted on January 15, 2020 at 4:25 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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When Climate Activism and Nationalism Collide

8 days ago

Kemal Dervis sums up one of the key battles of 2020s decade:
There is an overwhelming consensus among scientists that this decade will be the last window for humanity to change the current global trajectory of carbon dioxide emissions so that the world can get close to zero net emissions by around 2050, and thus avoid potentially catastrophic climate risks. But although the massive technological and economic changes required to achieve this goal are well understood, their political implications are rarely discussed.
While climate activists have built an impressive international movement, broadening their political support and crossing borders, the nationalist narrative has been gaining ground in domestic politics around the world. Its central message – that the world consists of

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From reforms to stagnation – 20 years of economic policies in Putin’s Russia

8 days ago

Laura Solanko of Bank of Finland in this research note tracks Putin era.
This paper gives a concise overview of the economic difficulties and policy responses in Putin’s Russia from the late 1990s to present. The discussion concludes with thoughts on future challenges facing Russia.

This entry was posted on January 15, 2020 at 1:55 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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Why every company needs a Chief Fun Officer?

8 days ago

David Allen of Warwick Business School in this piece argues why fun is important in workplaces and you need a officer to promote fun:

Besides making working lives more enjoyable, there is strong evidence that fun in the workplace packs a powerful punch in terms of organisational benefits. For example, I researched the restaurant industry (in collaboration with John Michel from Loyola University and Michael Tews from Penn State in the US), an environment with more than 60% employee turnover annually, and found that workers who socialised more in the workplace and who saw their co-workers and the workplace as more fun were less likely to leave.
Fun in the workplace can also foster more positive attitudes, help teams become more cohesive, and help people deal with or recover from

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A network analysis of economic history: how economic historians are interconnected through their research

8 days ago

Gregori Galofré Vilà of Universitat Pompeu Fabra in this voxeu piece:

Economic history is a thriving subset of the field. This column uses network analysis to review the development of the discipline over the last 40 years. It illustrates how economic historians are interconnected through their research, identifies which scholars are the most cited by their peers, and reveals the central debates enlivening the discipline. It also shows that the rapid increase in the number of economic history publications since 2000 has been driven more by research at universities in continental Europe than by those in the US or UK.
Social networks matter so much…

This entry was posted on January 15, 2020 at 10:31 am and is filed under Academic

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The origins of microfinance

9 days ago

Marvin Suesse and Nikolaus Wolf in this article:
There was a rapid spread of credit cooperatives in rural 19th-century Germany providing small-scale savings and loan services to previously unbanked people. This column shows how these cooperatives helped shift farm investment from grains to potentially profitable but more capital-intensive products, such as the production of meat and dairy. In cases like this, changes in the sector of economic activity are a better metric for the impact of microfinance than comparing income pre- and post-credit.

….
If microcredit allows farmers to exit a declining sector, a comparison between their pre- and post-credit incomes will not necessarily reveal the ‘impact’ of microfinance on income. Changes in the sector of economic activity would be a more

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JNU violence: Indian university’s radical history has long scared country’s rulers

9 days ago

Shalini Sharma of Keele University in this piece tracks JNU’s history. She points how JNU’s policy has been to give admissions to those with deprived background:

Set up in 1969, JNU was conceived at a unique moment in global academic history – something I’ve written about with JNU historian Rajat Datta for a forthcoming book about the radical campuses of the 1960s, edited by Jill Pellew and Miles Taylor, which grew out of series of conferences on the issue.
In the 1960s and 1970s, so-called utopian universities, which brought together staff and students in residential campuses, spawned new programmes of interdisciplinary teaching and research. Spreading from Sussex in the UK to Simon Fraser in Canada, and from Nanterre in Paris to Lusaka in Zambia, these new public universities were

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A monetary policy framework for all seasons?

10 days ago

Mark Carney of Bank of England in this speech argues that Inflation targeting has been a framework for all seasons in UK:
To set the stage for today’s discussions, I would like to do two things. First, I will review the conduct and performance of inflation targeting during my time as Governor. This period, which roughly coincides with the post-crisis recovery and which has seen more than its share of shocks and structural developments,provides some insights to the ability of inflation targeting to deliver price stability and support macroeconomic outcomes. I will suggest that, so far at least, inflation targeting has proven to be a framework for all seasons, an essential part of a robust foundation for economic prosperity.
Conclusion:
To conclude, the flexibility in the UK monetary

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Found and busted: Rs 2000 fake note printing gang

10 days ago

This blog is super interested in all kinds of money news including the counterfeiting ones.
This news caught my eye:

Police arrested five persons, including the priest of a temple, and seized from them 5,013 fake currency notes with a face value of over Rs 1 crore, police said on Sunday.
The arrested accused have been identified as Pratik Chodvadiya, Radharaman Swami, a priest at a temple at Ambav in Kheda, Pravin Chopra and Kanu Chopra, both residents of Kamrej in Surat, and Mohan Madhav of Ankleshwar.
A team of Surat Crime Branch raided an under-construction ‘Swami Narayan’ temple at Ambav village in Kheda on Sunday and arrested Radharaman Swami. Fake notes and a printing machine were seized from his possession. Police said that the accused used to print fake currency notes of Rs

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Bankers as Immoral? The Parallels between Aquinas’s Views on Usury and Marxian Views of Banking and Credit

10 days ago

Thomas Lambert of University of Louisville in this interesting paper looks at history of thought on banking:
Throughout history, the performance, practices and ethics of bankers and banking in general have received mixed reviews in both popular and scholarly writings. Early writings by philosophers, clerics, and scribes played a crucial role in the perceptions of banking and banking occupations. Thomas Aquinas’s thoughts and writings were greatly influenced by the Romans’ and Aristotle’s opinions on usury and the charging of interest, and Aquinas was in a position to have his opinions implemented in policy and practice.
Marx noted how banking and credit were used to expand the production and sales of a capitalistic economy beyond certain limits, although his focus was mostly on

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How does information management and control affect bank stability: Evidence from FDR’s Bank Holiday

10 days ago

Haelim Anderson and Adam Copeland in this NY Fed paper:

How does information management and control affect bank stability? Following a national bank holiday in 1933, New York state bank regulators suspended the publication of balance sheets of state-charter banks for two years, whereas the national-charter bank regulator did not.
We use this divergence in policies to examine how the suspension of bank-specific information affected depositors.
We find that state-charter banks experienced significantly less deposit outflows than national-charter banks in 1933. However, the behavior of bank deposits across both types of banks converged in 1934 after the introduction of federal deposit insurance.
Interesting. One would imagine that deposits flows would be higher for more transparent

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The Dilemma of Central Banking: To follow Keynesian, Fisherian or Neo Fisherian

10 days ago

Nice Proj Synd piece by Miao Yangling:
Neoclassical thinkers in the tradition of Alfred Marshall, Knut Wicksell, and Irving Fisher believe that real interest rates are determined by real economic forces. Money (or monetary policy) is neutral, and the rate of interest is that which equilibrates saving and investment, as determined by time preference and returns, respectively. (Hence, the title of Fisher’s 1930 book on the topic is: The Theory of Interest, as Determined by Impatience to Spend Income and Opportunity to Invest It.) Using the neoclassical framework, one can identify a range of structural factors – from demographic changes driving up savings to slower technological progress reducing demand – to explain the secular decline in interest rates.
By contrast, according to John

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Murugappa group family dispute: missing representation of women heirs on the Board

13 days ago

Top business groups need to set examples for others to follow. This case of Murugappa group is telling:

The family feud at the ₹40,000-crore Murugappa Group shows no signs of an early amicable settlement , with Valli Arunachalam still waiting for a “concrete offer”.
“They had sent out a communication to select media stating that the issue would be settled amicably soon,” Valli, the elder daughter of MV Murugappan, former Murugappa Group Executive Chairman, told BusinessLine on Thursday.
Demanding a seat on the board of Ambadi Investments Ltd (AIL), the holding company of the 119-year-old Murugappa group, Valli had crossed swords with other family members. Valli, her sister Vellachi Murugappan and their mother MV Valli Murugappan together hold an 8.15 per cent stake in AIL.
…….
“Every

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