`Headline inflation’: The year-on-year change in CPI-IW, with target zone superposed.
The best price index in India is the CPI-IW. `Headline inflation’ in India corresponds to the widely watched year-on-year change in the CPI-IW. The above graph shows us the experience of inflation in India from 1999 onwards. The informal target of policy . . . → Read More: Is this a time for monetary policy easing?
by Shubho Roy and Ajay Shah.
The macroeconomic setting
India’s macroeconomic woes consist of a high inflation, low GDP growth and a drop in asset prices. The loss of momentum is visible in the seasonally adjusted data:
Indicator Early 2009 Latest GDP growth (QoQ, saar) 9.83 Q2-2009 4.25 Q4-2011 Inflation (CPI-IW, pop, saar, 3mma) . . . → Read More: Evaluating responses to India’s macroeconomic crisis
Examining the macro-economic environment is how Jim Letourneau, publisher of the Big Picture Speculator, likes to begin his stock-picking process. However, his understanding goes beyond headline news to reveal surprising investment themes with profit potential. In this exclusive interview with The Energy Report, Letourneau talks about the hype and commodity investment cycles and . . . → Read More: Big Picture, Small Cap Investing: Jim Letourneau
Simon Wren Lewis who is a professor of economics at Oxford University has an interesting piece (hat tip: Mark Thoma) on the distinction and choice between micro founded macroeconomic models and top-down models such as the IS/LM (Keynesian) or other variants such as Modern Monetary Theory (MMT).
I think this is an interesting discussion . . . → Read More: Nothing new in macroeconomic methodology? (wonkish)
Economics is a rich and fascinating subject. But all too often, the teaching process forces young people in the field to look at the tail of the elephant, to think about macroeconomics as the game of solving dynamic models. There is actually much more going on. (On a related note, you might like to . . . → Read More: Macroeconomics: A reading list
Recently, India released BOP data. Many people, writing about this new data, wrote text such as:
The current account deficit (CAD) moderated to 1.1% of GDP in Q1 from 2.2% in Q4 2010, due to an improvement in the trade deficit and a sharp rise in the invisibles surplus.
Net capital inflows moderated . . . → Read More: New BOP data — a reminder of the paradigm shift that is required in our heads
I don’t suspect anyone remember part 1 of this series so if you want to refresh your memory, you can have a look here. In that note, I treated some of the more theoretical issues in the form of how demographics might affect long run growth as well as open economy dynamics. In particular, . . . → Read More: Demographics and Macroeconomics – Part 2 (Wonkish)
Steve Waldman has a very good post this week about the folly about the austerity vs non-austerity discussion which seems to be going the rounds at the moment. In fact, it you take a mental picture of the current financial market discourse most arguments can be bracketed along the two axes of austerity vs . . . → Read More: Other Alpha Sources for July 2, 2010
Robert Barro and Charles Redlick wrote an op-ed in WSJ (link) on their original paper (link) where they discuss the macroeconomic effects of fiscal stimulus and construct long-term time-series on U.S macroeconomic data to examine whether real GDP increases follows the spending multipliers and whether reductions in marginal tax rates, rather than spending increases, . . . → Read More: The Macroeconomic Effects Of Stimulus Spending
June 5th is the birthday of John Maynard Keynes, a brilliant economist whose influential work during the 1930’s changed the course of history. He has had a great deal of influence on generations of economists, including advisers to our current president and congress. It’s too bad he was wrong in virtually all of his . . . → Read More: The Father Of Macroeconomics