G7 Policies and their implications for Global Stability and Growth Andrew Cornford

Comments prepared for the debate sponsored by the South Centre on Revolution Required The Ticking Time Bombs of the G7 Model, book authored by Hervé Hannoun and Peter Dittus,    Palais des Nations, United Nations, Geneva, 13 April 2018 For reasons explained at length by the authors the principal focus of Revolution Required (RR) is the monetary policy in the Advanced Economies (AE), which has been the main response to the Global Financial Crisis (GFC). This response the authors view as leading to an unsustainable increase in debt levels in the medium term and to investment which may not be viable…

The return of a Housing Bubble C. P. Chandrasekhar and Jayati Ghosh

Even while optimistic assessments of growth trends in the global economy proliferate, concerns that the unwinding of inflated asset price markets could abort the recovery are being expressed. Interestingly, there appears to be a substantial degree of agreement on the cause for such uncertainty, which is an excessive dependence on monetary measures in the form of quantitative easing and the associated extremely low interest rate environment to address the post-crisis recession. That lever was not the most effective from the point of view of lifting growth. While the early resort to fiscal stimuli delivered a sharp recovery, the retreat from…

Managing Monetary Policy and Financial Supervision in Argentina: Historical Analysis and Present Neoliberal Challenges – A Personal Account Alejandro Vanoli

This article traces the context in which this author served Argentina as both the chairman of the Central Bank of Argentina and former chairman of Securities and Exchange Commission of Argentina. As described, the efforts necessary for a country such as Argentina to achieve and maintain financial sovereignty are almost as great as the forces opposing such a possibility. While focusing on the specific case of Argentina and pertaining to a specific time in its history, this article offers insights that hopefully can lead to a better understanding of the global forces that condition the management of national economies in…

Plurality in Teaching Macroeconomics Rohit Azad

For vibrant policy making, an open-minded academic engagement between contrasting viewpoints is needed in macroeconomic education. However, there does not even exist a textbook that contrasts these contesting ideas in a tractable manner. This pedagogical paper is an attempt to plug that gap by presenting a comparative study across different traditions in macroeconomics in a unified framework, which can be developed into a semester-long intermediate-level course. Plurality_Teaching_Macroeconomics  (Download the full text in PDF format) (This article was originally posted in the Economic & Political Weekly on March 30, 2018.)  

Market Fever and its Aftermath C. P. Chandrasekhar and Jayati Ghosh

Globally, equity and bond markets are turning bearish. Analysts seem to be unanimous in their explanation: the era of cheap and abundant money, that was leveraged for investments in capital markets, is over. Governments and central banks are tiring of the long spell over which, having abandoned the initial post-crisis fiscal stimulus, they have resorted to interest rate cuts and infusion of liquidity (through ‘quantitative easing) to drive a depressed economy to recovery. One consequence of the resulting environment of cheap and abundant liquidity was that versions of the carry trade flourished. Investors borrowed money cheap and invested in asset…

State Of Banking In India Y. V. Reddy

The follwing is the text of the KLN Prasad Memorial Lecture that was delivered by Y V Reddy at the Administrative Staff College of India, Hyderabad on 1st February 2018. Chairman Shri Padmanabhaiah garu, family of K.L.N. Prasad garu, Director General Khwaja and friends, I am happy to be here in familiar surrounding and among longstanding friends to give a memorial lecture in honour of Mr. K.L.N. Prasad.  Prasad garu had an incredible range of interests and innumerable friends, cutting across diverse backgrounds. I was introduced to Mr. K L N Prasad forty years ago, in 1978, by M. Narasimham…

When Business Turns ‘Easy’ C.P. Chandrasekhar

Its once again a time for exposés of big ticket scams. The headline hogger currently is the alleged huge Rs. 11,400 crore ‘scam’ unearthed in transactions through the Punjab National Bank (PNB) involving diamond merchants Nirav Modi and Mehul Choksi. That this is not an isolated occurrence is established by news of another Rs. 3,700 crore alleged fraud involving Vikram Kothari of Rotomac Pens being reported almost simultaneously. The full details of the possible fraud in either of these cases is yet to emerge. But underlying them is the suspicion that loans or guarantees of huge magnitudes were offered to…

Can Banking Recover? Jayati Ghosh

The bank frauds involving Punjab National Bank (PNB) and the companies associated with businessmen Nirav Modi and Mehul Choksi as well as the Rotomac case couldn’t have come at a worse time. The Indian banking system is already reeling under the pressure of growing NPAs, or non-performing assets (less politely known as loans that are not going to be repaid), which will touch nearly ₹10 lakh crore by March this year. This does not include the ₹6 lakh crore already written-off. This has already caused a slowdown in disbursal of bank credit, in turn affecting productive investment. Failure at many…

The Nirav Modi Scandal Prabhat Patnaik

Nirav Modi, and his uncle Mehul Choksi, are the latest additions to the list of the so-called “entrepreneurs of new India” who have looted public money and decamped with the loot. The Punjab National Bank, the second largest bank in the country, kept giving them loans without any collateral (which is basically what happened through the complicated procedure of the so-called “Letters of Undertaking”); and one fine day Nirav Modi simply left the country with his immediate family, to be followed by his uncle a few days later. Several characteristics are shared by all these decamping “entrepreneurs” whose list includes…

Bubbles, Stocks and Crashes Prabhat Patnaik

What is happening in the U.S. economy provides an object lesson on the functioning of neo-liberal capitalism. Pre-first world war capitalism which had witnessed the long Victorian and Edwardian boom had relied on the colonial arrangement for the system’s dynamics. The goods produced by Britain had been sold in colonial and semi-colonial economies (causing “deindustrialization” there), and goods of even greater value had been taken away from these economies (the difference constituting the “drain of surplus”) to be exported, partly against British imports and partly on credit, to the “New World”, i.e. to the temperate regions of white settlement, for…