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Monday, August 10, 2009

Interesting readings

  • Developments in India and China on internationalisation.
  • Watch Aruna Roy and Nikhil Dey on Ila Patnaik's TV show: part 1 and part 2. [also see]
  • Anne Sibert on the problems of Iceland being a small country. I would enlarge her comments, and add Dubai or Singapore into the class of countries where the (inadequate) fiscal backstop of a small government leads to somewhat reduced confidence in the international financial centre. And, her last paragraph applies equally to India:
    Many very small countries are islands, and thus isolated. It is more difficult for senior officials to travel to a neighbouring country if they live on a remote island than if they live in Luxembourg. This leads to a danger that policymakers in small and far away locations might become insular in their thinking and that they might not have access to advice that their counterparts abroad might offer. It is thus important that senior officials in out-of-the-way locations make an attempt to attend conferences and other professional gatherings abroad.

    I think staff with greater work experience with economics and economic policy in good countries would do a world of good in improving Indian policy making. Come to think of it, greater exposure to the private sector in India would do a lot of good, particularly for the agencies in India with weak HR practices.

  • Jeff Hammer in Indian Express on India's brush with swine flu. And, Ila Patnaik on how to better utilise NREG funds.
  • There's been an upsurge of criticism of economics, including sloppy pieces in The Economist. Robert Lucas responds.
  • Eswar Prasad in Financial Times on the big opportunity for Manmohan Singh.
  • Will India ever be a global aviation hub? by Ansgar Sickert, in The Wall Street Journal.
  • The walking class must protest by Vivek Moorthy, in Mint. (Click on the image to see it more clearly).


  1. Just two about Robert lucas response to criticisms against economists.
    1. The criticism is not against macro economics in general, it is against the methods of neo classical economics. and the criticism comes not from outside, but from economists of other traditions like Austrian, cambridge based post-autistic etc.

    2. If one accepts Lucas' arguments, it would become problematic to explain how many economists and finance guys including Roubini, peter schiff and others could actually warn about the coming crisis much in advance and that too with clear explanation on the phenomenon. My point is, if one understands the mechanics of business cycles as explained by Austrians, it is quite evident that a crisis was coming. Only the neo-classical guys found it difficult to understand.

    Prof. Shah, i would like to hear your thoughts on these points

  2. I am not particularly into the classification scheme of `neoclassical' versus other kinds of economics.

    In academic economics, a good idea is an arbitrage opportunity. It's a bit like a herbal medicine being an arbitrage opportunity for a researcher in mainstream biology. If an idea is good, it can be used to write a winning paper. It can make a career, gain a reputation, etc. Even if some people are `ideological' and will refuse to take a good idea because it has some odd antecedents, others are pragmatic and will do this (and get ahead in the profession to boot).

    That brings us to the biases of the refereeing and publication process. I am very aware that economists are a strange tribe and getting past the referees is not easy. But there is no bias against inefficient market stories. Look at the immense proliferation of behavioural finance papers. If anything, an efficient markets paper is boring to the editor who thinks that's obvious. It's the freakish stories that are more likely to get published.

    Academic economics has serious problems, but ideological bias isn't one of them. The real problem is the lack of incentive to write stuff that matters to the real world.


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