Recently I came across a problem which questioned how a country can increase budget deficit (through Gov. Spending) without increasing the interest rate. It asked its readers to solve it using IS-LM model and figure out two ways of achieving it. Surely a pertinent question in today’s scenario when central banks have pumped in lot of… Continue
Added by Bhasker Siddharth on May 10, 2010 at 9:00am —
We are witnessing a surge in inflation (in India) and this time the soaring numbers are reflecting the CPI. It would be interesting to see how the government tackles the situation.
The inflation figures are soaring due to rise in prices of food items, primarily potato (136%), pulses (40%), onion (15.4%) and wheat (14%). Supply side constraint has been sighted as the primary reason behind this recent surge. It’s true keeping in mind the draughts and floods that we have faced this year. To… Continue
Added by Bhasker Siddharth on December 20, 2009 at 1:55am —
India infrastructure: big ambitions, big potential, big money, little happening. This is what I feel, sums up, what's happening in the Indian infrastructure sector. Government's extended enthusiasm about the sector hasn't been able to get the big infrastructure projects moving. There are lot of PPP projects coming up but what's going wrong? Many Infrastructure and Power shares are seeing constant ups and downs in the market. What is keeping the big money away? Surely the private investor is… Continue
Added by Bhasker Siddharth on November 16, 2009 at 2:00pm —
I started off with the aim of exploring recessionary economics. I wanted to find out the different ways in which a recession is triggered and steps which can lead a nation out of it. But as I spent more time on it, the length and complexity of the scenarios to be considered kept increasing. I wanted to present a simple model which can explain different kinds of recession and give a clear picture of the phenomena which everybody can understand. But as I said earlier it’s now taking too much… Continue
Added by Bhasker Siddharth on September 22, 2009 at 2:47pm —
Welcome to part 2. (Click here to read the first part) I will begin this part with the modern panacea for recession. Loosen monetary policy, let your currency depreciate boost your export and plough back out of recession.
This looks efficient as well as effective in most cases. Although the sanity of increasing liquidity in the market was not suggested to the Asian tigers or the Argentinean government during the crisis, still it is now a well established fact to do so in order to… Continue
Added by Bhasker Siddharth on September 22, 2009 at 2:30pm —
Hey frns... I see this question popping up quite a bit more frequently now as compared to couple of months back. Perhpas the liquidity boost given by central banks have started to reach the pockets of individuals.
Well I believe that the excess liquidity in the market will surely ensure low returns from treasuries.
How about gold and stocks... excess liquidty can chase either of the two...
Below is my take on the situation...
We are still not out of… Continue
Added by Bhasker Siddharth on September 6, 2009 at 12:00pm —
American economy is influencing the world economy as never before and particularly the Asian developing nations which are increasingly becoming dependent on GDP growth fuelled by $ based trading. The present American recession pushed the US interest rate down to almost zero. However, the crisis didn't require similar cut back in interest rates for other economies. Though we saw strong measures to increase liquidity in developing nations. Why were the interest rates cut down so much and… Continue
Added by Bhasker Siddharth on August 24, 2009 at 10:58am —
It's an interesting question, specially because everybdy wants an answer and has an answer as well to this query. I would not put the blame on Financial innovation or American politics or Greed or Real estate crisis, etc etc... What we receive is often a result of what we choose, and we have chosen to follow a "similar to" free market economy model. Not a wrong choice but surely it comes with an inherent characteristic named *swing* which is responsible for 'almost cyclical' booms and bursts in… Continue
Added by Bhasker Siddharth on August 24, 2009 at 10:52am —
Check this thought provoking write up on the ever so famous 80/20 rule...
Added by Bhasker Siddharth on June 2, 2009 at 10:42am —