ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Partha Ray

Monetary Growth, Financial Structure, and Inflation

It is argued that a key question of the operation of monetary policy is its decomposition into a price effect and an output effect. Specifically, the
association between the easing of global monetary and liquidity conditions on the one hand, and the significant spurt in inflation, on the other, in recent
times is probed to conclude that across the world, there seems to be an association. The issues of monetary stability, price stability and financial stability are also intimately interlinked.

A Failed Economy Saved by Geography

Despite experiencing multiple political and economic crises in recent times, Pakistan’s economy has so far avoided a collapse similar to Sri Lanka’s. It is argued that the key to understanding its economic survival has been the effective utilisation of its unique geography, thereby exhibiting features of a rentier state. Its strategic location has enabled Pakistan to secure military and economic support from three major countries, namely the United States, China, and Saudi Arabia. While this enabled a razor’s edge type unstable economic survival, it also prevented the country from undertaking significant political and economic reforms. 

The Sri Lankan Crisis

Many have argued that the current Sri Lankan crisis was caused by the economic impact of the COVID-19 pandemic and the Ukraine war, and the country’s overdependence on predatory Chinese lending. Sri Lanka’s problems are more deep-rooted and have their origins in economic policy that focused on providing fi scal sops and a family-run political establishment that enabled the government to ignore sound advice.

Pandemic and the Monetary Policy in the Global North

During the COVID-19 pandemic, expansionary economic policies played an important role in reviving the floundering global economy. In this context, the present paper looks at the effectiveness of monetary policy in the global North in stimulating real economic activity. In an ultra-low interest rate regime, the traditional monetary policy ceases to be effective. Therefore, many developed country central banks adopted a slew of unconventional monetary policy tools to tackle the recession. This paper analyses the unconventional monetary policy tools pursued by the global North with special reference to the United States and argues that the transmission channels of unconventional monetary policy tools to increase effective demand are not always automatic and straightforward. There is strong evidence that while these expansionary measures may have helped during the initial crisis, their effectiveness in reviving sustained economic activity in the medium run is doubtful. On the other hand, there are routes through which increased liquidity created by unconventional monetary policy tools has ended up in the financial sector, thereby leading to an asset price inflation that may not have a net beneficial impact on the real economy.

The Union Budget and the Central Bank Digital Currency

The announcement of the introduction of the central bank digital currency was the highlight of the union budget. However, in the absence of any specific official paper as of now, the treatment in the present article is largely speculative. Specifically, it looks at the possible technological and legal implications of the CBDC in light of other country experiences.