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

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Finance, Banking, Money, in That Order

The “Banking: Theory & Policy” class of 2020–21 was a sounding board. The comments of an anonymous reviewer added value to an earlier draft. The usual caveats apply.

Central Bank Profits in National Accounts

For macroeconomics, the government is divided into the central bank and the treasury. Positive profits recorded by the first are cancelled out as a negative item in the second. However, a debate has been generated by the transfer by the Reserve Bank of India of a record surplus to the coffers of the overnment. The issue is examined in a stock-flow-consistent model. A tension is found to reside in the pledging of profits for advances to banks on the one hand, and reducing the government budget deficit on the other. In the case of India, we conclude that central bank profits are intended to substitute for taxation.

Trump’s Policies and Billionaire Indian Dreams

Passage from India to America: Billionaire Engineers, Extremist Politics & Advantage to Canada & China by Ignatius Chithelen, Bryant Park Publishers LLC, New York, 2018; pp 212, $40.95 (hardcover).

Universal Basic Cash

A critique of the notion of universal basic income is presented, using a basic microeconomic model. While the monetary authority can implement the golden rule of consumption for its citizens, the consequences for work, saving and investment are ambiguous, and the price level is indeterminate.

Monetary Economics of Fascism and a Working-class Alternative

Fascism is the usurpation of the economic process by the elite and the related decimation of the working class and the poor. This process is represented by the shrinkage of fiat money backing the production of goods and services and its substitution by financial instruments. This domestic coup is accomplished by the spread of what is generally referred to as “false consciousness.” The tools of basic economics can be fashioned to introduce students to these concepts. Mainstream economists continue to demonstrate the different ways utility functions can be manipulated.

And a Little Child Shall Lead You...

An elementary model of the Urjit Patel report is formulated here. Along with the positive repo rate-infl ation rate target connection, open economy controls as well as institutional data are potentially adjusting variables

Open-Economy Macro and Inflation Targeting: A Tutorial

Economic theory tells us that there should be at least as many instruments as there are targets. But the Reserve Bank of India does try to kill two birds with one stone: increasing interest rates so as to shoot down infl ationary expectations as well as bring capital into the country. This is poor macroeconomics. A comment that elaborates on Partha Sen's "India's Current Account Woes: An Attempt to Clarify" (EPW, 12 October 2013).

Predatory Capitalism

Animal Spirits by George A Akerlof and Robert J Shiller (Princeton: Princeton University Press), 2010;

East Is East and West Is West

Twenty years ago West German institutions were exported to East Germany following the fall of the Berlin Wall. One outcome has been the halting of convergence between the two.

Reinventing Fiscal Policy

Practising policy-makers have not been tardy in jettisoning new classical-new Keynesian wisdom when called upon to do so. It turns out that in the industrial world, stabilisation policy, defined as the minimisation of squared deviations of output around potential, has never been far from the concerns of monetary authorities. There has been a concerted move away not just from monetary policy rules but also from the limits of flexible discretion that theory would permit.

Stock-Flow Norms and Systemic Stability

We offer a dynamical systems translation of the Godley and Cripps (1983) framework. Stability of an economy is shown to depend on the concatenation of four parameters: a steady-state money income ratio, a speed-of-adjustment-of-assets coefficient, an inventory accumulation index, and the share of government in aggregate income.

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