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

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Classical Economics and Keynes

The author of Macroeconomics: An Introduction responds to the review of his book titled, “Competing Frameworks of Economic Thought” (EPW, 18 December 2021).

Simply Subbu

Futilitarianism by S Subramanian , London and New York: Routledge 2020; pp 78, ₹ 440. Present Values by S Subramanian , London and New York: Routledge 2020; pp 84, ₹ 440.

Competing Frameworks of Economic Thought

Macroeconomics: An Introduction by Alex M Thomas , Cambridge, New York, Melbourne, New Delhi and Singapore: Cambridge University Press, 2021 ; pp xx + 234 , price not indicated.

Falling behind the Curve Is Not an Option

India must jettison orthodox economics amidst the pandemic to protect employment and sustain a recovery.

Fifteenth Finance Commission Award for 2020–21

The first report of the Fifteenth Finance Commission has allayed many fears that arose after the notification of the terms of reference of the commission. The main report for the period 2021–22 to 2025–26 will have to factor in the devastating impact of COVID-19 on the economy and provide adequate fiscal space to the states for socio-economic response and recovery.

Dynamic Multiplier Effects of Foreign Remittances

India continues to be the largest recipient of remittances across the world, with a tremendous growth in private unrequited transfers from just ₹12 billion in 1990–91 to about ₹1,009 billion in 2015–16. Emphasising this component of remittances that India has witnessed during the post-liberalisation period, the article investigates the demand-side macroeconomic effects of the flow of private transfers on key variables such as consumption, investment, imports, and income in India during the post-reform period of 1996–2014.

A Post-Keynesian Approach to Understanding the Black Economy

Macroeconomics of the Black Economy by Saumen Chattopadhyay, Hyderabad: Orient Blackswan, 2018; pp xx + 276, ₹ 795.

Teaching Macroeconomics

The Economy presents a new approach to teaching macroeconomics. It starts from real-life institutions of macroeconomic policy management, teaching models that engage directly with these institutions. Money and monetary policy are explained in the context of modern banking systems, while the Phillips curve is derived from the labour market model. By emphasising empirical applicability, and the linkages with microeconomics, it provides students with a more intuitive and realistic understanding than standard approaches.

Macroeconomics in The Economy

The Economy is a worthwhile initiative that seeks to teach students about the economy, as opposed to teaching economics. The macroeconomic aspects of the textbook are critically scrutinised to understand what is being taught, and how different the treatment is from extant approaches.

Can Central Banks Reduce Inflation?

To explore the empirical validity of the proposition that a rise in the interest rate would necessarily lead to a lower rate of inflation, empirical evidence from 158 countries, during 1981 to 2013, is used to critically evaluate this widely accepted idea. Based on the findings, it is argued that from a policy perspective, the so-called “inflation targeting” should be revisited.

Demand-led Growth Slowdown and Inflation Targeting in India

A variety of indicators are presented to show that demand restricted output during the growth slowdown of 2011–17. The macroeconomic structure of the economy is such that a policy-induced demand contraction affects output more than it affects inflation. In this context it is important to evaluate the application of inflation targeting. Flexible inflation targeting was too narrowly and strictly implemented initially, although there are signs of moderation in 2018. Since inflation forecasts were biased upwards, the more effective expectations anchoring channel of inflation targeting was underutilised. The output sacrifice imposed was higher than necessary. Finally, possible mechanisms to ensure inflation targeting is implemented flexibly as required in the Indian context are discussed.

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