Reliance on Commodity Exports and Elevated NZD Highlight Industry Headwinds

The Bloomberg Correlation-Weighted Index shows that the NZD has appreciated by 3.56% over the past year, sustained by New Zealand’s economy outperforming many other advanced economies. The rising currency is providing benefits to some sectors to the economy, while posing challenges to other sectors. The high NZD is having the most effect pushing agricultural commodity […]

India and the U.S.: A Tale of Two Ineffective Monetary Policies

Monetary policy refers to the process by which a country’s central bank controls money supply, often through the manipulation of interest rates, with the aim of promoting economic growth and stability while maintaining relatively stable prices and low unemployment. Monetary policy is either expansionary (mainly by lowering interest rates to combat a recession or a […]

Looking Ahead – Who’s on the FOMC in 2012?

Nouriel and other clear-thinking economists often talk about the Three Stooges at the Fed, Kocherlakota, Fisher, and Plosser (Minnesota, Dallas, Philadelphia), who have probably hampered monetary policy this year. Kockerlakota and Plosser are good economists, but with degrees from Chicago, their intellectual and philosophical perspective renders them incapable of understanding the U.S.’s economic situation, including […]

Why RBI Should Be on Hold

Indian monthly inflation number for August was released today and it showed a minor uptick. There is a possibility that this will goad India’s central bank, the RBI (Reserve Bank of India) to continue with its hawkish stance, irrespective of the disastrous IP number released earlier this week. The feeling is that, the IP number […]

India’s Manufacturing Sector: Feeling the Heat

Monetary tightening failed to tighten the screws Since March 2010, the RBI has raised the repo rate 11 times, moving it up to 8% from 3.75%. Yet, for a fairly long period of time it failed to impact domestic demand. This can be attributed to the following. RBI failed to gauge the inflation trajectory appropriately […]

Yoshihiko Noda: On Record

On August 29, 2011, Japan’s Finance Minister Yoshihiko Noda was elected head of Japan’s ruling-Democratic Party of Japan (DPJ). He is expected to be approved as Prime Minister on August 30 by the DPJ-controlled Lower House. The following sampling of comments by Noda explain his positions on forming a coalition, Japan’s fiscal and monetary policy, […]

A Durable Recession?

Steep declines in durable consumption and residential investment have preceded nine of the US’s past 11 recessions. Neither one is doing well, and policy makers should take heed. First, a word on durable consumption. Some of the purchases that people make on a daily or weekly basis are difficult to delay (groceries, for example), while […]