Welcome to Applied Macroeconomic Centre

A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Monday, February 28, 2011

Food prices and inflation trajectory

Unnayan Onneshan in its latest Bangladesh Economic Update (January-February 2011) provides an analysis on the relationship between food prices and overall inflation using commodity specific data, both domestic and international.

Idea of wealth tax

The National Board of Revenue (NBR) is in a process to introduce wealth tax on people having excess land and property. 

In my view, this is indeed a good idea to control the asset price bubble in Bangladesh. This also coincides with the recent attempt of the central bank to control excessive credit (and thus over-priced asset) of banks for fixed assets such as land and apartment, as indicated in the latest Monetary Policy Statement (MPS, January 2011). If it imposes, it will ensure higher government revenue for its budget support along with income equality.    

Good attempt!

Here is the news on that. 

Inflation debate: Empiricists vs. Theorists

Well, here is the latest piece in the New York Times from Christina D. Romer, former chairwoman of President Obama’s Council of Economic Advisers on how far the Fed can go with its quantitative easing measures while checking price stability at the same time. 

The article is a must read one because it describes some common links among economic variables using different schools of thoughts (mainly empiricists and theorists), with a few evidences from the Great Depression.  

Thursday, February 24, 2011

Prof. Wahiduddin on rice price

A detailed and articulated analysis on 'Agriculture and Commodity Prices: Price of Rice and Election Commitment' by Professor Wahiduddin Mahmud published in the Daily Prothom Alo.  Though the article is a bit older, however, it is timely one, in terms of its implication in the current market situation. Several issues to note:

1. Food price is a serious issue for all, especially for the poor.
2. The days of enjoying low-priced food may be slowly phasing out.
3. Agricultural input subsidy should be targeted toward final farmers and more production oriented; not on ad-hoc basis, shouldn't be considered as the substitute of price subsidy.
4. Most importantly, the Government must update the current demand-supply estimates of commodities (surely there is a clear information gap) before implementing its long-term policies.

An important related issues also came out from this article by Professor A.K. Enamul Haque published in the Daily Ittefaq.

Wednesday, February 23, 2011

Price hike and beyond!

A good news analysis on recent price hike of edible oil by Mr. Shamsul Huq Zahid in today's Financial Express.

I am not sure whether the same story works for all imported food commodities. But I really can't stop myself from not believing in its general application. So sad!

Tuesday, February 22, 2011

Gita Gopinath - A promising economist!

Well, first of all, thanks to Mr. Gregory Mankiw for uploading this in his blog.

Gita Gopinath, a Professor from Harvard Econ, is basically from the University of Delhi and Delhi School of Economics, works on International Macroeconomics. Here is a short profile on her and her works.

You will love to read this!

Sunday, February 20, 2011

Food Price Watch (February 2011)

Here is the latest version of the Food Price Watch, published by the World Bank Institute, which provides some interesting issues, in terms of reasoning and implications of food price hike.

Conference on Macro and Growth Policies

The International Monetary Fund (IMF) is going to organize a conference on 'Macro and Growth Policies in the Wake of the Crisis' at its headquarters in Washington on 7-8 March involving some of the most noted economists. Here is the weblink of the conference, which you may visit, whenever you get time, to know the latest development in applied monetary & fiscal policies, financial intermediation and regulation, capital account management, growth strategies and international monetary system.


Tuesday, February 15, 2011

Bangladesh Food Security Monitoring Report

World Food Programme (WFP) publishes Bangladesh Food Security Monitoring Bulletin on a regular basis. Here are the latest two editions:

1. Special Issue, January 2011
2. Issue No. 3, Nov-Dec 2010

India's growth dilemma: Comparison with China and Bangladesh

Professor Amartya Sen wrote an excellent article 'Growth and other concerns' in the Hindu on the problems of India's growth through comparing that with China and Bangladesh. 

I surely believe in his philosophy 'it's not growth only, but inclusive growth that matters.'

Wednesday, February 9, 2011

Power tariff rose

After October 1, 2008 (when power tariff was raised by 16.0%, on average), the government yesterday raised the power tariff again effective from February 1, 2010The tariff will be enhanced in two phases — the first from Feb 1 (by 11.0%) and the second from Aug 1 (by 6.66%) for bulk consumers. On the other hand, the tariff at the retail level will be increased by 5.0% effective from February 1. 

Economics' most influential people!

Though not that much thorough, yet there is one kind of ranking among economists of the world!

You may find this article from the Economist to see the result!

Sunday, February 6, 2011

Bangladesh Bank Quarterly (BBQ)

Bangladesh Bank published its BBQ, April-June 2010 edition after a long break. Although it's a late publication compared to others; however, you may find some useful information it it, especially development on banking sector activities. (There is no direct internet link of BBQ. I am giving a direction: Please go to Bangladesh Bank website, click on 'Publication', then on 'Quarterly' and finally on 'Bangladesh Bank Quarterly'.)

Thursday, February 3, 2011

Any confusion over transit issues?

If you have any confusion on understanding transit and interrelated issues, please read this article by Tanim Asjad on contemporary debates about imposing transit fees on Indian vessels, the appropriate policies for getting maximum benefits from transits.

Wednesday, February 2, 2011

Inflation continues to rise!

Inflation, point-to-point, reached to 8.3% in December 2010, accelerating on food prices. Food inflation reached to 11.0%, highest during the present government that took power in January 2009. The food-nonfood inflation gap continues to widen as nonfood inflation keeps declining, slowed down to 3.3% from 7.0% in December 2009.

Two interesting points are that: 
(i) during the last couple of months, rural food inflation is considerably higher than urban food inflation, clearly indicates less concentration of the authority in rural market situation; 
(ii) average inflation became higher than the point-to-point inflation, indicating a continued level of higher inflation over the months. 

Foreign aid declines!

Foreign aid declines by 45.0% during July-December 2010 over the same period of 2009. Here is the news! 

So it's a good or bad sign?

Good sign: (1) Dependency on foreign funds for development spending reduced, reduction in further level of policy prescription from outside.

Bad sign: (1) Increased pressure on budget financing, may guide the government to cut down a few foreign-aided projects; (2) government borrowing from banking sector will increase, so crowding out of private investment as well as inflationary pressures; (3) foreign exchange reserves declines, so pressure on exchange rate depreciation at the time when remittances growth is declining and import payments is increasing.

Tuesday, February 1, 2011

BB publishes Monetary Policy Statement

BB publishes the 11th issue of its half yearly Monetary Policy Statement (MPS), outlines the monetary policy stance of BB for January-June 2011. MPS hints its stance will remain accommodative for productive sectors, while also discourage diversion and undue expansion of bank credit for wasteful unproductive uses to prevent buildup of inflationary pressures. Here is the link of MPS!