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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.

Sunday, June 29, 2014

Response on Raising CRR!

Professor M.A. Taslim writes on the impact of raising CRR.

The link of the article.

Main messages came out from the article are as follows:

1. the ultimate loser of raising CRR will be the ordinary people, who have regular transactions with commercial banks;
2. This attempt of the central bank will raise the interest rate up;
3. While the main job of the central bank should be to target nonfood inflation, it now wrongly  targets food inflation also. Probably, the central bank is misguided with using its policy instruments;
4. Without improving the investment climate, which is the pressing need of the economy at this moment, the current trend of ever-increasing excess liquidity of the banking system can't be stopped.

One more issue that the article couldn't cover: If one carefully plots a graph with historical data (year-on-year change) of net credit to the government and credit to the private sector, they will see the long-term trend of negative relationship, including recently. While Bangladesh Bank has been trying to discourage the government to borrow from BB's own funds, basically to avoid inflation threats, then raising CRR at this time will definitely open another door of crowding out of private investment funds. So, the central bank needs more thoughtful/innovative steps.   

Wednesday, June 11, 2014

Profile of Alan Krueger

Princeton Alumin Weekly profile Alan Krueger, former Chairman of the Council of Economic Advisers, the White House.

Link of the profile.

Thursday, June 5, 2014

IMF Staff Report: 4th Review under ECF

The IMF Staff Report covers the fourth review under the ECF with latest macroeconomic update, and a debt sustainability analysis update. 

Annual Budget FY2014-15 Documents

The Government announced its annual budget for fiscal year 2014-15.

Link for budget documents.

Wednesday, June 4, 2014

Political stability and economic growth

Probably, one of the well written articles, and critically analysed on the relationship between political stability and economic growth by Dr Zahid Hussain, Lead Economist, World Bank. The article is partly related with current economic and political context of Bangladesh, however the applicability of the main message won't entirely limit to Bangladesh only. Definitely it has a global context.

Link for the article.

Sunday, June 1, 2014

A Profile of Christopher Pissarides

IMF's Finance & Development profiles Christopher Pissarides, winner of the 2010 Nobel Prize for work on unemployment and labor markets.

Link of the profile.