The Price of Growth
Jan 27th 2012, C.P. Chandrasekhar
The early signs of a reduction in the rate of inflation have been used as evidence to make a case for lower interest rates. However, there is no reason to believe that within the current policy regime, rate cuts would not aggravate inflationary trends once again.
The Lurking Debt Problem
Dec 19th 2011, C.P. Chandrasekhar and Jayati Ghosh
Rising interest rates in the domestic market have been encouraging large firms in the Indian corporate sector to resort to foreign borrowing to finance domestic expenditures. In particular, there has been significant rise in the shares of commercial borrowings and short-term debt in total external debt. This tendency is increasing external vulnerability.
Evading an Inflation Cure
Sep 7th 2011, C.P. Chandrasekhar
The changing responses of the government to persisting inflation suggest that the government has given up on the task of curbing inflation and expects that people would learn to live with the phenomenon and adjust. Thus the focus on the long-run supply constraints in agriculture as being the reason for the recent inflationary surge is to evade rather than address the problem of inflation.
Trading Growth for Inflation
May 27th 2011, C.P. Chandrasekhar
If inflation is influenced by global developments, adjusting domestic interest rates may do little to redress the problem. The RBI's latest interest rate manoeuvre may thus end up being successful in contracting demand and growth, but it is likely to fail to rein in inflation.
Revisiting Capital Flows
May 4th 2011, C.P. Chandrasekhar and Jayati Ghosh
In a recent move the IMF surprised many by revising its position on the use of capital controls and making a case for them in special circumstances. It has followed this up with an analysis of capital flows to developing countries, which also explains its partial rethink on the use of capital controls by developing countries.
Policy Paralysis and Inflation
Feb 3rd 2011, C.P. Chandrasekhar
The price trends over the last one-and-a-half years suggest that inflation is being driven by factors which are structurally embedded in the economic environment generated by the government's neoliberal reform agenda adopted for two decades now. Further, neoliberal thinking is leading not only to policy paralysis and absurd reasoning, but also to policy responses that are contrary to what is needed.
(Un)Common Suffering: Distributional impact of recent inflation in India
Jan 6th 2011, Rajarshi Majumder and Subhadip Ghosh
Recent inflation in India is special both because of its peaks and its persistence. It is argued that unlike during 2008-09, recent inflation is due to structural problems. Further, a distributional analysis reveals that its impact is not shared equally. People in the lower income groups have been facing uncommon difficulties, as their purchasing power seems to have been halved over the last four years.
Disarray in the Global Economy
Oct 20th 2010, C.P. Chandrasekhar
The injection of cheap money at home to invest in emerging markets for profit by the US Federal Reserve, and its pressure on emerging market economies to allow their exchange rates to appreciate, in the hope that it would expand US exports and reduce its imports and facilitate a recovery, are a sure recipe for conflict.
Ignoring Asset Price Inflation
Sep 22nd 2010, C.P. Chandrasekhar and Jayati Ghosh
The spike in stock prices and the strengthening of the rupee are signals that it is time the government acted to regulate the capital flows that are generating these speculative trends. But while the government and the central bank are responding to inflation in the prices of goods, they are choosing to ignore the much sharper inflation in asset prices.
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