• Thursday, October 02, 2014

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Business & Finance

Europe's austerity zombies

IF the facts don't fit the theory, change the theory,” goes the old adage. But too often it is easier to keep the theory and change the facts -- or so German Chancellor Angela Merkel and other pro-austerity European leaders appear to believe. Though facts keep staring them in the face, they continue to deny reality. Austerity has failed. But its defenders are willing to claim victory on the basis of the weakest possible evidence: the economy is no longer...

The Asian Convergance

Is Abenomics working?

Is Abenomics working?

LAST April, Japan's government implemented a long-planned consumption-tax hike, from 5% to 8%, the first in a two-step increase that is expected to bring the rate to 10% by 2015. The hike – a key feature of “Abenomics,” Prime Minister Shinzo Abe's three-pronged strategy to revive Japan's economy – signals the government's long-term...

Joseph E. Stiglitz Series

Democracy in the Twenty-First Century

THE reception in the United States, and in other advanced economies, of Thomas Piketty's recent book Capital in the Twenty-First Century attests to growing concern about rising inequality. His book lends further weight to the already overwhelming body of evidence concerning the soaring share of income and wealth at the very top. Piketty's book, moreover, provides a different perspective on the 30 or so years that followed the Great Depression and World War II, viewing this period as a historical...

The economics of being happy

THE discipline of 'happynomics,' otherwise known as 'the economics of subjective well-being,' is a field where respected economists are joining in. Whether this discipline will be able to help every person to remain happy is unclear; however, economists have managed to get some insights into what can help us being content. Tim Harford, widely known as 'The Undercover Economist,' recently provided four tips as to how to be happy. Number one: never be distracted by the obvious. For example, when buying...


Economics is Dead. Long Live Economics!

Economics is Dead. Long Live Economics!

In June 2000, economics students of Panthéon-Sorbonn in Paris revolted. Their 'Post Autistic' petition: economics texts focus on mainstream economics (the neoclassical school) only. Other schools are sidelined. History of ideas in economics had become extinct. In June 2001, PhD students of economics at Cambridge added one new dimension: leading professional journals have...


Why are rich countries democratic?

WHEN Adam Smith was 22, he famously proclaimed that, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.” Today, almost 260 years later, we know that nothing could be further from the truth. The disappearance of Malaysia Airlines Flight 370 shows how wrong Smith was, for it highlights the...

Letter From Europe

How the Fed has come to influence the world economy

ACCORDING to some economic historians, the Fed was modelled on the English system. The Bank of England was founded in 1694 to deal with “currency, government finance, and banking for the leading financial undertakings of the country, including the other banks.” The Bank Charter Act of 1844 gave powers to the Bank of England to manage and control note issues. All new banks were forbidden to issue notes. This was a very important measure because its objective was to...

Discretionary tax policy hindering collection

THE Tax-GDP ratio is very low with about 10% in Bangladesh, but keeps improving at a slow pace. Both tax and non-tax revenues as a percent of GDP have been increasing over the years. But the status is the worst among the SAARC countries. Both the Tax-GDP ratios and revenue-GDP ratios are the lowest in Bangladesh among the seven SAARC countries too.  The average SAARC Tax-GDP ratio is about 15%. The Corporate Taxpayers are the highest income tax payers....

Investment and the lesser-known ratio

WITH the political strife out of the way, the investment climate can finally provide the much needed sustenance for businesses to bloom. As the country has surpassed half of the fiscal year, speculations regarding the economic growth rate are rife in an array of institutions; most of the forecasts puts the growth rate to hover somewhere close to 6%, which of course is much lower than the target of 7.2%. An argument had been made in the past, and has...

Business & Finance

Stagnation by design

SOON after the global financial crisis erupted in 2008, I warned that unless the right policies were adopted, Japanese-style malaise -- slow growth and near-stagnant incomes for years to come -- could set in. While leaders on both sides of the Atlantic claimed that they had learned the lessons of Japan, they promptly proceeded to repeat some of the same mistakes. Now, even a key former United States official, the economist Larry Summers, is warning of secular stagnation. The basic...

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