cafeconomics

Most of the time economic issues are the underlying factors for any political upheavals or turmoils and other form of social evils. Economic prosperity, at least most of the time ensures a good standard of living and respect in the society irrespective of your caste or creed or whatever. So why not think of a bill for economic representation? Any elected representative should be representing the economic majority of the electoral constituency. Caste, religion, region, race etc are secondary, if a person belongs to your economic class at least he or she can empathize with your problems, if not solve them.Theoretically if a political party has 20 million members then it should not matter who among them holds the electoral positions. In reality, most of the time electoral representatives are 'muscle men' or 'money men' or self declared prophets of some religion or caste or region etc. Time to think of a bill for economic representation because economic justice delayed is ...

This article discusses some of the issues and applications in monetary economics. 1.Disconnect between money supply and inflation:   The quantity theory of money proposes the following identity:       Money Supply * Velocity = Price * Quantity of Goods and Services (MV = PQ)  By rearranging the equation we can state that P = M*(V/Q) which implies that holding velocity constant and assuming that quantity changes only gradually, price level is a factor of money supply. In fact monetarists argue that in the long run  a) money supply is the only factor that influences nominal GDP and b) all real variables such as output, employment and unemployment are independent of money supply. In the chart below we examine the relationship between change in money supply M1 and change in Consumer Price Index for the US economy from 1960 to present.   As we can observe, the regression between Change in Money Supply M1 and Change in CPI is a loose fit and the correla...

 Here are a few interesting charts on the GSDP of different states of India. Data Sourced from MOSPI available at Workbook . (Please note - this is a publicly available document for all citizens) The chart below shows the list of states and union territories by GSDP in 2019-20. The 2020-21 figures are not available for many states, so we have to contend with 2019-20 figures for the time being. Maharashtra, Tamil Nadu and Gujarat occupy the top three spots as of 2019-20 whereas the north-eastern states and other smaller states/union territories as expected are at the lower end. UP and Karnataka are almost at the same level similar to Andhra Pradesh and Telangana. The chart below shows the percentage contribution of GSDP by each state or UT in 2019-20. Let us take a take a look at the growth rates in GSDP for the period from 2012 to 2020. For the year 2020-21 growth rates are NA for most states, so we are sticking to the average growth rate between 2012 to 2020. Northern Eastern Stat...

 This theme of differentiating between financial and real wealth seems omnipresent and economists often distinguish between the two. The chart below compares the personal savings rate and equity market cap. The personal savings rate is represented as a percentage of disposable income for the US economy and the equity market cap is represented by S & P 500 closing each year.  As S & P  500 market cap keeps climbing since the 1970s the personal savings rate keeps dropping. This behavioral aspect of a typical US investor is more or less true of investors anywhere in the world. The 'wealth effect' of increased market cap seems to have a large impact on investor behavior amongst  other things.  Remember that when every equity investor chooses to cash in the equity market falls in a heap. In the best interest of investors, specially the small investors it would be prudent to convert some part of financial wealth in to real wealth by diversifying into other ass...

Yellow journalism is a style of newspaper reporting that emphasized sensationalism over facts . ... Once the term had been coined, it extended to the sensationalist style employed by publishers in their profit-driven coverage of world events.....(google search)  The role played by media in a democracy cannot be understated and with greater proliferation of online platforms - the impact of media is only going to grow further. At the end of the day media houses need to pay their bills and salaries to employees. So some 'entertainment' stuff is acceptable but media can help better by focusing on the following areas: 1. Status and progress of key infrastructure projects by state or region. Details on financials and cost overruns, time delays etc. Governments are spending thousands of crores on infra projects and common people may not have the time and inclination to look for these details. 2. Last mile delivery issues - last mile delivery needs continuous monitoring - it does n...

Introduction As of 2021, India has 82.53 crores internet users second only to China which has close to 99 crores subscribers. And yet, it represents only 61% of India's population ( wiki )- which underlines the growth potential of India's telecom industry. Developed countries like the United States have an internet usage rate of 95.5% of the total population. As per TRAI's press release of 30th June 2021, there are a total of 1202.56 million subscriptions in India and the breakup is shown below:           The chart below shows that the proportion of wire-line subscriptions has been moderating over the years. In terms of tele-density which measures the number of subscriptions for every hundred individuals living in an area the total density for India as of June 30 2021 as per TRAI is 88.07%. Again the more interesting aspect to note is that Urban India has a tele-density of 140.86% whereas rural India has a tele-density of 60.10%. So the poten...

The Great Depression of 1929 to 1933 is a landmark event in the economic history of the world. Till date many organizations use the stress scenarios of this event in building their economic models.  Let us examine the causes and effects of the Great Depression of 1929.  Causes of the Great Depression: A decline in the aggregate demand led to the Great Depression of 1929. A general loss of business confidence, stock market crash, gold standard, misplaced fiscal and monetary polices are cited as some of the reasons for the Great Depression.  Some the prominent causes are discussed below. 1. The Stock Market Crash 1929:  The Great Depression is a classic example of a correction in financial economy impacting the real economic activity. The stock market crash of Black Thursday, Oct 24, 1929 also called as the Great Crash caused a dent in the general business sentiment. This in turn led to decline in investment spending. The 'roaring twenties' during which many investors...