Articles by Partha Ray

Despite experiencing multiple political and economic crises in recent times, Pakistan’s economy has so far avoided a collapse similar to Sri Lanka’s. It is argued that the key to understanding its economic survival has been the effective utilisation of its unique geography, thereby exhibiting features of a rentier state. Its strategic location has enabled Pakistan to secure military and economic support from three major countries, namely the United States, China, and Saudi Arabia. While this enabled a razor’s edge type unstable economic survival, it also prevented the country from undertaking significant political and economic reforms. 

Debt, Trust, and Reputation: Extra-legal Finance in Northern India by Sebastian Schwecke, Cambridge: Cambridge University Press, 2022; pp 372, price not stated (hardcover).

During the COVID-19 pandemic, expansionary economic policies played an important role in reviving the floundering global economy. In this context, the present paper looks at the effectiveness of monetary policy in the global North in stimulating real economic activity. In an ultra-low interest rate regime, the traditional monetary policy ceases to be effective. Therefore, many developed country central banks adopted a slew of unconventional monetary policy tools to tackle the recession. This paper analyses the unconventional monetary policy tools pursued by the global North with special reference to the United States and argues that the transmission channels of unconventional monetary policy tools to increase effective demand are not always automatic and straightforward. There is strong evidence that while these expansionary measures may have helped during the initial crisis, their effectiveness in reviving sustained economic activity in the medium run is doubtful. On the other hand, there are routes through which increased liquidity created by unconventional monetary policy tools has ended up in the financial sector, thereby leading to an asset price inflation that may not have a net beneficial impact on the real economy.

The announcement of the introduction of the central bank digital currency was the highlight of the union budget. However, in the absence of any specific official paper as of now, the treatment in the present article is largely speculative. Specifically, it looks at the possible technological and legal implications of the CBDC in light of other country experiences.

The recently published Report on Currency and Finance, 2020–21 of the Reserve Bank of India reviewed the performance of the flexible inflation targeting regime in India. In the light of stylised facts, cross-country experience, and detailed econometric results, the report seemed to suggest that despite several shocks (like demonetisation or introduction of the goods and services tax), a combination of good policy and luck have worked in favour of the success of the FIT regime in India. Going forward, while advocating some nuanced, subtle changes in the operation and administration of the FIT regime, the report called for its continuation as a strategy of monetary policy in India.