Tag: recession

• June 2, 2020

  The Covid Paradox — Keynes turned around

  The Indian economy, which was facing demand deficiency and slowdown prior to theCovid-19 outbreak, plunged further with the lockdown. The present exercise represents the current problem as a typical demand constrained Keynesian equilibrium, afflicted further by demand and supply failures generated by transaction costs. The resulting scenario resembles a “supply constrained” Keynesian equilibrium.
• November 26, 2010

  Misson Impossible

  Barack Obama’s desperate bid to rescue the recession-plagued American economy stands in sharp contrast to events that occurred in the early 1970s when Richard Nixon was in charge of the country. His bête noire at the time was the then president of France, Charles De Gaulle, who demanded that the United States of America pay for its mounting trade deficits by gold shipments from Fort Knox valued, according to the Bretton Woods agreement, at $35 an ounce. The US refused to honour the agreement and forced upon the world the tour de force of an oil-backed dollar. Oil imports, in other words, had to be paid for by US dollars and this made it imperative for everyone to hold eagerly on to the dollars printed by the US government to support its mounting trade deficits. The US trade deficit turned, therefore, into an advantage for its creditors, especially the ones, such as Japan, who were in dire need of oil imports to keep their economies running.