Jayati Ghosh’s Blog

In the 1920s and early 30s, John Maynard Keynes was embroiled in a controversy with the ‘austerians’ of his time, who believed that balancing the government budget, even in a time of economic volatility and decline and financial fragility, was necessary to restore ‘investor confidence’ and therefore provide stability. Keynes was horrified by the idea. Zachary Carter’s brilliant biography notes that Keynes felt a package of government spending cuts and tax increases would be ‘both futile and disastrous’. It would be an affront to social justice to ask teachers and the unemployed to carry the burden of deflating a doomed currency, in…

The Covid-19 pandemic highlighted the urgent need for a universal social protection floor—something that has been talked about and even internationally accepted for more than a decade now, but has still received relatively little serious attention from policy makers in most countries. The challenge is to ensure basic levels of food, health, income and livelihood security, not only in periods of crisis like the pandemic or economic shocks but also in the “normal” course of economies and societies. This has become a major concern because of the dramatically increased economic inequality and greater vulnerability of people to adverse events and…

The Russian invasion of Ukraine and the subsequent war sparked rapid and dramatic increases in some global trade prices, particularly for fuel products, wheat and fertilizer for which Russia and Ukraine are major exporters. It is now clear that these price changes were not due to actual changes in total supply, which remained largely unchanged (although source locations and trade routes shifted). Instead, market expectations amplified by media hype, financial speculation in commodity futures and simple profiteering by major fuel companies and agribusinesses, were probably the major factors. This is why these prices rose sharply from January until around June…

It was headline news when Chinese customs statistics at the end of September 2022 indicated that for a second calendar year, India’s trade with China would settle at well above $100 billion. That was only partly because of the positive implications of burgeoning trade between the two countries that only two years back were involved in clashes at the border at Galwan. The bilateral trade balance attracted attention because it reflected large imports from China into India, many multiples of India’s exports to China. Over the first nine months of 2022, China’s exports to India rose more than 30 per…

The monetary policies of the major advanced economies have been obsessively nationalist for more than two decades now, with hardly any genuine international cooperation beyond some coordination among G7 economies. These policies in turn have had all sorts of impacts—often very negative—in the rest of the world, and particularly in the low and middle income countries referred to collectively as emerging and developing economies (EMDEs). After the Global Financial Crisis, the advanced economies unleashed historically loose monetary policies, with major liquidity expansion and very low or even negative interest rates of their central banks. This enabled and encouraged massive increases…

It is well known that indirect taxes fall disproportionately on the poor, and therefore a tax regime that relies mostly on such taxes is both unjust and inefficient in terms of not mopping up the excess profits and incomes of large corporations and rich families. The Indian tax system has always been broadly regressive, with an inordinately high share of indirect taxes, even when compared to countries at similar levels of per capita income. But the extent to which this reliance has been accentuated during the Modi government are not fully appreciated. When combined with other regulatory measures and public…

Jayati Ghosh critiques and details the conceptual, methodological and empirical problems in defining and measuring productivity, the “holy grail” of economic growth. Productivity measurement encounters problems in both its numerator (output) and the denominator (input). While output measured as GDP doesn’t account for informal/intangible goods and services, the use of Purchasing Power Parity (PPP) rates over Market Exchange Rates (MER) limits meaningful comparison across countries, specifically by overstating the incomes of poorer countries. This is apart from fundamental flaws in the wide usage of labour productivity, as evidenced during the pandemic when labour productivity rose as output fell, but overall…

There is no doubt that creative industries, along with care activities, are going to emerge as some of the most significant economic sectors of the future. Broadly speaking, the creative industries consist of advertising, architecture, arts and crafts, design, fashion, film, video, photography, music, performing arts, publishing, research & development, software, computer games, electronic publishing, and TV/radio. A 2019 report from by UNCTAD (Creative Economy Outlook 2019, Geneva: UNCTAD) notes how these activities are valuable in both cultural and commercial terms. Obviously, they improve human and social well-being, and as expressions of the human imagination, bring joy, meaning and fulfilment…

More frequent and intense heat waves are poised to become bigger killers in the Indian subcontinent than the ongoing COVID-19 pandemic. But the government is essentially leaving people to fend for themselves in a foreseeable tragedy, and envisages continued investment in fossil fuels for decades to come. Click here for full article. (This article was originally published in the Project Syndicate on May 11, 2022)