Jayati Ghosh’s Blog

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)

The latest IPCC report makes it clear: the planet is now dangerously close to a tipping point and reliance on fossil fuels has to be drastically curtailed and even fully eliminated soon, to avoid catastrophic climate changes. Obviously, this urgent call fell on deaf ears where it matters. It didn’t take long, or even very much, for world leaders—especially those who should really know better and have the means to do otherwise—to renege on their very recent pledges to reduce reliance on fossil fuels. The latest excuse for avoiding the most basic inconvenient truths is the outcome of the Russian…

Inflation has become a problem in India once again, well before it emerged globally and in the advanced countries as a major concern. In India, inflation rates of 6 per cent and above were evident even during the pandemic collapse, when much of the rest of the world suffered deflation. This was largely due to cost-push pressures resulting from the central government’s continuous increases in fuel taxes, which effectively increased the costs of producing and transporting goods and services. Since then, and especially since the Ukraine war, global prices of fuel and other commodities (including food crops like wheat) have…

Testimony to US House of Representatives Committee on Financial Services, Sub Committee on National Security, International Development and Monetary Policy, Virtual Hearing on February 17, 2022. The Covid-19 epidemic has widened the disparities between affluent and poor countries (other than China).  Most developing nations are dealing with a substantially harsher external environment, and their resources are now even more limited than before. This has already resulted in decreased employment, major increases in poverty and hunger, and poor economic prospects for the near future. This process inhibits the increase of global effective demand, limiting the possibility of global economic recovery. To…

It is obvious that the Covid-19 pandemic has had a deep, searing impact on the Indian economy, in terms of both total economic activity and livelihoods. It is true that the economy had been struggling for several years before then, with falling investment and employment, sharply growing inequalities and worsening conditions of health and nutrition. But the pandemic and the policy response led to sharp aggravation of all of these problems. As Figure 1 show, per capita income in real terms, whether measured as GDP per person or as net national income per person (which is GDP after subtracting taxes…