tag:blogger.com,1999:blog-19649274.post4088773838604571485..comments2024-03-29T12:03:50.891+05:30Comments on The Leap Blog: Mythbusting: Current account deficit editionAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-19649274.post-40401833105912959522010-12-24T20:53:15.968+05:302010-12-24T20:53:15.968+05:30It also depends on political situation, image of t...It also depends on political situation, image of the country(example-corruption and rule of law,tax policy) willingness of government to put budget deficit in order, financial market's price level and interest rate-inflation outlook. As in Calvo's term, when "sudden stop" happens all the developing-emerging nations are put in the same box and country with liability in nonnative currency face the max problems. CAD is a slippery slop, when government sees it is not a problem today it tends to allow it to go unchecked(example-US) until they realize otherwise when crisis hits.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-34635583804347306862010-12-22T02:26:40.927+05:302010-12-22T02:26:40.927+05:30The intuition on the floating rate is accurate I b...The intuition on the floating rate is accurate I believe, but is there any level where the deficit actually becomes dangerous? An interesting survey would be to see if the deficit is funding an investment (novel enough if the rate of return of higher than the rate of borrowing) or being used for consumption (hence destabilizing). More accurate reflections would actually emerge from the Revenue deficit and primary deficit. These are figures which actually appear very rarely on most deficit arguments......but the revenue deficit is a more accurate description of the adverse effects of a deficit. If investors were also made aware of such facts, I think both the financial and goods markets would benefit the Economy.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-60521187168673438672010-12-21T22:39:49.053+05:302010-12-21T22:39:49.053+05:30Some queries I had:
1. With the frequent RBI inter...Some queries I had:<br />1. With the frequent RBI interventions; is our exchange rate policy closer to the fixed or flexible type?<br />2. The bid-ask spreads on Rupee is not as narrow as the international currencies; would not that be a hindrance to the equilibrium condition you were talking about?Durganoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-66001987895956539342010-12-21T16:16:48.271+05:302010-12-21T16:16:48.271+05:30Hi Ajay,
Just below the graph you write "......Hi Ajay,<br /><br />Just below the graph you write "...and small scale trading by RBI has zero impact on the price: i.e. what we're seeing is a true market price..."<br /><br />Well this still is not true price of rupee unless off course full convertibility is introduced. Would you agree with that ?<br /><br />Thanks,<br />Neeraj.Neerajhttps://www.blogger.com/profile/14007327243911492672noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-53934384336943679242010-12-21T11:58:21.201+05:302010-12-21T11:58:21.201+05:30Slightly off track query here. Why the sudden rise...Slightly off track query here. Why the sudden rise in rupee trading by intl investors?Ambarishhttps://www.blogger.com/profile/02938341065980278355noreply@blogger.com