One feature of each period of turbulence is that we get an upsurge of out of the box thinking. While it is always good to think out of the box, these innovative ideas must also make sense. If I were a teacher of economics, I would use these in class as demos of how not to do economics:
- Coordinated intervention by emerging markets. Andy Mukherjee nails this one.
- Devesh Kapur and Arvind Subramanian want an import tariff -- that they term a `third best measure' -- to do things that exchange rate depreciation does better.
- Veerappa Moily says we should close down petrol pumps at night so as to reduce consumption of petrol.
- Swaminathan S. Anklesaria Aiyar thinks there is a second Asian Financial Crisis in store. But Asia has substantially moved away from exchange rate rigidity. He says depreciation is recessionary. No, depreciations are expansionary. He implies that depreciation is a problem in India today as corporations have large unhedged foreign currency borrowing. The existing evidence does not support this.
- Jamal Mecklai on temple gold. It is satire.