Solow writes an interesting piece on deficiencies of DGSEmodels in giving us insight about the economy. He points that since the economy is populated with “representative agents”, these models do not take into account the strategic interaction between the agents in a realistic way. The fact that these models are not able to give us a decent explanation for unemployment is particularly striking.
A delightful place with a bistro feel, serving exquisite tapas in Soho. We had duck salad with dandelion, watercress, hazelnuts and beetroot vinaigrette, warm squid salad with saffron potatoes, piquillo peppers and parsley, crispy pork belly, olive oil mashed potatoes with pimenton de la vera, lamb chops and finished with an orange sorbet and pistachio ice-cream. Excellent! The food is delicate, yet lively. Fresh ingredients and done to perfection. The wine list more than sufficient and not too pricey. We were able to get a sofas on the pavement, which is the best seat in the restaurant. Every one that went by looked at our food with envy, which may have added a notch to the experience. Highly recommended. Continue reading
What a gorgeous day. Spent it in Winchester, first having a nice open air lunch at a friends place and then ambling around town in the sunshine. It is a small town of 40,000 and hour’s ride from London. It is charming with the a brook running through the city. There is the famous cathedral, the 15th Century Cheyney Court and the Priors Gate next to it, Military Museums and of course the Winchester School. There is also a nice ice-cream van outside the Bishop of Winchester’s residence which cannot be missed. It was great fun getting into line with all the kid then lolling about with the cone in hand. A perfect summer’s day finished off with champage in the friend’s garden.
The best sautéed crabs and prawns I have had yet. This was a crab shack is in my middle of nowhere. It is a flight, a car ride and then a boat ride away. But, it is worth the trip. Fresh crabs and prawn caught from the backwaters known as Chilka Lake in Orrisa. The boat take to the sea mouth of Chilka Lake where there are a number of crab shacks ready to fire up their stove and deliver the delightful masala crabs and prawns in your place.
Ate at Andreas on Monday evening. It was balmy and we sat on table on the pavement. For starters, we had Dolmathes, Pastourma (char-grilled beef sausages, marinated in red wine) and Keftethes (meatballs of lamb, onions, parsley, herbs and seasoning), each at a fiver a piece. The service was brilliant and attentive. The food was fresh and well prepared. For mains I had a Kleftiko, which was juicy, succulent and perfectly well done. At 15 quid, fair value for money and much better than the usual fare you get in London. The house was more than adequate at 5 quid. A very pleasant way to spend a summer evening in London.
There has been an fairly sharp increase in food price inflation in the India in the last one year. The politicians are busy trying to strengthen the public distribution system to bring the food price inflation under control. It would be a miraculous if that has any impact on the food prices.
To hone in on the source of the inflation, it would be useful to examine the issue that affects the supply and the demand for food. Even though the urban(e) India seems to be sceptical about NREGA, it is potentially a radical change as far as the poorer half of India, geographically concentrated in rural parts, is concerned.
Guaranteeing 100 days of labour for everyone raises the reservation wage (the best alternative) and thus should impact the rural or agricultural labour market. Faced with higher labour costs, the land-owning farmers may either reduce or change the pattern of food production across the country. It is too early to pin down the new pattern of food production in the country. Though, this could be a potential supply shock for the food market in the country, pushing up the prices.
On the demand side, we know that the food elasticity of income is very high for the poorest of the poor. We also know that the very poor tend to derive their calorific intake from staples like cereals or lentils. As income increases, they diversify their intake and move towards the nutrient rich foods like vegetable, milk and meats.
NREGA’s affect on the demand side is two folds. It increases the labour endowment of the poor unskilled workers. It also reduces the income uncertainty for the poor by giving them a steady predictable employment for 100 days in a year. Given the high income elasticity of food, we would expect this to increase the demand for food across the country.
Food demand could also be impacted by the 6th Pay Commission — the body that determines the salaries of the all the central and state government employees in India. The 6th Pay Commission, like its predecessor, has been extremely generous. These generous payoff to hitherto relatively impoverished government employees has been financed by a ballooning budget deficit.
Inflation being confined to mainly food is unusual and the high income elasticity of food for the poor maybe useful in providing an explanation for this phenomenon. Would be interesting to see how this pans out. What is certain is that with the price rise, the relative prices for staples and cash crops has changed dramatically and would lead to radical changes in crop pattern across the country in years to come. Interesting times.
Howard Davies has been a regulator (as the head of FSA) as well as a central banker (Deputy Governor of Bank of England) in the last decade. I went hesitantly, bracing myself for the kind of mind numbing defence of their respective roles we have seen from the likes of Greenspan and Bernanke off late. What I instead encountered was a really pleasant mannered man, who took a fairly comprehensive look at the past decade.