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Poverty Traps and Productivity Puzzles

At an interesting conference on growth prospects for Latin America at the IMF last week, there was an interesting exchange on the factors holding back productivity growth. The proximate cause of the weak productivity performance, most would agree, is the large share of the informal sector in the region. Informality is associated with poor pay, lower levels of education, reduced unionization and fewer contributors to social security schemes. At the same time, informal firms operate under the tax "radar" so that governments have less revenues to finance public projects. There are, seemingly,...

Sovereign Debt Restructuring Decision Making Under Uncertainty

The Greek debt talks have broken down. The IMF has withdrawn from negotiations and IMF Chief Economist Olivier Blanchard has a blog post, here, explaining the Fund’s position. The outlook is bleak. The Fund is struggling to strike the right balance in terms of incentives: balancing the desire to promote timely, orderly restructuring with the need to minimize risk of market turbulence. Access to Fund resources is a potential catalyst to restructuring, but also poses a moral hazard threat that frustrates the goal. It is doing so in a fog of uncertainty, however. Consider the range of sit...

Nikkei rebounds from 1-month low; trade cautious ahead of BOJ meeting

Japan's Nikkei share average rebounded from a one-month low on Friday as buyers took advantage of recent dips, but trade was cautious ahead of a Bank Of Japan policy decision and its governor's comments after the meeting. The Nikkei share average rose 0.7 per cent to 20,131.95 points by mid-morning after dipping below the 20,000-mark for the first time since mid-May. At the two-day meeting ending on Friday, the BOJ is expected to maintain its massive asset buying programme and .. ...

Rupee strengthens against US dollar for third straight session

Rupee continued to strengthen against dollar for the third straight session, thanks to a dovish tone set by the US Fed in its recent policy meet. The local unit hit a day's high of 63.66 in intraday trade, up 7 paise. The US Fed in its two-day policy meet concluded on Wednesday said that it was not planning to raise interest rates right away. Most investors were expecting the US apex bank give a clear signal of a rate hike in the September policy review. The outcome hurt d .. ...

Funds buy banks, pharma in May as valuations turn attractive

The top five mutual fund houses — HDFC AMC, ICICI Pru, Reliance MF, Birla Sun Life AMC and UTI AMC, which together hold about 55% market share in the mutual fund industry — bought interest rate sensitive stocks in May ahead of the Reserve Bank of India's (RBI) monetary policy, amid continued foreign institutional investors' (FIIs) selling on concerns over corporate earnings slowdown. FIIs offloaded shares worth `5,800 crore during the month, while DIIs bought shares worth `4,200 crore during th .. ...

Twelve stocks in focus in Friday’s trade

Indian markets are expected to trade in a range on Friday tracking muted trend seen in other Asian markets. "A level of 27,375 on Sensex is something that I am watching on the upside. For Nifty, the corresponding target comes to about 8270," says Mitesh Thacker, Technical Analyst, miteshthacker.com. "In fact, we have maintained that 8,180-8,200 would be a tough level for the Nifty to get passed. I would initiate fresh positions on Nifty if 8,200 if broken. We have had some kind .. ...