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Showing posts with the label Lockdown

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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Indian Economy and COVID-19 Second Wave

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  The challenge in the second wave of the coronavirus orginatiing in China is managing the economy. In the previous instance of the first wave of 2020, India had gone in for an early lockdown when the cases were hardly in double digits. India had perhaps one of the strictest lockdowns in the world. This certainly managed to contain the wave and slow down the spread. The peak came something later around mid-September, partly causes by the increased flow of migrants across the country. The gravity was essentially a result of mismanagement in contact tracing by states like Maharashtra and Delhi. The lockdown took a heavy toll on the economy. The economy crashed to fall nearing 25% yoy. The lockdown also led to the recession for the first time in India. The economic scars is something government wants to avoid this time around. The economic impact and consequent social transfers led to the fiscal deficit hitting close to 10% of the GDP. There is of course a question whether India would be
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Blake Moulton Grid and the Unconditional Economy First Advocacy

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The issue of extending lockdown or reopening of the economy continues to border on rhetoric than substance. There are a few who hold an extreme view of complete reopening of the economy while few advocate the lockdown. At times, it seems rather than the individual judgment, it is the views of their ideological mentors sitting thousands of miles away from the location that determines the views. In India, many state governments notably ruled by the opposition parties are clamouring for an extension of lockdown. This makes the usually vociferous right wing activists on social media see red on any news of possible extension of the lockdown. Their views that India needs to open up fully arises from the fact of the need to oppose the views of the political left and so-called political liberal.   The debate on the feasibility of economy first or the health first has been discussed in this post .   The analysis is underpinned on the classical societal dilemmas of allocation of resources the
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Peak End Experience of Wuhan VIrus Lockdown

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Thanks to the virus originating from Wuhan, China and the destruction it has spawned as it traverses across the world, seemingly the whole world is shut down. The economic activity is down to a standstill with experts talking about a long recession ahead globally. There are a few however who believe the world is headed towards a V shaped recovery- a sharp dip in growth rates followed by equally sharp recovery. As the economies shut down, a lot of discussion is happening over the duration of the lockdown. With no vaccine or cure in sight, options seem to be very limited with either a priority on health implying a long lockdown or a priority on economy which carries the burden of swifter spread of the infection. The debate between advocates of economy first and advocates of health first has been captured in this post . Aside of the debate is a serious question of the socio-eco-political consequences that arise of the decision in extending or exiting the lockdown. In India, politic
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