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Showing posts with the label forecasting

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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Technology Forecasts for Post Wuhan Virus World

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COVID-19, the pandemic caused by a virus originating from Wuhan, China seems no sign of peaking out. Yet, as in any battle, human mankind will emerge triumphant. However, to expect life to be same post pandemic might not be a valid proposition. Indubitably, life will return to normal and with passage of time, the aftereffects are forgotten. Hardly anybody remembers the after effects of Spanish flu though in terms of destruction it was far more severe. As with any disruption, there are bound to be changes that bring about their own unique idiosyncrasies. Similarly, the changes brought about by the current round would be long lasting. The post “ Tech Forecasts and the Post China Virus World ” captured some of the possible changes thanks to technology in the post pandemic world.   In continuation with the above post, it would be pertinent to decode some more features that might characterize the post pandemic universe. Sanitization Tunnels The economy cannot come to a standstill
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Caselets in Macroeconomics

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Caselet I- Rupee depreciation and textile industry The recent rupee depreciation has enabled the Indian textile industry to hold yarn prices and also increase yarn exports.   Though Indian industry demonstrates stronger backward linkages, low labour costs have enabled countries like Bangladesh, Pakistan and Vietnam to overtake India in terms of capturing textile export markets.   With Chinese Yuan appreciating, Indian exports have become more competitive. Indian textile export share is marginal ( 5% as compared to China’s 30%). Many analysts advocate leveraging the current scenario to capture the global market at the expense of China.   As a CEO of leading textile manufacturer, you are planning to go in for capacity expansion. Capacity expansion necessitates funding and thus you approach a consortium of banks. Prepare the detailed projections convincing the bankers how the global economic trends portray well for Indian textile exporters. (Note: Use financial statements sh
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