The Unassuming Economist

From a paper by Floris Bukman:

“Military coups are a persistent feature of global politics, with nearly 90 incidents recorded worldwide between 1996 and 2023, particularly in Sub-Saharan Africa and Asia. Such events typically disrupt economic performance, causing declines in GDP growth, high inflation rates, reduced foreign direct investment (FDI), and increased unemployment. However, the severity and duration of these economic outcomes vary significantly across countries. This thesis addresses this gap by investigating whether institutional quality, measured by government effectiveness, moderates the short- to medium-term economic impacts of coups. Using a fixed-effects panel regression model covering all UN member states from 1996 to 2023, the findings suggest that countries with stronger institutions are better able to mitigate the typically negative economic effects of coups. These countries experience faster GDP growth recoveries, particularly evident in the second year after the coup and, in some contexts, as early as the first year. For inflation, FDI, and unemployment, the moderating effect of institutional quality was not statistically significant. By emphasising the important role of institutional quality following political instability, this research provides new insights into why some countries experience less severe economic impact and recover more quickly from military coups than others, and it offers directions for future research.”

From a paper by Supipi Hansika, Priyan Navamohan, Dinuli Gamage, Ridmi Madurawala &  Ruwan Jayathilaka:

“In the modern world, exploring economic uncertainty and the unpredictability in economic conditions is crucial to determine its impact on day-to-day society. However, existing literature has examined this relationship in a generalised manner, often without focusing on the bi-directional effects among these variables. This study explores the causal and cointegrating interrelationships among economic uncertainty and suicide rates, unemployment rates, economic growth, and trade openness across 30 high uncertainty countries utilising Granger causality test and Cointegration test. Unlike existing studies, which focus on a certain country or region, the current findings disclose bi-directional causation between the measured variables, particularly in Kenya, Finland, Portugal, Latvia, Peru, Haiti, Mexico, Kazakhstan and Kyrgyz Republic. The cointegration tests show that while uncertainty reduces economic growth and trade openness in the long run, in line with contemporary literature, uncertainty also reduces suicide rates and unemployment rates in the long term. By analysing the countries with the highest economic uncertainty, this study aims to provide country-specific policies in line with Sustainable Development Goals (SDGs) developed by United Nations (UN) to navigate the bi-directional effects among economic uncertainty and the linked variables.”

This article first appeared in the India@100 special issue of Business Today. Here is a link to the image of the article. The full text is provided below:

In 1500, India was one of the advanced economies of the world. Now, it is trying to make it way back into the advanced countries’ club. India is the fastest-growing major economy in the world, and is expected to contribute a remarkable 20 percent of global growth in the coming years (Econofact, 2025). It would be felicitous if the re-entry happened by 2047, a 100 years after independence.

But re-entry will be a remarkable achievement even if it occurs a couple of years or even a couple of decades later. Growth is a marathon race, not a sprint.

A question for policymakers to ponder in the interim is: how can India’s stay in the club be a durable one? What does economic theory and country experience teach us about why some countries become permanent residents of the club, while others go in and out, as though on a tourist visa? 

When thinking about the lessons from economic theory, I am reminded of the time my American wife first expressed an interest in cooking Indian food. Delighted by her interest, I purchased a cookbook by Madhur Jaffrey. Her wonderful recipes provided not just the list of ingredients, but specified the size of the pot or pan my wife should use, the sequence in which to put in the ingredients and exactly how long to stir them. The result was a reliably-delicious gravy. Other cookbooks were less helpful. One of them, which we joke about to this day, simply instructed her to throw all the ingredients simultaneously into a pot of unspecified size and “stir until the gravy is highly delicious”.

Economic cookbooks are sadly of the latter variety. In 2001, the World Bank assembled a group of Masterchefs and asked them to come up with a reliable recipe for growing the economic pie. The group included Nobel laureates like Michael Spence and top policymakers like India’s own Montek Singh Ahluwalia. The group identified the common features of the growth miracles of their time, like that of China. Most of these features turned out to be the expected ones, much like the tomatoes and onions of an Indian gravy. One feature was prudent macroeconomic policy; fiscal deficits and inflation had to be contained to keep the growth party going for long. Another feature was openness: countries with durable growth remained open to trade, technology and expertise from the rest of the world.

But the so-called Spence report  also revealed a common feature that the chefs weren’t expecting: this secret ingredient is inclusion. Countries with durable growth were more likely to be ones where  growth during the miracle years included broad segments of the society, instead of being confined to particular income classes, sectors, regions or gender.  By this metric, India is in great shape. Growth has been associated with remarkable declines in poverty (The Economist, 2025) and no increase, if any, in income inequality. Women’s participation in the economy has increased substantially. and growth has been shared across  states and has included both urban and rural areas (Balasubramanian, Loungani and Kumar, 2021). On all these fronts, there is much room for further improvement, but it is also important to take note of, and rejoice in, the fact that India has achieved not just a growth miracle’ but an ‘inclusive growth miracle’ (Ahluwalia, 2001).  

If past experience remains a reliable guide, the inclusive nature of India’s growth raises the odds that its’ stay in the rich countries’ club will be a durable one.

The author is the Director of the M.S. in Applied Economics program at Johns Hopkins University, where he teaches a course on Economic Growth (jointly with Karan Bhasin). He is the author of Confronting inequality: How Societies Can choose inclusive Growth (Columbia University Press, 2019).

From a paper by Martin Boďa, Mariana Považanová, and Katarína Vitálišová:

“Whilst the economic success of ASEAN countries is frequently attributed to the transformation of their economies towards digitalization and technical innovation, little is known about the unemployment-output behaviour of ASEAN economies in the course of the business cycle. One aspect of this conjunctural behaviour is studied in this chapter in the hope of providing insights into how the unemployment-output relationship–enacted in Okun’s law––unfolds in conjunction with the structural changes of their economies and other factors. A two-stage procedure is applied to that end. First, for a period of three decades, 1991–2022, a time-varying version of Okun’s law is estimated for each ASEAN economy. Second, the estimated Okun coefficients are matched against a set of explanatory variables including various metrics of digitalization, sectoral and labour market characteristics. The results indicate that in the majority of ASEAN economies unemployment was mostly insensitive to output, or that the unemployment-output relationship was constant and otherwise of a negligible magnitude, which corroborates the resilience of economic growth in the Southeast Asian region. Nonetheless, this sensitivity is heightened by the reorientation towards medium and high-tech industries whilst the adoption of digital technologies by the population has actually no effect per se.”

From a paper by Klara Perica, Josip Visković, and Mario Pečarić:

“Financial openness affected the reduction and accumulation of reserves, the growth of the degree of monetary policy independence, while the choice of exchange rate regime was not statistically significant. The study thus confirms that monetary policy independence in the era of capital account liberalisation is limited regardless of the type of exchange rate regime.”