Public Finance

India’s smart foreign exchange reserves policy

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The Indian currency has been under pressure for the past few months, having lost 13 percent since February. Earlier this week, it hit an all-time low of 56 rupees to the dollar in intraday trading. This weakness comes partially from the shift of global investors to “risk-off” mode, retrenching in fear of a European mess. But it primarily reflects bad economic policy in India that has scared away investment (investment in both the economic, building-a-factory sense and the financial, buying-a-stock sense). Continue Reading →

Political limits to India’s growth trajectory

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The Indian economy’s growth rate, above 6 percent at present, makes India the envy of most of the world. But to those who know India, growth rates below 7 percent are a sore disappointment. India aspires to double-digit growth, and with large domestic markets, a diversified economy and a large pool of competitive labor, it holds the potential to reach its goal. To meet its aspirations, India requires a series of reforms to its economic structure that can facilitate business growth and encourage private sector investment. Continue Reading →

President Reagan’s tax legacy 25 years later

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Twenty-five years ago this week, President Ronald Reagan signed into law the Tax Reform Act of 1986, the last major effort to update the U.S. income tax system.

The legislation, also known as TRA86, lowered individual taxpayer rates by closing corporate loopholes and reflected more than two years of negotiations by Reagan, a Republican, with a Democratic-controlled House of Representatives.

“When I sign this bill into law, America will have the lowest marginal tax rates and the most modern tax code among major industrialized nations, one that encourages risk-taking, innovation and that old American spirit of enterprise,” Reagan said at the time. Continue Reading →

The U.S. economy: A student’s perspective

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As a college student watching the United States economy slide into an abyss, I am immensely worried. I am worried that when I graduate jobs may not be plentiful. I am worried that robust economic growth may become a bygone phenomenon for the United States. I am worried that Washington is lacking smart, courageous leaders. But, despite all these worries, I take solace in knowing that all is not lost — the United States can recover. By enacting the right policies, the United States can boost economic growth, can create jobs for Americans, and can help the country reduce its deficit.

But, for such a dream to come true, I believe the United States will need to realize that, as former Secretary of Treasury Larry Summers recently noted, “[T]he biggest problem the country has right now is not the budget deficit. The biggest problem the country has right now is the jobs deficit.” Continue Reading →