TITLE:
I Was Learning Economics at the Cost of the Economy
AUTHORS:
Majumder Debasish
KEYWORDS:
Aggressive/Unconventional Monetary Policy, Value-at-Risk (VaR), Nowcasting
JOURNAL NAME:
Theoretical Economics Letters,
Vol.11 No.3,
June
29,
2021
ABSTRACT: COVID-19,
a virus of the size of 0.12 microns, had crippled the global economy with 19.14
million people infected as of April 15, 2020, increased to 37.11 million as of
October 11, 2020 as per the COVID-19 Weekly Epidemiological Update published by
World Health Organization (WHO). The COVID-19 count as of March 23, 2021 was more than 122 million,
suppressing the last year’s rate of growth of the same. Economic activities
across the globe had been stalled after February 2020. The world has been caged
in a Great Lockdown. For the vast majority of people, this has been the biggest
economic upset of their lives. There were many causes of recession delineated
in the contemporary research papers. Nevertheless, too many causes of the
crisis, too many research papers, so many techniques for optimization and too
many surveys, etc., frequently divert the focus. We should not lose focus in
the sea of numerous causes of recession. Therefore, the objective of the
present paper is more specific: “Was conservative/defensive stance in the risk
management in the regulatory policymaking post-global financial recession
(2007-10) foreboding or worthy?”. The subprime crisis of 2007-08 and the economic recession
that followed and many significant economic and socio political events after
2010, e.g., the sovereign debt crisis in Greece, European credit crisis,
Brexit, the Venezuelan hyperinflation in 2014, China-United State trade war
(July 6, 2018-present), etc., had left many economists on the defensive stance
in the policy research/policy prescriptions. We can’t deny that scholars
belonging to pre- and post-global financial
crisis (2007-2010) generally possessed opposite views. For example, Berkowitz and O’Brien (2002) argued
that 99th percentile VaR forecasts were conservative; however, recommendations
by the BASEL committee of banking supervision (BCBS) since 2010 were 99th and
99.9th percentile VaR forecasts. It is difficult to judge if economic policies
post-global financial crisis were impartial or for espousing a specific interest
group/lobby. It is furthermore difficult to speculate if economic policies after 2010 were
influenced by the great recession (2007-10)’s debilitating impacts.