Friday, April 17, 2009

Imbalance is the balance: real vs money and balance of payment

Kaushik Das has good piece in today’s Mint emphasizing the real sector and money growth but what will never happen is what he is also concerned about it. He says in an economy the “...M3 growth should equal nominal gross domestic growth (GDP) growth (ex ante Real GDP growth plus ex ante inflation) after factoring in the income elasticity of demand for M3 growth”.  

The same logic goes with the countries balance of payment which is not balanced.

No comments: