Fabio Panetta, Governor of Banca d’Italia, discusses how Florence was once this lab of financial innovation in this speech:
Archive for November, 2025
Florence as a laboratory of financial innovation
November 7, 2025Speaking of debt: Framing, guilt, and economic choices
November 7, 2025In many Germanic languages (English, German, Dutch, Swedish, and Icelandic), debt means guilt.
In many Germanic languages, the commonly used word for “debt” also means “guilt”, which carries a strong moral connotation. Commentators have long suspected that this linguistic overlap may lead to greater debt aversion. Former French finance minister Bruno Le Maire invoked this idea to explain Germany’s fiscal conservatism: “In Germany, debt is ‘die Schuld’. It’s both the financial debt and the fault. There’s a kind of guilt in debt.” The Economist (2015) similarly observed that “this mental link helps explain Germany’s peculiar concern with borrowing money”.
Philosophers and linguists have long argued that language does more than describe reality – it shapes how individuals perceive and interpret it, including in economic choices (Sapir 1929, Whorf 1956). Yet, debt aversion is also shaped by many other forces, including economic conditions, institutional structures, and cultural norms (Almenberg et al. 2021, Martínez-Marquina and Shi 2024). Whether language itself influences how people think about borrowing or merely reflects deeper cultural values has remained an open question.
In a new paper (Aksoy et al. 2025), we provide the first causal evidence that language affects economic attitudes and behaviour toward debt. Drawing on large-scale cross-country surveys, incentivised experiments, and text analysis, we show that the moral connotations embedded in debt-related language are powerful. They reduce individuals’ willingness to borrow, lower approval for government debt, influence firms’ stated financing plans and advertising strategies, and shape how politicians frame fiscal policy.
Mamdani’s Win and the Price of Urban Life: Why City Voters Are Seeking Change
November 6, 2025Lynn Paramore on the Mamdani win:
From New York to California and beyond, soaring costs seem to be rewriting city politics, as voters respond to candidates who promise to ease the financial squeeze. Zohran Mamdani’s historic win in NYC underscores a shift that has been emerging in recent years – both in the U.S. and globally — and could extend to other major cities.
For example, in Boston, progressive Democrat Michelle Wu, elected in 2021, ran on making city life more affordable with expanded tenant protections, investments in housing, and childcare support. Her most prominent challenger, Josh Kraft, son of Forbes 400 billionaire Robert Kraft, flamed out even before the election. Out west, Oakland’s progressive Democrat Barbara Lee, elected in 2025, focused on tackling homelessness and making housing and daycare more accessible for families. And in Chicago, democratic socialist Brandon Johnson, who took office in 2023, campaigned on “Green Social Housing” and other programs to lower living costs for working families.
Across these cities, the math is clear: when basic necessities like housing, childcare, and utility costs reach stratospheric levels, voters turn to leaders who offer solutions. These mayoral victories reflect the economic pressures impacting urban life and show why cost-of-living issues are now a defining feature of city politics.
Let’s take a look at how these four cities — New York, Boston, Oakland, and Chicago — stack up in terms of costs.
Industrial Policy Since the Great Financial Crisis
November 6, 2025A large team of IMF economists track industrial policy since 2008 financial crisis:
This paper extends the New Industrial Policy Observatory (NIPO) dataset from 2009 to 2023 by employing large language model techniques to identify policy motivations. We document widespread industrial policy adoption across advanced and emerging market economies since the Great Financial Crisis, which was implemented primarily through subsidies and trade restrictions. We identify a structural break around 2020, characterized by accelerated policy activity and the emergence of “new industrial policies” motivated by supply chain resilience, national security, and geopolitical concerns, in addition to policies focused on competitiveness and climate objectives, which were already prevalent in previous years. Policies have targeted dual-use and various advanced technology sectors, as well as their upstream inputs, such as critical raw materials and minerals. We find that geopolitical risk and tit-for-tat retaliation have played a greater role in driving industrial policy after 2020, and that this support extends beyond existing sectors of comparative advantage.
History keeps going in circles….
An Analysis of the Federal Reserve’s Response to the 2008 Financial Crisis Through the Eyes of Milton Friedman
November 6, 2025Patrick Vassallo of the George B. Delaplaine Jr. School of Business reviews 2008 crisis response through lens of Friedman:
This essay examines the actions taken by the Fed during the Great Depression and the 2008 Housing Crisis in the context of Milton Friedman and Schwartz’s economic theories. The Fed’s actions often contrasted with the theories of Milton Friedman, with their usage of government bailouts, which created a moral hazard, overreliance on quantitative easing, and slow response time to the 2008 crisis. Friedman also agreed with parts of their response, like their efforts to expand the money supply, lower interest rates, and maintain the global economy. The paper concludes that Friedman believes the Fed should take a more proactive rather than reactive approach to crisis management to avoid a prolonged crisis.
The Great World War 2 Afterparty is over
November 5, 2025100 years of Syndicate Bank: An anniversary that could not be celebrated
November 4, 2025Syndicate Bank established in October 1925 would have completed 100 years in 2025. However, the centenary of the iconic bank could not be celebrated as the bank was merged with Canara Bank in 2020. I have documented the glorious history of Syndicate Bank and banking in South Canara District in this book.
Having said that, the retired Syndicate Bank officials called as “Retired Syndians” celebrated the centenary. You have to go and talk to the local people to understand the impact these South Canara banks had on people’s lives.
Is the quantity of money informative for future inflation? The Swiss case
November 4, 2025Samuel Reynard revisits quantity theory of money in Switzerland in this Swiss National Bank Economic Note :
Indicators based on money in the hands of the public have fallen somewhat out of fashion for monetary policy analysis. The reason is the instability of money demand that was observed in many advanced economies in the 1990s and 2000s. In this note, I show that a careful assessment of monetary developments can still be informative about potential medium-term inflationary pressures in Switzerland.
Like many central banks, SNB had stopped publishing monetary aggregates in 1999. But the author argues than money growth can still help us have some idea about future inflation.
How Kerala ended extreme poverty: Former Kerala CS Sarada Muraleedharan shares inside story
November 4, 2025In a conversation with Onmanorama, former Chief Secretary Sarada Muraleedharan, who helped conceive and implement the project, explains how Kerala ended extreme poverty.
Cameroon’s Electoral Farce: How Paul Biya, Cameroon’s 92-Year-Old President, Won’t Let Go At Any Cost
November 4, 202592 year old Paul Biya has been Cameroon President since 1982. He won again for a record eighth successive term.
Madras Courier on the electoral farce in Cameroon:
For over four decades, Paul Biya has clung to power in Cameroon, a symbol of Africa’s enduring autocratic tendencies. At 92, his grip on the nation remains firm, built on a system of electoral fraud, state violence, and patronage.
While many parts of the world see political renewal through younger leaders, Biya’s rule is marked by stagnation, where opposition voices are silenced and reforms are a mere illusion. His regime’s manipulation of the electoral process has transformed democracy into a formality, with every election a farce.
Meanwhile, the country’s youth, increasingly disillusioned, face a future defined by repression and economic stagnation. Even as the international community grows more critical, Biya’s longstanding ties to powers like France and the US have allowed him to remain largely unchallenged. As Cameroon teeters on the edge of change, one question looms: how much longer can this aging autocrat hold on before the country demands its overdue transformation?
Autocrats can hold onto power longer than we can imagine and their decline is also quicker than we can imagine.
This elctoral autocracy is a farce in so many countries. You hold elections for namesake to show that you are a leader of masses but manipulate the system in such a way that no one else has a chance to get reelected.
Planes Overhead: How Airplane Noise Impacts Home Values
November 3, 2025A team of economists (
Air transportation supports economic growth and global connectivity but imposes localized environmental costs, particularly through aircraft noise. We estimate the causal effect of aviation noise on housing prices using quasi-experimental variation from the Federal Aviation Administration’s rollout of performance-based navigation (PBN) procedures and runway reconfigurations at three major U.S. airports.
Combining high-resolution flight trajectory data with geocoded housing transactions, we apply a difference-in-differences hedonic framework to identify changes in exposure unanticipated by residents. A one-decibel increase in annual day-night average sound level reduces house prices by 0.6 to 1.0 percent.
Among alternative noise metrics, average exposure explains property value impacts most strongly. Willingness to pay for quieter conditions varies systematically with income and race, indicating that aircraft noise externalities have meaningful distributional consequences. Our results highlight the need to incorporate localized environmental costs into aviation and urban land-use policy.
A Teacher Writes to Students Series (56): Valiumed Economics
November 3, 2025A Teacher Writes to Students Series (56): Valiumed Economics
Annavajhula J C Bose, PhD
Department of Economics (Retd.), SRCC, DU
Mostly Economics 
