Instant savings: a revolutionary third wave – myRepublica

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This third economic wave demands more real-time data and less theory. This fast-paced, data-driven economy, however, appears to have prevailed before it was hit hard by the pandemic.

In recent times, the world has been on a roller coaster ride as Covid-19 tears itself apart around the world with massive changes in people’s daily lives and a shift without a clue of the economic trend. Economists have sought to visualize the correct picture of the theories and equations applicable to optimizing employment opportunities and returning to development. No one knows whether the inflation and wage curve will soar or collapse. Thus, an urgent need for instant economy is observed for this fast paced economy with a huge shift in the pattern of behavior to influence on the public economy which has created the third wave of the economy in recent times.

The first wave was mainly impacted by three well-known personalities. The wave started when Adam Smith wrote “The Wealth of Nations” based on the monopolistic nature of 18th century Europe. John Maynard Keynes and Milton Friedman subsequently came up with the idea of ​​government accountability in the business cycle. This very first wave focused on those aforementioned individual theories and assumptions. The second wave of economics, however, included cost-benefit analysis for infrastructure decisions, but was still constrained by data and time lag. This wave was dominated by national statistics as it provided data that could be taken into consideration, but the lack of precise numbers and statistics loomed as it was difficult to extract real numbers and data from the housing market and household spending. consumption. In addition, the financial sector was still in its infancy with only three sectors. Therefore, the second wave still had many shortcomings to accurately determine the economic situation.

With the use of digital and snapshot data for the mechanization of work processes by giant companies and government sectors, the real-time revolution of the economy is creating a “third wave” of the economy. Therefore, the Age of Mystification opens the way to the greater gateway. This third wave in economics demands more real-time data and less theory. This fast-paced, data-driven economy, however, appears to have prevailed before it was hit hard by the pandemic. At the time, the economist’s advocacy for policymaking was largely based on the judgmental aspects, theories and the superficial form of national statistics creating loopholes due to the fact that data extracted from national statistics presented gaps because they did not take into account small expenses. or consumer spending.

Generally speaking, if we were asked today where the economic phase is leading us, we would conclude that the world is heading into recession due to the aftermath of the Covid-19 pandemic, but when we analyze the data, it speaks from another story. . The point is, the third wave was knocking on the door even before the pandemic hit the globe. Data extracted from cell phone tax records tracing locations and businesses assimilated by modern calculation methods in economics have been used by economists. The first notable example of this was when BREXIT arrived in 2016 and testing began with snapshot data to determine the actual changes in UK GDP became vital. From the details of reservations at restaurants to cutting prices at supermarkets, the precise abstractions of the data made it clear that the UK economy had slowed. China, the world’s second fastest developing economy, is set to collect high-frequency, grainy data with a lead on bite-sized activities like buying movie tickets at the buying a bottle of beer even before the pandemic hit hard. This methodology of processing real-time data has become even more convenient since the lockdown, as they could pinpoint real facts and figures with a conclusion that the economy has collapsed massively. No wonder the instant economy and the third wave of the economy are here to stay. Quantifying the impact of policies has become more difficult during the pandemic. Therefore, economists should dig deeper into the activity index attributing real-time economic data. A more flexible and instantaneous economy based on instantaneous and real-time data is needed to define a real picture and develop policies that actually shape the growth of the economy. The instant saving phase also made economists see being a data scientist as a real compliment. So, experts and practitioners argue that now is the time to move on to instantaneous economics, indicating a shift from theory to data, correcting the historical imbalance that depended on the macro factor and economics to Ancient. Because relying on erroneous and late data can be poisonous as it leads to policy errors resulting in billions and billions of billions in lost output losses. For example, GDP and employment data are dramatized weeks and months later, hence the public sector slowing down in its reform acts. Moreover, because of this patchwork data, the European region had the effect of reverting to recession when the European Central Bank calculated an erroneous interest rate solely on the basis of a temporary rise in inflation. Also in the case of the United States, when it entered a recession in 2008, the financial crisis could have eased if the Federal Reserve had lowered the interest rate to near zero a year earlier.

This upstream economic policy revolution is here to stay, the footprints in the use of data appear to be massive. Economists must comply with the demand for “instant economics”, rather than sticking to traditional “general theory”. All of this is backed by advancements in technology, with data amassed with the clicks of a finger and electronic transactions leading the age. With the introduction of Govcoins – the digital coins of central banks, which the country like China is lagging behind, this can be a big buzz as real-time knowledge of how the economy works can be represented.

These transitions can create a new scenario in terms of economic policy that leads to more precise, transparent and law-based decision-making. Accompanied is the risk that invites dangers and uncertainties. Moreover, the game that big economies like China and the United States want to win with these Govcoins could create chaos. Still, don’t forget that the data age is here to stay. And “instant economy” is not foreknowledge but is beyond theories, charts and is a factual fusion of all branches of economics into a condensed volume. In particular, synchronization has been geared towards data-driven economic decisions that provide competitive advantage.

(The author is deputy director of the operations department of Nepal Bank Limited.)


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