New Series / Volume 10, No. 2 /
Old Series/ Volume 26, No. 2/ July, 2010
- Front Page
- Reflections on Poverty
- Is Ghettoisation a Collateral Damage of "Ballot Box Democracy" in the Developing World?
- Concentration and Indian Insurance
- Equilibrium Play and Learning in a Stochastic Public Goods Experiment
- Volatility Spillover and Time-Varying Correlation among the Indian, Asian and US Stock Markets
- Estimation of Joint Costs Allocation Coefficients Using the Maximum Entropy: A Case of Mediterranean Farms
- Disequilibrium in the Indian Registered Manufacturing Sector: A Simulated Maximum Likelihood Analysis
- Returns to Education in India: Some Recent Evidence
- Damped Trend Exponential Smoothing: Prediction and Control
- Have Economic Reforms Helped in Reducing the Regional Variation of Productivity Performance in Indian Manufacturing Industries?
- Poverty and Exclusion of Minorities in China and India (by A.S. Bhalla and Dan Luo)
Author(s): Biswajit Chatterjee
Author(s): Partha Gangopadhyay
Abstract: In contrast with the evolving racial segregation in the US and Europe over the centuries, the latest phenomenon of urban segregation in the developing world is mostly based on what is commonly known as segregation by income. These urban ghettos are informally built settlements, mostly in the outskirts of large cities, the formation of which is often driven by rural to urban migration as poor migrants cannot afford to pay the premium price for the formal urban housing. Segregation in the developing world has created an unusual dichotomy as, on one side, we see the chaotic world of ghettos while on the other side we see the organized and flourishing advanced sector. The stark dichotomy has prompted reactions from regional and local authorities to physically isolate ghettos from the organized parts of urban centres. We argue that the formation and sustenance urban ghettos, or ghettoisation, in developing nations turn on the pivots of peculiar economic advantages and political opportunism and ours will be a first model to blend these economic and political factors to explain the formation of urban ghettos in equilibrium. We construct a simple game with two ghetto overlords who make relevant economic and political decisions in their respective ghettos. Ghetto overlords are rivals and strategically choose the optimal size of their respective ghettos, while the size of a ghetto determines the local supply of labour and thereby drives the informal economy of a ghetto. The size of a ghetto also endows the ghetto overlord with electoral votes of their ghetto dwellers. With these assumptions and simple functional forms, we characterise the Nash equilibrium of the proposed game. Three important observations are in order: first, the game has multiple equilibria and the equilibria can be Pareto-ranked, which gives rise to the problem of what is commonly known as indeterminacy. Secondly, if a dynamic process is superimposed, then it is possible to examine the stability property of each equilibrium. If the dynamic process is simplistically represented by a first-order difference equation, then conditions under which chaos and cycles would occur are characterised. Finally, we find the bifurcation property of a stable Nash equilibrium can render the ghetto’s economic and political outcomes highly fragile and chaotic, which can seriously impinge on the lives of about 500 million ghetto dwellers in developing nations.
Author(s): D.V.S. Sastry
Abstract: Concentration measures indicate how equal or unequal the output in an industry is distributed among firms. There are many measures of concentration and the choice of the measure depends on the properties that the measure satisfies. They provide a synthetic measure of market structure. Every concentration index possesses a specific inequality component. This paper calculates the available concentration measures for the insurance industry and following Bajo-salas decomposes the indices into contribution of inequality and number of companies.
Author(s): Priyodorshi Banerjee, Sujoy Chakravarty and Ruchika Mohanty
Abstract: In the experimental game we study, the benefit received from a public good varies non-linearly and stochastically with effort. We examine the effect of a quality bound under which group members receive very negligible benefits from the public good. Our theory predicts that the presence of such a “pass mark” on quality of the good ultimately provided may under certain conditions reduce the incidence of free-riding. We obtain very mixed support for this hypothesis using both mixed strategy as well as quantal response equilibrium benchmarks. In contrast, a reinforcement-learning model does better at predicting laboratory behavior.
Author(s): Puja Padhi and M.A. Lagesh
Abstract: Transmission mechanisms presenting between returns and volatilities play a critical role in examining the distribution and interdependence across international financial markets. Our objective is to investigate volatility transmission between emerging markets in geographically disparate regions. The data used in this study are daily stock-price indices from July 1, 1994, through September 30, 2009, for five Asia equity markets, India and United States. We have used bivariate BEKK and DCC model for the analysis. Bilateral shocks and volatility spill over existing in the India/Malaysia, India/Taiwan and India/Indonesia. Evidence demonstrates that Indonesia is the main transmitter within the Asia markets. The significance of DCC-GARCH estimates explains that conditional correlation between India and the Asia-US stock markets are highly dynamic and time varying.
Author(s): Rui Manuel de Souza Fragoso and Maria Leonor da Silva Carvalho
Abstract: This paper aims to estimate the farm joint costs allocation coefficients from whole farm input costs. An entropy approach was developed under a Tobit formulation and it was applied to a sample of farms from the 2004 Farm Accounting Data Network base for the Alentejo region, Southern Portugal. Five alternative model specifications respecting error bounds, the central value of the uniform prior support and the generalized cross entropy were tested. Model results were assessed in terms of their precision and estimation power and were compared with real data. The entropy estimation showed a high degree of precision and its practical validity was guaranteed to allocate joint costs, even in the specific context of Mediterranean farms.
Author(s): Harish Mani, V. Pandit and R. Prabhakar Rao
Abstract: How a macroeconomic policy package is designed depends critically on whether the economy in question is supply constrained or demand constrained. In simple terms, this may often be seen in terms of whether the policies should try to augment demand or to raise productive capacity. The question is relevant to objectives of growth as well as stability. In the present study, we examine this problem with regard to the registered manufacturing sector in India, within a framework of market disequilibrium for the period 1980 through 2007. The maximum simulated likelihood approach used by us indicates that the registered manufacturing sector in India has largely been demand-constrained over the entire period of analysis.
Author(s): Tushar Agrawal
Abstract: This paper estimates returns to education in India using a nationally representative survey. We estimate the standard Mincerian wage equation separately for the rural and urban sectors. To account for the possibility of sample selection bias, Heckman two-step procedure is used. The findings indicate that returns to education increase with the level of education and differ for rural and urban residents. Private rates of return are higher for graduation level in both the sectors. In general, the disadvantaged social groups of the society tend to earn lower wages. We find family background is an important determinant affecting the earnings of individuals. Using quantile regression method, we show that the effect of education is not the same across the wage distribution. Returns differ considerably within education groups across different points of the wage distribution. Returns to education are positive at all quantiles. The results show that the returns are lower at the bottom quantiles and are higher at the upper quantiles.
Author(s): Giacomo Sbrana
Abstract: Damped trend exponential smoothing models have gained importance in empirical studies due to their remarkable forecasting performance. This paper derives their theoretical forecast error variance, based on the implied ARIMA model, as algebraic function of the structural parameters. As a consequence, the minimum mean squared error (MMSE) forecasts as well as the h-step ahead theoretical forecast error variances can also be expressed as algebraic (and unique) functions of the structural parameters. Analytical results are provided for the random coefficient state space model, as introduced by McKenzie and Gardner (2010) “Damped trend exponential smoothing: A modeling viewpoint”, International Journal of Forecasting, 26 (4), 661-665, in the single source of error context. Moreover, algebraic results are also given for standard Holt-Winters (damped) trend models in the multiple sources of errors context.
Author(s): Dipika Das
Abstract: With the introduction of the new industrial policy in 1991, Indian industry industries were exposed to higher competition not only in domestic market but also with imports. There was considerable concern that liberalization will reinforce class and regional economic disparities. In this paper, I have examined whether the impact of economic reforms was uniform across various regions as well as for different types of manufacturing industries with respect to productivity growth. Productivity and efficiency of different state’s manufacturing have been compared during pre and post-reform period based on data from Annual Surveys of Industries (ASI) for 15 major states and 25 years from 1979-80 to 2003-04.I have classified manufacturing industries into three categories- traditional, basic and hi-tech industry and the production frontier is estimated for each industry group using DEA methodology. TFP growth is decomposed into efficiency and technical changes to explore the sources of productivity growth in Indian manufacturing- i.e. whether productivity growth is due to increase in efficiency or due to technical progress. I have observed a declining trend of TFP growth in the traditional industries in the post-reform period and a rising trend in basic and hi-tech industries for majority of the states. The rise in productivity growth in basic and hi-tech industries is driven by technical progress. It is observed that the regional variation of productivity growth has increased after reform.
Author(s): Ashok Desai