334 research outputs found
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The Real cost of credit constraints: Evidence from micro-finance
No full textIn December 2010, the Indian state of Andhra Pradesh passed a law that severely restricted the operations of micro-finance institutions and brought the micro-finance industry to an abrupt halt. We measure the impact of micro-credit withdrawal in this unique natural experiment and find that average household expenditure dropped by 19 percent relative to a control group after the ban. The largest decrease was observed in expenditure on food. There is some evidence of higher volatility in consumption after the ban. All households were affected and not just the borrower households, which may suggest general equilibrium effects
Growth and deprivation in India: What does recent data say?
No full textWe investigate the relationship between growth and deprivation in India, an issue of immense interest. Given the continuing controversy in India over poverty lines, we use a framework that rigorously assesses the impact of growth on the poor over a range of poverty lines. Using National sample Surveys on consumption expenditure, we show that while growth has "trickled down" in both rural and urban areas, it has not been in favor of the poor. In urban areas, growth has been "anti-poor." We extend this methodology to incorporate sub-groups and consider disadvantaged caste groups and poorer/lower classes. We find that growth has not been in favor of the poor among these groups. Our findings raise serious concerns about the "inclusiveness" of Indian growth. Our analysis also has implications for pro-poor growth and the measurement of inequality
The annoncement impact of bank rate on commercial paper rate
No full textoai:localhost:2275/13Central bank actions are designed to influence asset prices and yields, which in turn
affect economic decisions. Following the reforms in the Indian financial sector, the Bank
rate has emerged as an important indicator for signalling the stance of monetary policy
for the market and guiding the interest rates to the desired trajectory. Commercial Paper
(CP) has evolved as an important source of resource mobilization by the corporates
during last few years. Like other money market rates, CP rates are also influenced by the
changes in the Bank rate. This paper attempts to capture the extent and nature of
influence of announcement of bank rate changes on Commercial Paper rates in India. It
concludes that the time series data of CP rates and Bank rate are non-stationary at level.
However, these data series are found to be cointegrated. The Error Correction Model
reveals that the changes in Bank rate are not quickly reflected in the CP rates. The
regression equations reveal that there is a statistically significant relationship between
Bank rate and CP rates. The result obtained from using regression analysis for 30 days
window period for each of the eight times when Bank rates have changed reveals that
compared to 1999-2000, the CP rates have become more sensitive to Bank rate changes
during 2001-2003. The bank rate has thus established itself as a potent signalling rate for
CP rates in recent years
Understanding fundamentalist belief through Bayesian updating
No full textUsing Bayesian updating to deterministic priors persistence of fundamentalist belief like
those in the mind of a terrorist is explained. Under such belief system if conditional evidence
is diametrically opposite and also deterministic then a process of change will set in and in the
present war against terrorism this can be effectively done through Islamic religious
authorities. In situations where interaction is the basis, self-defeating scenarios can be
avoided by giving space to others’. Thus, in the political sphere one has to be accommodative
about the concerns of Middle East, this will also make things easier for intervention through
Islam
Morbidity profiles of Kerala and all-India: An Economic perspective
No full textThis study examines the economic profiles of morbidity by disease in Kerala and all-
India by estimating Engel elasticities for diseases and classifying them as between
those associated with affluence and deprivation. Morbidity rates, in general, are more
for the rich than for the poor. There could be factors other than income, which
influence the morbidity rates as revealed by horizontal pseudo-Lorenz curves for
distribution of reported total morbidity across households. That morbidity rates are
higher for the rich than for the poor households does not hold uniformly valid at the
level of individual diseases. This is borne out by pseudo-Lorenz curves for diseasespecific
morbidity. Pseudo-Lorenz curves lay above/below the Line of Equal
Distribution depending upon the nature of diseases. The sub-set of undiagnosed
diseases is a poor man’s disease in both rural and urban all-India but only in urban
Kerala. To avoid Type II errors in targeting medical facilities, it would be useful to
identify those diseases, which afflict the rich proportionately more, that is, diseases
with Engel elasticities more than one. Such diseases are virtually insignificant in
Kerala. They account for 1.23 and 1.75 per cent of reported morbidity cases in rural
and urban Kerala respectively. As regards all-India, they have significant presence.
Their respective shares in total rural and urban morbidity cases are 7.83 and 6.83 per
cent. Generally coronary heart diseases, diabetes and hypertension are considered as
life style diseases. Among them, only diabetes mellitus has elasticity greater than one
for rural and urban all-India; heart disease and hypertension too have elasticities
greater than one only for rural all-India. As regards Kerala, none of them are luxury
diseases. This could also be interpreted to represent a process whereby the diseases
of affluence and deprivation converge in Kerala. In other words, this may represent a
shift a in the epidemiology of diseases in Kerala
The Natural interest rate in emerging markets
No full textAn optimizing model of a small open emerging market economy (SOEME) with
dualistic labour markets and two types of consumers, is used to derive the natural
interest rate, terms of trade and potential output. Shocks are classified into generic
types that affect the natural interest rates. Since parameters depend on features of the
labour market and on consumption inequality, the natural rates and the impact of
shocks differ from those in a mature small open economy. Subsistence consumption is
found to have the largest effect on the natural rates. It reduces the interest rate, raises
natural output and the terms of trade. Technology and infrastructure backwardness
reduce natural output. The implications for monetary policy are derived. The effect of
managed exchange rates combined with different types of inflation targeting is
examined through simulations. Endogenous terms of trade make the supply curve
steeper in a SOEME, so partial stickiness of the real exchange rate can be beneficial.
In general, domestic inflation targeting, with some weight on the output gap, delivers
lower volatility. Output response is higher and volatility lower with fixed terms of
trade, demonstrating the flatter supply curve. CPI inflation targeting also does well
when terms of trade are credibly fixed