334 research outputs found
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Incomplete contracts, incentives and economic power
No full textThis paper formalizes ideas from classical and radical political economy on task allocation and
technology adoption under capitalism. A few previous studies have attempted this, but the framework
and results in this paper are different. I model labor contracts that are incomplete owing to
unforeseen/indescribable contingencies, leading to Pareto-improving renegotiation and a hold-up
problem. Given path dependence, the allocation is sub-optimal, with the extent of inefficiency depending
upon the degree of incompleteness. This model captures insights from the above literature on the
microeconomic roots of inefficiency and power. It also provides a concrete setting where indescribable
contingencies do (or don’t) matter - a much-debated issue
Conflict resolution through mutuality: Lessons from bayesian updating
No full textIf priors are deterministic (zero or unity) and conditional evidence is uncertain (lies between zero and
one) then Bayesian updating will lead to posteriors that are the same as priors. This in a sense explains
the persistence of fundamentalist belief. Under such a belief system, only if conditional evidence is
deterministic and diametrically opposite to that of the prior then a process of change can set in. Conflict
resolution is possible through dialogues that calls for mutual respect and allows reasonable pluralism –
a Rawlsian prerequisite. If interaction is the basis then self-defeating scenarios can be avoided by
giving space to others. Thus, in the political sphere one has to be accommodative
Liquidity considerations in estimating implied volatility
No full textOption markets have significant variation in liquidity across different option series. Illiquidity reduces
the informativeness of the price. Price information for illiquid options is more noisy, and thus the
implied volatilities based on these prices are more noisy. In this paper, we propose a scheme to estimate
implied volatility which reduces the importance attached to illiquid options. We find that this liquidity
weighted scheme outperforms conventional schemes such as the traditional vxo, or vega weights, and
volatility elasticity weights
When do stock futures dominate price discovery?
No full textStock futures offer leveraged positions and are expected to attract informed traders. However, many
researchers have found that the information share of the stock futures is surprisingly small; the equity
spot market appears to play a large role in price discovery. In this paper, we investigate this
phenomenon and offer two findings. First, liquidity of the stock futures plays a major role in influencing
price discovery. The securities where the spot market plays a major role tend to be those with illiquid
stock futures. The enhanced transactions costs appear to counterbalance the gains from leveraged
trading. In addition, when large price movements take place, the stock futures appear to play a much
more important role. These findings help fill out our understanding of the role of the equity spot and
single stock futures markets in price discove
Food, hunger and ethics
No full textManagement of hunger has to look into issues of availability, accessibility and adequacy. Posing it from
an ethical perspective the paper argues out in favour of right to food. But, for this to happen, the state
has to come up with an appropriate and effective bill on food and nutrition security, address the issue of
inadequate provisioning of storage space by state agencies leading to rotting of foodgrains - a criminal
waste when people are dying of hunger, and rely on a bottom-up approach involving the community that
complements the top-down administrative structure to identify poor and reduce both exclusion and
inclusion errors in targeting
Relative prices, the price level and inflation: Effects of asymmetric and sticky adjustment
No full textThe paper examines how relative price shocks can affect the price level and then inflation. Using Indian
data we find: (i) price increases exceed price decreases. Aggregate inflation depends on the distribution
of relative price changes—inflation rises when the distribution is skewed to the right, (ii) such
distribution based measures of supply shocks perform better than traditional measures, such as prices of
energy and food. They moderate the price puzzle, whereby a rise in policy rates increases inflation, and
are significant in estimations of New Keynesian aggregate supply, (iii) an average Indian firm changes
prices about once in a year; the estimated Calvo parameter implies half of Indian firms reset their
prices in any period, and 66 percent of firms are forward looking in their price setting. The implication
of these estimated real and nominal price rigidities for policy are drawn out
Size-class and returns to cultivation in India: A Cold case reopened
No full textThis paper investigates the relationship between returns to cultivation per hectare and size-class of land
cultivated in India, using unit level data from the 59th round National Sample Survey, 2003. The
analysis is done separately for ‘kharif’ and ‘rabi’ - for total value of cultivation from all crops at the all
India level. The empirical evidence rejects the null hypothesis of no relationship and points to the
existence of an inverse association. We argue that the efficiency of the small-holders has to be taken
with a pinch of salt because their low absolute returns brings into focus the question of their livelihood
sustainability which is further aggravated on account of higher unit costs. Being the first exercise in a
series of proposed explorations into disaggregated analyses across states, and for specific crops, it
opens up the classic debate on farm size and productivity in the 21st century
How is financial regulation different for micro-finance?
No full textWhat is the role of nancial regulation in the eld of micro- nance?
This paper identifies two features of micro- finance which call for unique
treatment in policy considerations as compared to policy thinking in
the mainstream body of financial law. These features are credit recovery and the credit risk of the MFI, when credit access is enabled
through the structure of the joint liability group. The paper goes on to
o er draft law which embeds a regulatory treatment of microfinance
that
flows from this analysis
How much should you own? Cross-ownership and privatization
No full textThis paper investigates the effects of cross-ownership on optimal privatization, and vice-versa, in mixed
duopoly. It shows that cross-ownership is profitable to the private firm only if the level of privatization
of the public firm is sufficiently high. In equilibrium, cross-ownership does not take place even if there is
partial privatization. However, the possibility of cross-ownership significantly limits the socially
optimal level of privatization in most of the situations. Moreover, it demonstrates that full
nationalization is socially optimal, in case of sufficiently convex identical cost functions and
homogeneous goods. These results have strong implications to both divestment and competition policies
Foodgrains policy and management in India: Responding to today’s challenges and opportunities
No full textFunded by International Food Policy Research Institute (IFPRI), New Delhi, March 200