Template-Type: ReDIF-Paper 1.0 Title: Bribing and Vulnerability of the Informal Sector in India Author-Name: Devlina Author-Workplace-Name: (Corresponding author), Madras School of Economics, Gandhi Mandapam Road, Behind Government Data Centre, Kotturpuram, Chennai, 600025, India. Author-Email: devlina@mse.ac.in Author-Name: Santosh Kumar Sahu Author-Workplace-Name: Associate Professor, Department of Humanities and Social Sciences, Indian Institute of Technology Madras Author-Email: santosh@iitm.ac.in Keywords: Informal sector, bribe, corruption, sales-vulnerability, tax evasion, ease of registration Classification-JEL: D22, D73, L21, O17 Abstract: This paper attempts to understand bribing in India’s informal business sector. Using World Bank’s informal sector business survey data, 2022, for three Indian states, we find that tax evasion and avoiding formal sector corruption are two primary reasons to continue in the informal sector. However, these reasons are insufficient for paying bribes as a way to stay informal. Businesses that cite these as primary reasons have a lower probability of bribing to continue operations in the informal sector. Instead, the probability of paying bribes is higher for those businesses that cite ease of registration and lack of knowledge & information about the registration process as one of the challenges in transiting to the formal sector. We also find that businesses with sales vulnerability and financial constraints have a higher probability of bribing to remain informal. To this view, policy focus should be on simplifying registration processes and spreading awareness and benefits of becoming a formal sector, which is in line with the theory of firm growth. Long-term investments that focus on improving the education and skills of informal owners and curb corruption should be considered. Length: 33 pages Creation-Date: 2025-09 File-URL: https://mse.ac.in/wp-content/uploads/2025/09/Working-paper-291.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-291 Template-Type: ReDIF-Paper 1.0 Title: Cournot Equilibrium at the Limit Author-Name: Vijay Adithya C Author-Workplace-Name: (Corresponding author), Madras School of Economics, Gandhi Mandapam Road, Behind Government Data Centre, Kotturpuram, Chennai, 600025, India. Author-Email:ba23vijay@mse.ac.in Author-Name: Poornapushkala Narayanan Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: poorna@mse.ac.in; Keywords: Cournot-Nash Equilibrium, Limit Market, Equilibrium Convergence Classification-JEL: . Abstract: This paper studies a Cournot market with infinitely many firms facing constant but heterogeneous marginal costs, without assuming perfect competition. We determine a necessary and sufficient condition for the existence of equilibrium - the marginal costs converge to a limit r with summable deviations. We deduce from this condition that perfect competition is not automatic in such markets, but competitive behavior emerges asymptotically under certain conditions on the costs. We also consider a family of finite markets growing to the infinite limit market. We show that the equilibria of finite markets converge to that of the limit market if and only if the average marginal costs of the finite markets converge to r. Length: 16 pages Creation-Date: 2025-09 File-URL: https://mse.ac.in/wp-content/uploads/2025/09/Working-paper-290.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-290 Template-Type: ReDIF-Paper 1.0 Title: Why Are Wages Of Both Skilled and Unskilled Workers Lower in Poor Countries? Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: naveen@mse.ac.in; Author-Name: Poorna Narayanan Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: poorna@mse.ac.in; Author-Name: Megana Prabha Author-Workplace-Name: London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, United Kingdom Author-Email: ba22megana@mse.ac.in; m.sendhil-kumar@lse.ac.uk Author-Name: Hariharasudhan Selvaraj Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: ba23hariharasudhan@mse.ac.in; Keywords: Skilled Wages; Migration; Credit Constraints; R&D; Endogenous Growth Classification-JEL: F2; D24; D42; J23; J24; J62; O40 Abstract:We introduce credit constraints into a standard model of endogenous growth. In the presence of credit constraints, firms in poor countries face higher borrowing costs which in turn negatively affects capital accumulation and labor productivity in the final-goods producing sector. Furthermore, lower capital intensity of production makes R&D activity less profitable. As a result, both demand for skilled labor and return to skill are lower in poor countries. Domestic financial frictions may therefore be the key to understanding the persistent wage differentials in favor of rich countries and international migration patterns we observe. Length: 32 pages Creation-Date: 2025-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/09/Working-paper-289.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-289 Template-Type: ReDIF-Paper 1.0 Title: Fundamental Valuation Of Patents in Continuous Time: A Note Author-Name: Akila Hariharan Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: ba23akila@mse.ac.in Author-Name: Megana Prabha Author-Workplace-Name: London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, United Kingdom Author-Email: ba22megana@mse.ac.in; Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: naveen@mse.ac.in; Author-Name: Srikanth Pai Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: srikanthbpai@mse.ac.in; Keywords: Patents; Differential Equations; Integrating factor; Laplace transform; Bubbles Classification-JEL: 031; 040; C65 Abstract: In this note, we show how to solve for the fundamental (or bubble-free) value of a patent in continuous time using two methods: the method of integrating factor and the Laplace transform. Not only do these methods deliver a solution, they also provide conditions for when the solution is unique. Length: 22 pages Creation-Date: 2025-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/09/Working-paper-288.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-288 Template-Type: ReDIF-Paper 1.0 Title: Impact of Cash Transfer Program on Time-Use Patterns of Agricultural Households: Evidence from India Author-Name: Sonna Vikhil Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: phd23vikhil@mse.ac.in; vikhils944@gmail.com Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: kavi@mse.ac.in; Keywords: Cash Transfers; Agriculture; Time-Use Patterns Classification-JEL: D13, I38, J22, Q18 Abstract: While many developing countries, including India, increasingly started using unconditional cash transfers in agriculture (UCTAs) to improve welfare of people, the effectiveness of such policies are still being evaluated. The impact of UCTAs can be evaluated from multiple perspectives, including expenditure on inputs, allocation of time across different activities by the farmers etc. Using data from the 2019 and 2024 NSSO’s Time Use Survey, this study aims to investigate the effects of a cash transfer program – Rythu Bandhu Scheme - introduced in Telangana on the time use patterns of rural agricultural households.The time allocation in a day has been classified into activities corresponding to four broad categories: System of National Accounts (SNA) (e.g., Employment and Production-related), Extended SNA (ESNA) (e.g., Unpaid domestic services and caregiving), Non-SNA (NSNA) (e.g., Learning, Socialization and Leisure etc), and Self-care (SC) (e.g., Eating, Sleeping etc). The program’s causal impacts are evaluated separately for both periods using a Seemingly Unrelated Regression (SURE) framework to address cross-equation residual correlation. Additionally, to address selection bias, Average Treatment effects on the Treated (ATT) has been estimated ignoring residual correlation. The study also employed Propensity Score Matching (PSM), to ensure a valid quasi-experimental design. The 2019 findings demonstrate an initial trend towards more engagement in SNA and SC activities, coupled with a contraction in time spent on ESNA and NSNA activities. This pattern indicates an immediate response to the cash transfer, possibly driven by short-term adjustments in labour supply and household well-being. The 2024 estimates, on the other hand, show time use pattern that is more sustained: households engage more time on NSNA and, to a lesser extent, ESNA activities while spending less time on SNA and SC. These shifts indicate a settling into a new equilibrium facilitated by assured income from the UCTAs, where households diversify their time usage beyond the market production and prioritise leisure, learning, and social activities Length: 48 pages Creation-Date: 2025-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/08/Working-paper-287.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-287 Template-Type: ReDIF-Paper 1.0 Title: Sustaining Nutri-Cereal Consumption in Rural Areas: Role of Access to Free Grains Author-Name: Surabhi M Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: brinda@mse.ac.in Keywords: Nutri-cereals; Free grains; Food security Classification-JEL: I14, I15, I18 Abstract: The production and consumption of nutri-cereals (NCs), more commonly known as coarse cereals, offer significant benefits enhancing soil, human, and livestock health, yet their adoption remains limited. This study aims to investigate NC consumption in the backdrop of free grains interventions to the poor through various schemes, particularly, Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY). Despite various promotions given to the NCs especially millets in recent years (e.g., National Year of Millets, 2018; International Year of Millets, 2023), the NSSO’s HCES 2022-23 data shows the decline in the per capita consumption of the NC and an increase of per capita rice and wheat among the rural consumers who have access to PMGKAY. Based on a causal evaluation framework, the treated households are those not availing free rice and wheat while the control are those who avail free grains within the sample of major NC-consuming states and households reporting access to PMGKAY. Propensity score matching technique is used to analyze the impact based on the average treatment effect on the treated and inverse probability weighted regression adjustment is additionally used to account for potential confounding from observed covariates. The results reveal that the households not consuming free grains but had PMGKAY access consumed 12 percent more NCs than the matched control group, clearly indicating NCs are substituted away by access to free grain consumption among all those households that had the habit of NC consumption. The control group though gain marginally in protein intake and a larger gain in calories from rice and wheat but lose out on the micronutrient consumption from NCs, thereby adversely affecting nutritional diversity. These findings underscore the urgent need for a policy shift that integrates NCs into food security programs, thereby promoting both dietary and nutritional diversity and mitigating the adverse effects of over-dependence on refined cereals. Length: 48 pages Creation-Date: 2025-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/07/Working-paper-286.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-286 Template-Type: ReDIF-Paper 1.0 Title: Understanding Trade Agreement Formation: The Role of Global Uncertainty and Geopolitical Closeness Author-Name: Reshma Ann Gigi Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: phd22reshma@mse.ac.in Keywords: Trade agreements, Uncertainty, Geopolitical Closeness, Logit Model Classification-JEL: F15, F19, F50, C25 Abstract: Trade agreements are praised for promoting international trade and cooperation among member nations. However, as the global economy becomes more uncertain and geopolitically fragmented, countries increasingly rely on trade pacts to counteract these challenges. Under these circumstances, this paper aims to statistically measure and quantify the likelihood of countries signing trade agreements amid uncertainty and to explore whether geopolitical closeness influences this probability. The econometric approach uses a panel logit model to analyze how global uncertainty and geopolitical closeness impact the formation of trade agreements from 1990 to 2021. The results show that global uncertainty tends to increase the chances of forming trade agreements, emphasizing the role of economic integration in reducing risks during uncertain times. Additionally, geopolitical closeness significantly encourages trade agreement formation, highlighting the importance of shared political ideologies, especially in today’s globalized world. Length: 6 pages Creation-Date: 2025-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/07/Working-paper-285.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-285 Template-Type: ReDIF-Paper 1.0 Title: Co-residence with Adult Children and Elderly Mental Health: Evidence from India Author-Name: Lakshmi Ullas Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Name: and Amrita Chatterjee Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: amrita@mse.ac.in Keywords: Ageing population; Mental health; Living arrangement: LASI Classification-JEL: J14, I12, J11 Abstract: Ageing is associated with increased vulnerabilities, decline in social skills and other capabilities. Prevalence of depression among elderly people is much higher in Low- and Middle-Income Countries (LMICs) and adult children are considered as the primary care givers in these countries. It is the general perception that co-residence with adult children facilitates their daily activities and provide financial support. International literature shows mixed results in this context though Indian studies are showing the positive impact of co-residence with adult children on mental health of elderly patents. However, no study corrects the possible endogeneity in the relationship neither they explore the possible role of formal and informal health care services in mental health-co-residence relationship. The current study examines the effect of co-residence with children on the mental health of elderly people in the age category of 60 and above using Longitudinal Ageing Study in India (LASI) 2017-18. After correcting for endogeneity through Propensity Score Matching and Instrumental Variable method, the results suggest that elderly parents living with their children are less likely to be in a state of depression. However, this relationship crucially depends on the formal or informal health care the parents need. Length: 47 pages Creation-Date: 2025-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/07/Working-paper-284.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-284 Template-Type: ReDIF-Paper 1.0 Title: Mean-Variance Portfolio Optimization Using Jackknife Empirical Likelihood Estimation Of Tail Conditional Variance Author-Name:Rupel Nargunam Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: rupel@mse.ac.in Author-Name: Sudheesh K. K. Author-Workplace-Name: Statistical Science Unit, Indian Statistical Institute Chennai Centre, India Keywords: Tail Conditional Variance, Jackknife Empirical Likelihood, Confidence Interval, Mean Variance Portfolio Analysis Classification-JEL: G11, C13, C14, C15 Abstract: This research introduces a nonparametric approach for estimating tail conditional variance (TCV) at the p-th quantile through the use of Jack-knife Empirical Likelihood (JEL). TCV functions as a second-moment indicator of tail risk, offering enhanced understanding of the variability of extreme losses, surpassing traditional scalar measures such as Condi-tional Value-at-Risk (CVaR). By utilizing jackknife pseudo-values within an empirical likelihood framework, we are able to develop robust confi-dence intervals for TCV without the necessity of specific distributional assumptions—an essential benefit when addressing financial returns char-acterized by heavy tails and skewness. The proposed methodology is ap-plied to mean-variance portfolio analysis, facilitating the construction of efficient frontiers that explicitly incorporate downside tail volatility. The findings indicate that the integration of JEL-based inference enhances both the interpretability and statistical robustness of portfolio risk evalu-ations, particularly in scenarios marked by model uncertainty and limited data in the tail. Length: 36 pages Creation-Date: 2025-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/06/Working-paper-283.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-283 Template-Type: ReDIF-Paper 1.0 Title: Assessing Market Liquidity Amidst Crisis: Evidence from Indian Stock Market Author-Name: Sidharth J Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: phd22sidharth@mse.ac.in Keywords: Liquidity; 2008 Financial Crisis; COVID-19 pandemic; Indian Stock Market Classification-JEL: G01, G10 Abstract: Liquidity is very important for the stock market as it effects the portfolio decisions of investors and influences future outlook of the economy. Liquidity is especially important to withstand economic shocks and to facilitate faster recovery. The study examines the impact of two significant market crises, the 2008 Global Financial Crisis and the COVID-19 pandemic, on liquidity in the Indian stock market. Data for 655 companies listed at the National Stock Exchange (NSE) is utilized over a time period of 17 years from 2005 to 2022 to analyze multiple dimensions of liquidity. Preliminary results suggest that both crises had a substantial effect on market liquidity. The 2008 financial crisis exhibits a more pronounced and prolonged impact compared to COVID-19 pandemic. The severity of 2008 financial crisis surpassed that of COVID-19 across all liquidity dimensions. Trading volumes saw an uptrend during COVID-19 crisis, contrasting with decline in all other liquidity measures. Conversely, the 2008 financial crisis witnessed reductions in trading volume alongside broader declines in liquidity measures. Length: 21 pages Creation-Date: 2025-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/06/Working-paper-283.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-283 Template-Type: ReDIF-Paper 1.0 Title: Determination and Analysis of Weather over Administrative Regions of India: 1951 to 2021 Author-Name: Anubhab Pattanayak Author-Workplace-Name: (corresponding author) IIT-Kharagpur, Kharagpur, India Author-Email: anubhab@hss.iitkgp.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: kavi@mse.ac.in Keywords: Weather Data; Climate Trends; Mann-Kendall; IPTA Classification-JEL: C14; C23; Q54 Abstract: Non-availability of official, single-source, reliable and easy to access weather data at administrative regions such as states and districts poses significant challenges for Indian social science research community interested in climate impact research and policy. This paper provides a brief summary of evolution of access to weather data in the public domain over the past three decades in India. Gridded datasets being the standard for making available the official weather information, the paper discusses the concepts and procedures involved in using such data products to arrive at weather information at various administrative scales. A transparent approach to spatially interpolate the gridded weather data (supplied by IMD) on temperature and rainfall to determine state and district level estimates of weather over the period 1951 to 2021 is presented. The paper further analyzes the long-term trends and changes in the distribution of annual and intra-annual temperature and rainfall at the All India level and at one sub-national state (Tamil Nadu) level across multiple time-scales (i.e., 1951-1980, 1981-2010, and 2011-2021) using traditional methods such as Mann-Kendall tests and Sen’s Slope estimates. The paper further reports the climate trends across Tamil Nadu districts over the period 1951 to 2021 using the visually appealing Innovative Polygon Trend Analysis. Length: 38 pages Creation-Date: 2025-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/05/Working-paper-281.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-281 Template-Type: ReDIF-Paper 1.0 Title: Time-Use Patterns of Youth in India (2019): NEET vs. others Author-Name: Ronak Maheshwari Author-Workplace-Name: (corresponding author) Ph.D. Research Scholar, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: ph21ronak@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: brinda@mse.ac.in Keywords: NEET, Youth Unemployment, Time-Use Classification-JEL: I23, J24, J64, P36 Abstract: This study analyzes the covariates of the time spent on education and leisure of the youth who are Not in Employment, Education, or Training focusing (NEET). Based on the 2019 Time Use Survey for youth in India the study estimates a two-stage control function to examine the covariates that explain the share of time spent on learning among NEET after accounting for the potential endogeneity of NEET status. The first stage probit model predicts the probability of NEET using average income of, and regional unemployment rate among adults (30-65 years) aggregated by state, district, and education level from PLFS (2018-19) as instruments. The generalized residuals (Inverse Mills Ratio) are then included as an explanatory variable in the second stage GLM with a logit link and binomial family. The selection coefficient for men and women have opposing signs, suggesting the difference in unobserved characteristics that drive men and women into NEET to explain the gender differentials in time-use patterns in India. The share of time spent on learning among NEET youth is significantly positively associated with better education, urban residence, access to some type of labor-saving technologies in their homes, and residing in Northern India, for both males and females. The study highlights the heterogeneity within NEET youth and underscores the need for policies tailored to their specific characteristics. Length: 43 pages Creation-Date: 2025-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/05/Working-paper-280.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-280 Template-Type: ReDIF-Paper 1.0 Title: Weaning away from China – Trade and Welfare Implications Author-Name: Devasmita Jena Author-Workplace-Name: (corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: devasmitajena@gmail.com Author-Name: Uzair Muzaffar Author-Workplace-Name: Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Name: Rahul Nath Choudhury Author-Workplace-Name: Economist, EY LLP India Keywords: China, Decoupling, Import Dependency, Structural Gravity, Welfare, PPML Classification-JEL: F13, F14, F17 Abstract: Over the past couple of years import dependency on China has deepened and expanded globally. Incidences like supply chain disruption during COVID19 due to over dependence on single supply source, and countries’ heavy reliance on Chinese imports—often termed the “China shock”— has garnered anxiety worldwide and forced them to make efforts to wean away from China. The weaning attempt started in 2018 when the US imposed additional tariffs on its imports from China. Gradually, the process of decoupling or weaning away from China, was adopted by other economies. Despite the motivation to move away from China, data shows that nations continue to depend increasingly on imports from China. In this study we empirically quantify the trade dependence on China and estimate the costs associated with weaning away from China using structural gravity model of trade. We find that lowering dependence on Chinese imports results in diminishing countries’ propensity to export. Furthermore, general equilibrium counterfactual simulations show that if US progressively reduces import dependency on China, the welfare loss will be higher for the US as compared to that of China. The rest of the world will also suffer welfare losses owing to US’ action to bar Chinese imports. Length: 49 pages Creation-Date: 2025-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/05/Working-paper-279.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-279 Template-Type: ReDIF-Paper 1.0 Title:Impact Evaluation of Cash Transfer: Case Study of Agriculture, Telangana Author-Name: Sonna Vikhil Author-Workplace-Name: (corresponding author) Ph.D. Research Scholar, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: vikhils944@gmail.com Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: kavi@mse.ac.in Keywords: Agricultural Policy; Cash transfers; Input Spending Classification-JEL: Q18; I38; O13 Abstract: With Unconditional Cash Transfers in Agriculture emerging as a significant policy instrument in India in recent years, evaluating such interventions has become imperative and policy relevant. This study aims to estimate the causal impact of one such program implemented by the state of Telangana in 2018, on the agricultural input spending. This study uses the data from National Sample Survey’s 77th round which is a nationally representative survey conducted in 2018-19. The analysis applies propensity score matching combined with inverse probability weighting method to estimate the causal impact of the cash transfer program. The findings from the study suggested a 36 percent raise in agricultural input spending for the average treatment effect estimate that is highly significant and can be traced to the cash transfer program. Additionally, after accounting for the selection bias, the average treatment effect on the treated estimates reveals a highly significant 18 percent increase in the input spending by the farmers. The results further suggest that the intervention shifts expenses away from imputed labour toward paid labour, and facilitates increased use of fertilizers. Length: 44 pages Creation-Date: 2025-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/05/Working-paper-278.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-278 Template-Type: ReDIF-Paper 1.0 Title: Financial Inclusion and Electricity Consumption: A Cross-Country Study of Upper-Middle and Lower-Middle Income Countries Author-Name: Rajesh Barik Author-Workplace-Name: Department of Economics & Finance, BITS Pilani, K K Birla Goa Campus, Near NH-17B, Bypass Road, Chamber #D-308/5(NAB), Zuarinagar – 403 726, Goa, India Author-Email: rajeshbarik195@gmail.com Author-Name: Parthajit Kayal Author-Workplace-Name: (corresponding author) Asst. Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: parthajit@mse.ac.in Keywords: Financial Inclusion, Electricity consumption, Cross-Country, Upper-Middle income, Lower-Middle income, Empirical Analysis Classification-JEL: O12; O13; O16; Q43; I32 Abstract: Electricity consumption's positive impact on household well-being, education, and quality of life is well-documented. Yet, providing accessible and affordable electricity remains a global governance challenge. This study explores the potential of financial inclusion to extend electricity consumption. Investigating the relationship empirically, we analyze the effect of financial inclusion on per capita electricity consumption across countries. Using annual data from 2004 to 2021, we employ various econometric models (such as ordinary least squares, fixed effect, random effect, panel corrected standard errors, feasible general least square, Generalized Method of Moments, and Driscoll-Kraay approach) to examine this nexus in both upper-middle and lower-middle income countries. The study unveils a positive association between financial inclusion and per capita electricity consumption across the overall sample and income subgroups. Robustness checks further underscore the consistency of our findings across income categories. In light of our findings, policymakers could consider leveraging financial inclusion initiatives as strategic measures to bolster electricity consumption across both upper- and lower-middle-income countries. Length: 46 pages Creation-Date: 2025-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/02/Working-paper-277.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-277 Template-Type: ReDIF-Paper 1.0 Title: Short Term Employment Transitions in Urban India: Role of Minimum Wages Author-Name: Mohit Sharma Author-Workplace-Name: Ph.D. scholar, Madras School of Economics,Chennai, Tamil Nadu, India, 600025 Author-Email: mohit@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: brida@mse.ac.in Keywords: Minimum Wage, Employment transitions, Gender, India Classification-JEL: J16, J3, J42 Abstract: This paper studies the minimum wage effect on the transitions of men and women workers from covered to uncovered sector as well as to unemployment and out of labour force. Using border discontinuity design, first differencing and the individual level panel data for the urban region for the years 2017-18 to 2022-23, and novel data on more than 1800 minimum wages, this paper finds that an increase in minimum wage results in transition of women workers out of the covered sector, however, for male workers this paper finds null employment transitions effects. The study on heterogenous effects reveal that the results are primarily driven by low-skilled female workers belonging to the regions of high labour market concentration where 10 percent increase in minimum wage result in a fall in probability that a worker remains in covered sector by 1.5 percent. Contrary to this, we find favorable labour market conditions for low-skilled male workers in the regions of high labour market concentration. The results are robust to various specification choices. Length: 28 pages Creation-Date: 2025-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/02/working-paper-276.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-276 Template-Type: ReDIF-Paper 1.0 Title: Trade Continuity and Global Production Sharing in Emerging Economies: Evidence from Panel Gravity Analysis Author-Name: Sanjeev Vasudevan Author-Workplace-Name: Assistant Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: sanjeev@mse.ac.in Author-Name: Suresh Babu Manalaya Author-Workplace-Name: Professor and Director, Madras Institute of Department Studies, Chennai, Tamil Nadu, India, 600020. Keywords: Global Production Sharing, Parts And Components, Intermediate Goods, Trade Continuity, Gravity Model, Poisson Pseudo Maximum Likelihood, Emerging Economies Classification-JEL: F10, F14 Abstract: This paper examines whether trade continuity is a determinant of global production sharing and trade in intermediate goods. We argue that the literature on global production sharing overlooks the dependent and hierarchical nature of trade relations. Huge switching costs faced by countries warrant the continuity of trade relations. With an unbalanced panel dataset of finely disaggregated bilateral exports of 29 emerging economies for 2004-17, we estimate an augmented gravity model using the Poisson Pseudo Maximum Likelihood method. We show that trade continuity has a significantly positive impact on global production sharing. We also show that the nature of trade continuity in global production sharing is process-specific and may vary between exports of parts and components and final assembly. Length: 41 pages Creation-Date: 2025-01 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/01/working-paper-275.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-275 Template-Type: ReDIF-Paper 1.0 Title: Efficiency Decomposition of Public Expenditure – Evidence from Indian States Author-Name: Blessy Augustine Author-Workplace-Name: Assistant Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: blessy@mse.ac.in Author-Name: Raja Sethu Durai S Author-Workplace-Name: Professor, BITS-Pilani, Dubai Author-Email: rajasethudurai.s@gmail.com Keywords: Public expenditure efficiency, Data Envelopment Analysis, two-stage relational DEA, Governance Classification-JEL:H72, C61, I1, I2 Abstract: Assessing the efficiency of public expenditure and identifying the origins of inefficiency is imperative for any government to design effective policy measures. This study aims to decompose the efficiency of health and education expenditure of major Indian states as a two-stage process in which the first stage is infrastructure development and the second is service delivery. Using a two-stage relational Data Envelopment Analysis of Kao and Hwang (2008) for the year 2019-20, the empirical findings from this study suggest a significant variation in efficiency across the states in these two stages. Further, it also identifies that the governance of a state matters only in the infrastructure stage and not in the service delivery stage. The results from this study will help the states understand the stage where they have deficiencies and design their policy for improvement. Length: 26 pages Creation-Date: 2025-01 File-URL: https://www.mse.ac.in/wp-content/uploads/2025/01/workpaper-274.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2025-274 Template-Type: ReDIF-Paper 1.0 Title: Use of Information by Agricultural Households in India: Determinants and Preferences Author-Name: Aritri Chakravarty Author-Workplace-Name: Assistant Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: aritri@mse.ac.in Keywords: Agriculture, Information, Sample selection bias, human capital Classification-JEL: Q12, O13, D81 Abstract: The NSSO report (2015) shows that 41 percent of the rural households in India have accessed information and 34 percent households have used them. This paper explores the households’ use of information and understand their preference of information sources and their determinants. Households with better socio-economic conditions access information and from multiple sources. Media has the highest access while public sources have the lowest. Most of the households accessing information use it but the source-wise adoption rates show that, the source with the highest access, media, has the lowest use. This study tries to identify potential factors that lead to a systematic difference in using patterns across households and also across sources. Almost 80 percent of the households accessing information have used it and those not using information have cited lack of credit as a big hurdle to adoption among other reasons. Source-wise disaggregation of use shows that media has the lowest use at around 60 percent, even though it is the highest accessed resource. For all other sources, the share hovers around 80 to 90 percent. The analysis uses a Heckman Selection model to identify the potential factors that drive information use and also the differences between users and non-users of information from media. Overall, use of information is driven more by education and availability of credit than by other factors directly. Caste doesn’t appear to be a significant determinant of use directly, but obviously through the caste dynamics that shape different outcomes like education, access to information and access to credit. This analysis finds evidence to support the existing argument that development of human capital is crucial in processing information and using it for efficiency gains. Length: 37 pages Creation-Date: 2024-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/12/working-paper-273.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-273 Template-Type: ReDIF-Paper 1.0 Title: Trade Effects of Eurasian Economic Union and Global Production Sharing: A Gravity Analysis Author-Name: Sanjeev Vasudevan Author-Workplace-Name: Assistant Professor, Madras School of Economics, Chennai, Tamil Nadu, India, 600025 Author-Email: sanjeev@mse.ac.in Author-Name: Suresh Babu Manalaya Author-Workplace-Name: Professor and Director, Madras Institute of Department Studies, Chennai, Tamil Nadu, India, 600020. Keywords: Eurasian Economic Union, Trade Effects, Global Production Sharing, Parts and Components Trade, Gravity Model, Hausman and Taylor Estimator Classification-JEL: F10, F14 Abstract: This study examines the Eurasian Economic Union's trade effects, focusing on global production sharing. We measure the extent of global production sharing with the exports of parts and components. With a panel dataset of disaggregated bilateral flows of 5 members and 28 partners, we estimate an augmented gravity model for 2010-17 using the Hausman and Taylor Estimator. The study has two important findings. First, there are significant trade diversion effects in final goods, parts, and components. Second, the formation of the economic union results in declining intra-bloc exports. Besides, we find that market size, inter-country differentials of income, business-friendly climate, and cultural similarities are the other significant determinants of bilateral trade. Length: 37 pages Creation-Date: 2024-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/12/working-paper-272.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-272 Template-Type: ReDIF-Paper 1.0 Title: Is Health Insurance Actuarially Fair? Quantifying Discrepancies in the Indian Health Insurance Sector Author-Name: Nikhil Rathee Author-Workplace-Name: MA Actuarial Economics, Madras School of Economics Author-Name: Rupel Nargunam Author-Workplace-Name: corresponding author, Assistant Professor, Madras School of Economics Author-Email: rupel@mse.ac.in Keywords: Pricing Health Insurance, Actuarial Fairness, Discrepancies, Misinformation, Claim process inconsistencies, Access to Medical Services. Classification-JEL: I11, I13, G22, G52 Abstract: This study investigates the actuarial fairness of health insurance policies by examining discrepancies within the Indian health insurance and their impact on medical costs. By virtue of its creation, the scope of health insurance contracts is to cover medical expenses and the cost of the same is expected to reflect the expected cost of medical services. In practice it is observed that there are discrepancies such as misinformation, accessibility to health care services, hospital quality and inconsistencies in claims processing, increase costs associated with health care of individuals participating in the health insurance, which affect the fairness in pricing of these policies. This study uses Structural Equation Modelling (SEM) to develop latent variables representing these discrepancies and Hierarchical Linear Modelling (HLM) to assess their effect on the cost of medical care. The findings of this study support the presence of region-wise discrepancies in the Indian health insurance sector and the results support the significant impact on the increase in medical expenses. The study concludes with policy recommendations aimed at enhancing the efficiency, effectiveness and fairness of the health insurance policies in India. Length: 33 pages Creation-Date: 2024-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/12/working-paper-271.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-271 Template-Type: ReDIF-Paper 1.0 Title: Detecting and Forecasting Financial Bubbles in The Indian Stock Market Using Machine Learning Models Author-Name: Mahalakshmi Manian Author-Workplace-Name: Research Scholar Author-Name: Parthajit Kayal Author-Workplace-Name: (corresponding author), Assistant Professor Madras School of Economics, Chennai Author-Email: parthajit@mse.ac.in Keywords: Financial Bubbles; Machine Learning; K-nearest Neighbour; Random Forest Classifier; Artificial Neural Network; Naïve Bayes Classification-JEL: G1, G2, G3, C1, C5 Abstract: This research investigates the phenomenon of economic or financial bubbles within the Indian stock market context, characterized by pronounced asset price inflation exceeding the intrinsic worth of the underlying assets. Leveraging data from the NIFTY 500 index spanning the period 2003 to 2021, the study utilizes the Phillips, Shi, and Yu (PSY) method (Phillips et. al., 2015b), which employs a right-tailed unit root test, to discern the presence of financial bubbles. Subsequently, machine learning algorithms are employed to predict real-time occurrences of such bubbles. Analysis reveals the manifestation of financial bubbles within the Indian stock market notably in the years 2007 and 2017. Moreover, empirical evidence underscores the superior predictive efficacy of Artificial Neural Networks, Random Forest, and Gradient Boosting algorithms vis-à-vis conventional statistical methodologies in forecasting financial bubble occurrences within the Indian stock market. Policymakers should use advanced machine learning techniques for real-time financial bubble detection to improve regulation and mitigate market risks. Length: 39 pages Creation-Date: 2024-10 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/11/WORKING-PAPER-270.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-270 Template-Type: ReDIF-Paper 1.0 Title: Adaptive Analysis of 3E Factors (Economy, Energy, and Environment) for Renewable Energy Generation in the South and South-East Asian Region Author-Name: Salva K K Author-Workplace-Name: Research Scholar, Madras School of Economics, Chennai Author-Email: salva@mse.ac.in Author-Name: Zareena Begum Irfan Author-Workplace-Name: Professor, Madras School of Economics, Chennai Author-Email: zareena@mse.ac.in Keywords: Renewable and Non-renewable energy consumption, Ecological footprint, CO2 emission, Economic growth Classification-JEL: Q42, O13, Q56, C23 Abstract: Growing energy demand in the context of unprecedented changes in the climatic pattern is a challenge of the period. In light of this scenario, renewable energy, the widely accepted alternative for having energy security would be worth examining. Since Asia is accountable for a major portion of global energy demand and emission, this study investigates the impact of renewable energy consumption along with non–renewable energy consumption on environmental degradation and economic growth in 24 developing countries of Asia from 1990 to 2018. To account for the panel specific heterogeneity and cross-sectional dependence, Pooled Mean Group model in Panel Auto Regressive Lag approach is used for analysis. Unlike most of the existing literature, this research work has considered ecological footprint as a proxy for environmental degradation, in addition to CO2 emission. The result showed that both type of energy consumption have positive impact on economic growth, but renewable energy consumption also helps to reduce the emission and ecological footprint. This implies that for developing countries of Asia renewable energy is the best option for having energy security and economic growth without degrading the climate and environment. Further the existence of conservation hypothesis indicates that countries considered for the analysis could adopt energy conservation measures with no fear of hurdle being caused on economic growth. The result also showed that economic growth measured by GDP is increasing the emission and ecological footprint. This implies the need for a transition to an environmentally sustainable way for economic growth. Length: 50 pages Creation-Date: 2024-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/11/WORKING-PAPER-269.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-269 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Renewable Energy in Asia: Socio-Economic and Environmental Perspective Author-Name: Salva K K Author-Workplace-Name: Research Scholar, Madras School of Economics, Chennai Author-Email: salva@mse.ac.in Author-Name: Zareena Begum Irfan Author-Workplace-Name: Professor, Madras School of Economics, Chennai Author-Email: zareena@mse.ac.in Keywords: Renewable energy, CO2 emission, energy consumption, energy import, traditional energy, economic growth Classification-JEL: Q42 O53 Abstract: Energy related CO2 emission makes up two-third of global Green House Gas emission (GHG). It is mainly driven by developing countries especially those from Asia. Transition to Renewable Energy could reduce energy related emission. Identification of factors determining renewable energy is crucial for supporting its growth. We have tried to find out the factors determining renewable energy generation in developing countries of Asia. We used panel fixed effect model with Driscoll and Kraay standard errors using a sample of 26 countries for 19 years. The result shows that increased emission and energy consumption have not yet provide the incentive to invest in RE. Higher economic growth and increased dependency on imported energy find to encourage the renewable energy. Discouragement of renewable energy by the lobby of traditional energy sources is not found in our analysis. Length: 29 pages Creation-Date: 2024-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/11/Working-Paper-268.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-268 Template-Type: ReDIF-Paper 1.0 Title: Drivers and Barriers to the adoption of Renewable Energy: Investigating with the Ecological Lens Author-Name: Salva K K Author-Workplace-Name: Research Scholar, Madras School of Economics, Chennai Author-Email: salva@mse.ac.in Author-Name: Zareena Begum Irfan Author-Workplace-Name: Professor, Madras School of Economics, Chennai Author-Email: zareena@mse.ac.in Keywords: Renewable and non-renewable energy consumption, Ecological footprint, CO2 emission, Economic growth. Classification-JEL: C3 Abstract: The growing energy demand amidst unprecedented climatic patterns pose a significant challenge of the century. Given this backdrop, the exploration of renewable energy as a viable solution for ensuring energy security becomes imperative. Considering Asia's significant contribution to global energy consumption and emissions, this study examines the impact of renewable and non-renewable energy consumption on environment across 24 developing countries in Asia. Employing the Pooled Mean Group model within Panel Auto Regressive Distributed Lag framework facilitates the examination of panel-specific heterogeneity and cross-sectional dependencies. This research differs from much of the existing literature by incorporating ecological footprint as an additional measure of environmental degradation, alongside CO2 emissions. The findings suggest that increased consumption of renewable energy is associated with a reduction in emissions and ecological footprint, underscoring the potential of renewable energy to achieve energy security in Asian countries without exacerbating climate and environmental degradation. Length: 37 pages Creation-Date: 2024-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/11/Working-Paper-267.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-267 Template-Type: ReDIF-Paper 1.0 Title: Drivers and Barriers to the adoption of Renewable Energy: Investigating with the Ecological Lens Author-Name: Salva K K Author-Workplace-Name: Research Scholar, Madras School of Economics, Chennai Author-Email: salva@mse.ac.in Author-Name: Zareena Begum Irfan Author-Workplace-Name: Professor, Madras School of Economics, Chennai Author-Email: zareena@mse.ac.in Keywords: Renewable and non-renewable energy consumption, Ecological footprint, CO2 emission, Economic growth. Classification-JEL: C3 Abstract: The growing energy demand amidst unprecedented climatic patterns pose a significant challenge of the century. Given this backdrop, the exploration of renewable energy as a viable solution for ensuring energy security becomes imperative. Considering Asia's significant contribution to global energy consumption and emissions, this study examines the impact of renewable and non-renewable energy consumption on environment across 24 developing countries in Asia. Employing the Pooled Mean Group model within Panel Auto Regressive Distributed Lag framework facilitates the examination of panel-specific heterogeneity and cross-sectional dependencies. This research differs from much of the existing literature by incorporating ecological footprint as an additional measure of environmental degradation, alongside CO2 emissions. The findings suggest that increased consumption of renewable energy is associated with a reduction in emissions and ecological footprint, underscoring the potential of renewable energy to achieve energy security in Asian countries without exacerbating climate and environmental degradation. Length: 35 pages Creation-Date: 2024-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/11/Working-Paper-266.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-266 Template-Type: ReDIF-Paper 1.0 Title: Are the Responses of Oil Products Prices Asymmetrical to Global Crude Oil Price Shocks? Evidence from India Author-Name: Abdhut Deheri Author-Workplace-Name: Assistant Professor, School of Social Sciences and Languages, Vellore Institute of Technology, Vellore Author-Email: abdhut.deheri@vit.ac.in Author-Name: Stefy Carmel Author-Workplace-Name: Lecturer/ Research Associate, Madras School of Economics, Chennai Author-Email: stefy@mse.ac.in Keywords: Oil shocks, Oil products prices, Asymmetry, Non-linearity, Slope test, Impulse response test, India. Classification-JEL: C3, C22, D4 Abstract: The paper examines the existence of asymmetry and nonlinearity in the influence of global crude oil price shocks on oil product prices in India for the time period April 2000 to March 2022. For the purpose, novel assessments of symmetry and linearity, namely slope and impulse response tests, have been utilized. The findings of the slope tests indicate that there is absence of nonlinearity in the reaction of the majority of oil product prices to global crude oil price shocks. In contrast, the results obtained from the impulse response test indicate that with the exception of liquid petroleum gas, all oil product prices exhibit asymmetric responses to positive and negative crude oil shocks of varying magnitudes. The findings are in line with prior research on the transmission of oil prices to oil product prices and provide evidence for the existence of a rockets-andfeathers phenomenon in the Indian oil products market. From a policy standpoint, the results suggest the government to consider reducing taxes on petroleum products. This measure would help to ensure a symmetric response of oil product prices to global fluctuations in crude oil prices and expected to mitigate the welfare loss experienced by consumers due to the presence of asymmetry Length: 44 pages Creation-Date: 2024-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/09/Workiing-Paper-265.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-265 Template-Type: ReDIF-Paper 1.0 Title: Elementary Education Outcome Efficiency of Indian States: A Ray Frontier Approach Author-Name: Jyotsna Rosario Author-Workplace-Name: Assistant Professor, Vidyashilp University, Bangalore Author-Email: jyotsna.rosario@vidyashilp.edu.in Author-Name: K.R. Shanmugam Author-Workplace-Name: (Corresponding Author) Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: technical efficiency, public expenditure, elementary education outcome, stochastic frontier analysis, Ray frontier Classification-JEL: C14, D24, I21, I28, H52 Abstract: This study uses the generalized stochastic frontier approach to estimate the technical efficiency of Indian States in providing elementary education from 2009-10 to 2018-19. Mean efficiency was estimated at 85 percent and it varied between 67 percent to 97 percent. Considerable inter- state disparity is observed in elementary education outcome and 96 percent of the disparity is explained by inefficiency. Kerala is the most efficient State followed by Maharashtra and Himachal Pradesh. Arunachal Pradesh is the least efficient state, followed by Sikkim and Tripura. Efficiency estimates were observed to change across States over the study period. Proportion of government schools, rural population and Schedule caste and Schedule Tribe children are the major determinants of inefficiency. Finally, the study identifies best practices and helps in separating the resource poor States from the inefficient ones. The study is useful for designing public policy that would help in removing regional imbalances in elementary education outcome. Length: 41 pages Creation-Date: 2024-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/09/Working-Paper-264.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-264 Template-Type: ReDIF-Paper 1.0 Title: How Green (performance) are the Indian Green Stocks – Myth Vs Reality Author-Name: Saumitra Bhaduri Author-Workplace-Name: Professor, Madras School of Economics, Chennai Author-Email: saumitra@mse.ac.in Author-Name: Ekta Selarka Author-Workplace-Name: (corresponding author) Professor at Madras School of Economics, Chennai Author-Email: ekta@mse.ac.in Keywords: ESG, India, Risk-adjusted Performance, Pandemic, Crash risk Classification-JEL: G30 Abstract: Socially responsible investing gains attention following the perception of Covid-19 pandemic as the “sustainability” crisis. Environmental, Social, and Governance (ESG) characteristics emerge as essential factors for the assessment of sustainability and social impact of an investment leading investor focus in ESG-focused investment for meeting non-financial, societal values with investment objectives. This paper contributes to the ongoing debate on impact of ESG investing on firm value in the Indian context by analysing the risk-adjusted performance of the two ESGfocused indices – Nifty ESG100 and Nifty100 Enhanced - over a sample period of July 2018 to Dec 2022. The paper also examines whether ESG strategies of firms can reduce the downside risk sensitivity during crisis periods by testing the hypothesis that the socially responsible firms suffered less during the Coronavirus pandemic. Length: 29 pages Creation-Date: 2024-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/09/Workinig-Paper-263.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-263 Template-Type: ReDIF-Paper 1.0 Title: Empowerment of Scheduled Tribes and other Traditional Forest Dwellers for Sustainable Development of India Author-Name: Ulaganathan Sankar Author-Workplace-Name: Honorary Professor, Madras School of Economics, Chennai Author-Email: usankar@mse.ac.in Keywords: biodiversity, community forestry, eco restoration, forest rights, sustainable development Classification-JEL: Q01, Q23, Q56, Q58 Abstract: The Forest Rights Act 2006 aimed at correcting the historic injustice done to scheduled tribes and other traditional forest dwellers by giving usufruct rights on certain forest resources and associating them in forest management. This paper reviews implementation of the Act and other supportive measures taken by the government towards achieving the goals of carbon sequestration, biodiversity conservation and increase in livelihood opportunities of the dwellers. This paper argues that if the dwellers services are fully available as guardians of forests, they can generate many external benefits, some are at local level, some at regional level, and a few at global level. Hence, this paper suggests a few additional supportive measures for empowering and incentivizing STs and OTFDs to invest in forest ecosystem assets to achieve these multiple goals. Length: 21 pages Creation-Date: 2024-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/09/Working-Paper-262.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-262 Template-Type: ReDIF-Paper 1.0 Title: Assessment of Urban Road Transport Sustainability in Indian Metropolitan Cities Author-Name: B. Ajay Krishna Author-Workplace-Name: Ph.D. Scholar, Madras School of Economics, Chennai Author-Email: ajaykrrish13@gmail.com Author-Name: K.S. Kavi Kumar Author-Workplace-Name: (Corresponding Author) Director, Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: kavi@mse.ac.in Keywords: Composite index; Principal component analysis; Sustainability indicators; Transport indicators; Urban road transport. Classification-JEL: C38, C43, Q01, R40, R49 Abstract: The sustainability of urban transportation has emerged as a significant area of research, particularly in urban centres of developing countries due to its notable economic, social, and environmental implications. This paper presents an indicator-based approach to evaluate the sustainability of urban road transit systems in Indian metropolitan cities. A set of 24 indicators is identified and analysed across five metropolitan cities under the sustainability framework, and an index – Sustainable Urban Road Transport Index (SURTI) – is constructed to rank these cities. Further, to allow for comparisons across both space and time, SURTI is constructed for 2010 and 2020 to analyse the decadal variations in relative performance of the metropolitan cities. The study also attempts to illustrate how alternative approaches in Index calculation could influence relative ranking-based outcomes. The study's findings indicate that Mumbai and Kolkata appear to consistently perform better across time and location. Meanwhile, Bangalore has improved substantially during the last decade, whereas Chennai's poor performance has resulted in a rapid decrease in SURTI scores and rankings. The study highlights key transport metrics where cities can potentially improve. The study's findings could prove relevant to policymakers and mobility planners in their attempts to build a sustainable road transport system and address inefficiencies in the key performance areas highlighted in this study Length: 6 pages Creation-Date: 2024-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/09/Working-Paper-261.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-261 Template-Type: ReDIF-Paper 1.0 Title: Economic Overview of Tamil Nadu (2023-24) Author-Name: C. Rangarajan Author-Workplace-Name: Chairman, Professor, Madras School of Economics, chennai Author-Email: c.rangarajan@mse.ac.in Author-Name: K.R. Shanmugam Author-Workplace-Name: (Corresponding Author) Director, Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: Tamil Nadu economy, Growth prospects, Social indicators, Climate change Classification-JEL: H63, D72, H72, C22, E32 Abstract: This is a short overview of the Tamil Nadu economy in 2023-24. This covers some of the broad features of the Tamil Nadu economy including trends in growth, sectoral performance, social parameters, climate change issues and growth prospects. Tamil Nadu’s economy is strong on many dimensions. Tamil Nadu’s rate of growth has been higher than India’s overall growth rate between 2005-06 and 2022-23. While all India economy grew at an annual rate of 6.71 percent, Tamil Nadu economy grew at 7.8 percent during this period. This trend needs to be maintained in order to reach a level of 1 trillion-dollar economy as early as possible. Also, Tamil Nadu like India must adapt itself to the far reaching changes in technology that are occurring. Details given in the study may help the readers to gain an understanding of the strengths and challenges of the Tamil Nadu economy Length: 49 pages Creation-Date: 2024-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/07/Working-Paper-260.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-260 Template-Type: ReDIF-Paper 1.0 Title: India @ 100 and the Significance of Top Six States Author-Name: K.R. Shanmugam Author-Workplace-Name: (Corresponding Author) Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Author-Name: Mathew Koshy Odasseril Author-Workplace-Name: Research scholar, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: mathewkoshy@mse.ac.in Keywords: Indian economy, Indian States, Markov Switching Regression, GDP/GSDP forecasts Classification-JEL: C34, E17, E66 Abstract: India has a goal of achieving a US$ 7 trillion economy in 2030 and subsequently a developed nation status by 2047. While some studies/reports have explored the possibilities of reaching these targets based on assumptions recording the growth rate, inflation etc., this study is an attempt to forecast the future growth of the Indian economy till 2047-48, using the Markov Switching model and real GDP growth data from 1993-94 to 2022-23 and verify when these goals will be achieved. Since the economic outcomes are highly heterogeneous across the Indian States and there are indications of divergence in economic growth, it also estimates and predicts the future growth prospects of the top six states to see how much these top states contributes to achieve the targets. The findings suggest that India will achieve the US$ 7 trillion target by 2032-33 and the per capita income level of developed nation by 2046-47, assuming 4.5 percent inflation and 2 percent depreciation of exchange rate. Tamil Nadu, Karnataka and Gujarat are expected to reach per capita income mark of developed nation by 2037-38, Maharashtra is expected to reach in 2040-41. West Bengal will reach this target by 2047-48, while Uttar Pradesh has to go a long way to reach this ambitious target. Length: 28 pages Creation-Date: 2024-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/07/Working-Paper-259.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-259 Template-Type: ReDIF-Paper 1.0 Title: Multidimensional Inequality Index among Indian Women Author-Name: Astha Kushwaha Author-Workplace-Name: Research Assistant, IIM Ahmedabad (Corresponding Author) Author-Email: asthakushwaha1819@gmail.com Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: brinda@mse.ac.in Keywords: Inequality, Multidimensional inequality, Health, Education, Domestic Violence Classification-JEL: D63, I14, I24, J1, J12 Abstract: Inequality is typically assessed using a single dimension measured in monetary values such as income or wages. As many women in developing countries lack access to onetary resources, various indicators must be used to comprehend inequality among women. Since women are the cornerstone of any household and are solely responsible for raising their children and inequality perpetuates itself across generations, it is crucial to study how one woman is unequal compared to another. In this study, we utilized data from NFHS 4 (2015-16) and NFHS 5 (2019-21) to examine the trend of inequality over time, taking into account covariates such as age, educational attainment of partner/husband at the individual level, and caste and religion of the women at the household level. We also investigated regional and statelevel inequality. The findings suggest that although there was an overall decrease in inequality from 2015-16 to 2019-21, several groups of women continue to face significant inequality. Length: 52 pages Creation-Date: 2024-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/07/Working-Paper-258.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-258 Template-Type: ReDIF-Paper 1.0 Title: Monetary Valuation of Ecosystem Services and options for Value Realization in Developing Countries Author-Name: Ulaganathan Sankar Author-Workplace-Name: Honorary Professor, (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: usankar@mse.ac.in Keywords: Anthropocene, ecosystems, ecological thresholds, strong sustainability, planetary boundaries, sustainable development Classification-JEL: Q51; Q56; Q58 Abstract: This paper classifies ecosystem services under 5 groups: at thresholds, provisioning, supporting, regulating and cultural; the first comes under Anthropocene and the last four from MEA. It considers issues raised by ecological economists on sustainable scale, use of marginal analysis, and distributional equity. It stresses the need for monetary valuation for resource allocation decisions and discusses problems in monetary valuation for services in each group. As the principle of “common but differentiated responsibilities” of governments in solving global environmental problems is not accepted by developed countries now, most developing countries face difficulties in implementing SDGs and enhancing provision of ecosystem services. This paper suggests that a decentralized approach involving local communities can enable eco restoration and achieve SDGs at lower cost to governments. Length: 21 pages Creation-Date: 2024-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/06/Working-Paper-257.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-257 Template-Type: ReDIF-Paper 1.0 Title: Sustainability and Threshold Value of Public Debt in Karnataka Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Author-Name: P.S. Renjith Author-Workplace-Name: Assistant Professor, Gulati Institute of Finance and Taxation, India Author-Email: renjith@gift.res.in Keywords: sustainability, threshold value, public debt, FRBM, debt solvency, Karnataka Classification-JEL: Q54, H63, C23, D72 Abstract: This study analyzes the sustainability and the threshold level of public debt in Karnataka using the modern time series methods and threshold regression method. The results of the study indicate that Karnataka’s public debt level is unsustainable, and its debt sustainability threshold is about 20 percent. Since Karnataka’s debt is negatively related to growth, the state should control its debt to a sustainable level. The simulation exercise based on the debt dynamics of the state suggests that the state GSDP (nominal) should grow at 14 percent and the fiscal deficit target should be 2 percent from 2024-25 onwards to attain the debt sustainability target in 2028-29 and with 13 percent growth the state could reach the target in 2030-31. The relevant policy strategy for the state is to increase its revenue-GSDP ratio by 1 percent. Length: 25 pages Creation-Date: 2024-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/06/Working-Paper-256.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-256 Template-Type: ReDIF-Paper 1.0 Title: Work Activity Status of Male Youth in India: Role of Social Networks Author-Name: Ronak Maheshwari Author-Workplace-Name: Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India) Author-Email: phd21ronak@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: brinda@mse.ac.in Keywords: Higher Education; Labor Force Participation; NEET; Social Networks; Youth Labor Classification-JEL: I23, J24, J64, N30, P36 Abstract: The Right to Education Act of 2010 makes education a fundamental right for children aged six to fourteen years. Between 18 and 21 years, the activities of young adults diverge into pursuing further education or entering the labor force, or Not in Educational Employment and Training (NEET). Very few studies analyze the factors involved in these three choices and in particular, how the role of family and non-family networks varies across these activity statuses of youth in India after controlling for other covariates. This study attempts to fill this gap based on an empirical analysis of boys aged 18-21 years from the IHDS data for 2005-06 and 2011-12. The results from the discrete choice multinomial logit model show that, after controlling for socio-economic status, the primary source of household income, and parents’ education, both family and non-family networks increase the odds of enrolling in higher education or training compared to NEET while non-family networks favor workforce participation compared to NEET. The results further highlight that in addition to the number of ties the types of ties have a greater influence on the work-activity-related decisions of the youth. Length: 34 pages Creation-Date: 2024-01 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/02/Working-Paper-255.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2024-255 Template-Type: ReDIF-Paper 1.0 Title: Efficiency of Commercial Banks in India after Global Financial Crisis Author-Name: K. Ravirajan Author-Workplace-Name: Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India) Author-Email: ravirajan@mse.ac.in, ravirajan1981@gmail.com Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: stochastic frontier, technical efficiency effect, panel data, Indian banks, financial crisis Classification-JEL: D24, G21, G34, G28 Abstract: While the global financial crisis had a cascading effect on all economies and financial sectors of countries, the Indian economy and its finances, particularly its banking system, due to its stringent regulatory and prudent policies. However, in the post crisis period, the scenario changed in the Indian banking because of the mounting pile of bad loans. The main purpose of the study is to estimate the bank specific efficiency utilizing the technical efficiency effect model in the stochastic frontier approach for panel data during the post global financial crisis period, 2009-2018 and find out the factors causing variations in efficiency of Indian banks. Results indicate that despite the consolidation of information technology efforts, the efficiency of the Indian banking industry deteriorated during the post global financial crisis period. This may be due to the mounting pile of non-performing assets. Interestingly, the public banks seem to be more efficient than their private counterparts. The results also indicate that banks with larger capital adequacy ratio or older banks or banks with more branches are less inefficient in generating interest income. Length: 34 pages Creation-Date: 2023-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/02/Working-Paper-254.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-254 Template-Type: ReDIF-Paper 1.0 Title: Public Debt and External Debt Sustainability among BRICS Countries Author-Name: Magulsha George Author-Workplace-Name: Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India) Author-Email: magulsha@mse.ac.in Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: Sustainable Debt, BRICS, Bohn Model, Penalized Spline. Classification-JEL: H63, C23, D72, E62, H72 Abstract: This study analyses an important policy issue pertaining to the public debt and external debt of BRICS nations from 1993 to 2020 using the Bohn framework and a penalized spline estimation method. The results indicate that, as the primary surplus reacts positively and significantly to public debt in China and South Africa, the debt is sustainable in these nations. In Brazil, India and Russia, the debt is not sustainable. The external debt policy is sustainable only in China and not in other BRICS nations. These results suggest immediate policy interventions in Brazil, India and Russia to achieve sustainable levels of public debt and external debt. We hope that these results will be useful to policy makers and other stake holders to take appropriate strategies to improve the public debt and external debt position of BRICS nations and make them sustainable. Length: 31 pages Creation-Date: 2023-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/01/Working-Paper-253.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-253 Template-Type: ReDIF-Paper 1.0 Title: The Effect of Technology on Financial Performance of Indian Banks Author-Name: K. Ravirajan Author-Workplace-Name: Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India) Author-Email: ravirajan@mse.ac.in, ravirajan1981@gmail.com Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: Technology Index, The Performance Index of Banks, Panel Data Methods, Indian Commercial Banks. Classification-JEL:G21, G28, L25, L86, O31, O33 Abstract: This study empirically analyses the effect of technology on the financial performance of 50 Indian banks during 2011-12 to 2019-20. It considers three technology indicators – average amount of debit card transaction at ATM, average amount of debit card transaction at POS and average amount of NEFT transactions and three performance indicators – return on assets, return on equity and net interest margins of banks and uses them to construct the composite technology index and the composite performance index respectively. It regresses the performance indicators individually and also the composite performance index on technology indicators/technology index along with other explanatory variables and estimates these equations using the standard panel data methodology. As these regression results provide the average effect of technology indicators and technology index on banking performance, it also allows the technology index to interact with bank dummies to observe bank specific effects of technology in the alternative specification of equations. The estimation results indicate that the NEFT has a negative and significant effect on the performance index, but it has a positive and significant effect on both return on assets and return on equity. Surprisingly, both average amounts of debit card transactions at ATM and POS do not influence all performance indicators and the performance index. Thus, the technology impact is mixed based on the performance indicator and the NEFT is the dominant technology indicator in determining the profitability of banks. Results from the estimation of an alternative specification of the model indicate that the technology index has a significant negative effect on the performance index of 42 banks. However, it has a significant positive effect on both return on assets and return on equity in almost all banks, but it does not play a role in determining the net interest margin of banks. We hope that these results are useful to policymakers and other researchers to take appropriate strategies to improve the performance of the banking industry in India. Length: 27 pages Creation-Date: 2023-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/01/Working-Paper-252.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-252 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Non-Performing Assets of Commercial Banks in India Author-Name: K. Ravirajan Author-Workplace-Name: Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India) Author-Email: ravirajan@mse.ac.in, ravirajan1981@gmail.com Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: Bank credit, non-performing assets/loans, panel regression, Indian banking sector Classification-JEL: C23, E51, G11, G21 Abstract: Banks’ credit growth continues to decelerate in India due to huge non-performing assets (NPAs) overhangs in banks. This study empirically analyzes the determinants of NPAs of scheduled commercial banks in India during 2009-2020, using the panel data methodology. Results indicate that the excessive credit growth in the past increased the surge in the current NPAS. The economic slowdown also aggravates loan delinquencies in Indian commercial banks. While higher priority sector lending creates higher loan delinquencies, higher banks size and higher profitability reduce it. This study suggests that counter capital buffer, dynamic provisioning and a sound credit appraisal NPA will improve the financial stability and monetary policy effectiveness. We hope that these findings are useful for policymakers, bankers and other stakeholders to make appropriate strategies to resolve the NPA issue is India. Length: 22 pages Creation-Date: 2023-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2024/01/Working-Paper-251.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-251 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Efficiency of Commercial Banks in India after Global Crises Author-Name: K. Ravirajan Author-Workplace-Name: Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India) Author-Email: ravirajan@mse.ac.in, ravirajan1981@gmail.com Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai Author-Email: shanmugam@mse.ac.in Keywords: Technical Efficiency, Pure and Scale Efficiency, Data Envelopment Analysis, Non-Performing Assets, Indian Commercial Banks, Emerging Market Classification-JEL: G2, G210, G280, E58, C6 Abstract: This study contributes to the bank efficiency literature by estimating the technical efficiency, pure efficiency and scale efficiency of banks in four different ownership groups in India from 2008-09 to 2019-20 utilizing the DEA method and three alternative approaches to choose inputs and outputs of banks-intermediation approach, value added approach and operating approach. It also uses the tobit estimation procedure to identify the factors determining the variations in the technical efficiency of banks. Results indicate a high degree of inefficiency of several banks during the study period and there is a greater scope for improving their performances. There exists sizable scale inefficiency and banks are likely to lose sizable output. The results also indicate that banks with larger capital adequacy ratio or young banks or larger banks or more profitable banks are more efficient. Foreign banks and nationalized banks are more efficient than private domestic banks. We hope that the findings of this study will be useful to international agencies and other stakeholders in evaluating and improving the performance of Indian banks. Length: 37 pages Creation-Date: 2023-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/12/Working-Paper-250.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-250 Template-Type: ReDIF-Paper 1.0 Title: The Lausanne School of Economics Author-Name: S. Pridiksha Author-Workplace-Name: Corresponding Author, Madras School of Economics (MSE), Chennai Author-Email: ba22pridiksha@mse.ac.in Author-Name: T. Archana Author-Workplace-Name: MSE Author-Email: ba22archana@mse.ac.in Keywords: Economic thought, Neoclassical, Leon Walras, Vilfredo Pareto, Wicksell, Cassel Classification-JEL: B3,B31,B16 Abstract: In the late 19th century, with growing criticism of the classical school of economics of ignorance of microeconomics, Leon Walras, one of the pioneers of the 1871 Marginalist Revolution, founded the Lausanne school of economics (Ecole de Lausanne). With an emphasis on mathematics, this school attributes all economic activity to the choices and actions of individuals. The central feature of the school is the concise formal description of ideas with mathematical notation which was lacking in classical economy. Lausanne school economists such as Leon Walras, Vilfredo Pareto, and others formulated and improved principles and theories such as general equilibrium theory, Pareto optimality, the 80-20 rule, the circulation of elites, ordinal utility and so on. The paper critically examines these ideas and their evolution. This paper explains the general equilibrium theory developed by Walras, breaking through the misconceptions revolving around unrealistic assumptions. With the focus on welfare economics, the principles of Pareto of Lausanne school had profoundly impacted public policy, the highlights and challenges of this impact is analysed. The aim of reviving Walras’s ideas from enigma led to further development in economics by Irving Fischer, Cassel, Wicksell. Paretian “taste and obstacles” approach was also advanced by Slutsky and W.E.Johnson. The abandonment of walras’s theories is the crucial cause of contemporary financial crisis ,thus, Lausanne tradition is alive, kicking and highly relevant in the contemporary world. Length: 30 pages Creation-Date: 2023-10 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/12/Working-Paper-249.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-249 Template-Type: ReDIF-Paper 1.0 Title: Deflecting Economic Sanctions: Do Trade and Political Alliances Matter? Author-Name: Devasmita Jena Author-Workplace-Name: Corresponding Author, Madras School of Economics (MSE), Chennai Author-Email: devasmita@mse.ac.in Author-Name: C. Akash Author-Workplace-Name: MSE Author-Name: Prachi Gupta Author-Workplace-Name: Temple University, Tokyo, Japan Keywords: Sanction, GSDB, Trade Agreement, Political Alliance, Structural Gravity Model Classification-JEL: F1, F14, F51, N4 Abstract: Success of economic sanctions hinges on their impact on sanctioned countries’ trade. This, in turn, depends on the sanctioned country’s opportunity to divert trade to a third-party (country, not involved in sanctions). History is witness to third-parties facilitating trade diversion, thus busting sanction. Nonetheless, literature does not present conclusive evidence on trade diversion or on motivation for busting sanctions. Therefore, in this paper, we address the following. What bearing sanctions have on bilateral trade flows and trade diversion? Is diversion dependent on the political and trade alliance the third-party shares with the sanctioned and/or the sanctioning countries? We estimate a structural gravity model for globally representative country-dyads, during 1990-2019, using, inter-alia the Global Sanctions Database. We find that sanctions depress bilateral trade between sanctioned and sanctioning nations and cause trade diversion via third-party. The existence of trade alliance between third-party and country involved in sanction has additional impact on trade diversion. Furthermore, a political alliance between third-party and sanctioned country heightens trade between them. However, political alliance between third-party and sanctioning country doesn’t explain trade between them. Our results have insight for India’s evolving trade relations with Russia, since 2022, as Russia reels under Western sanctions. Length: 43 pages Creation-Date: 2023-10 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/11/Working-Paper-248.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-248 Template-Type: ReDIF-Paper 1.0 Title: The Impact of Monetary and Fiscal Stimulus on Stock Returns During the COVID-19 Pandemic Author-Name: Chinmaya Behera Author-Workplace-Name: Economics and General Management, Goa Institute of Management, Goa, India, (Corresponding author: Goa Institute of Management, Poriem, Sattari, Goa) Author-Email: chinmayaeco@gmail.com Author-Name: Badri Narayan Rath Author-Workplace-Name: Department of Liberal Arts, IIT Hyderabad, Kandi, Sangareddy, India Author-Email: badri@la.iith.ac.in Author-Name: Pramod Kumar Mishra Author-Workplace-Name: School of Management, University of Hyderabad, Telangana, India Author-Email: pramod.mishra@uohyd.ac.in Keywords: Monetary Policy, Fiscal Policy, Stock Return, Machine Learning, COVID-19 Classification-JEL: G11; G15; G18 Abstract: We contribute to the literature by investing the impact of monetary and fiscal stimulus and exchange rate on stock returns during the COVID-19 pandemic in Australia, China, India, and Indonesia. By employing the machine learning approach, We find that monetary stimulus positively boosts the stock return of Indonesia. Contrary, fiscal stimulus adversely affected stock return in Australia. The exchange rate positively impacts stock return for both India and Indonesia during the COVID-19 pandemic. However, the findings from this study reveal that both monetary and fiscal stimulus have no effect on the stock market return in the case of China and India. Policymakers needs better strategy to counter the extreme events like pandemic. Our model is robust to the alternative model specification. Length: 3 pages Creation-Date: 2023-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/11/Work-Paper-247-abstract.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-247 Template-Type: ReDIF-Paper 1.0 Title: Role of State in Food and Nutrition security: A case of Telangana Author-Name: Gummadi Sridevi Author-Workplace-Name: Professor, School of Economics, University of Hyderabad, Hyderabad India, Professor, School of Development, Azim Premji University, Bangalore, India Author-Email: gummadi645@gmail.com Author-Name: Amalendu Jyotishi Author-Workplace-Name: Professor, School of Development, Azim Premji University, Bangalore, India Author-Name: Matta Srinivas Author-Workplace-Name: Research Assistant, UoH - IoE Project titled, “Understanding and Addressing Food and Nutrition Security issues among Vulnerable Groups: An Inter-disciplinary study in Andhra Pradesh and Telangana Author-Name: Balaji Author-Workplace-Name: Research Associate, UoH - IoE Project titled, “Understanding and Addressing Food and Nutrition Security issues among Vulnerable Groups: An Inter-disciplinary study in Andhra Pradesh and Telangana Keywords: Nutrition, food Classification-JEL: I10, I14 Abstract: The causes of food insecurity are poverty (transient or chronic) and unequal access to resources. After the failure of the ‘trickle down’ approach to ensure poverty reduction, direct approach with PDS, mid- day meal, ICDS, and Urban canteens were introduced as the main safety net programs to protect the poor from potential short-run, price-induced adverse food insecurity. The direct approach of reaching food to the unreached makes the scheme effective in achieving its objective. The Telangana State Government launched GHMC Annapurna Canteens for the urban poor in GHMC region to improve the food and nutritional security in Hyderabad with eight centers in the year 2014 and has expanded to 150 centers through Hare Krishna charitable Foundation and had also expanded its prospects via. Mobile Canteens in selected areas. This initiative is appreciated by a wide spectrum of urban poor ranging from homeless to migrant workers and food delivery workers. In the beginning, the introduction of these canteens was been doubted as be effective for mitigating food insecurity and accused of being "populist". But this idea of providing inexpensive food meals in urban areas promises food security and also keeps food prices in check. Our primary data revels that urban canteens played a very crucial role during the first phase of lock down in Hyderabad. Length: 41 pages Creation-Date: 2023-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/10/WORKING-PAPER-246.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-246 Template-Type: ReDIF-Paper 1.0 Title: Corporate Social Responsibility of Indian Banks Author-Name: Brijesh C. Purohit Author-Workplace-Name: Professor, Madras School of Economics, Chennai Author-Email: brijeshpurohit@gmail.com Keywords: corporate social responsibility; Indian banks.; public sector; private sector Classification-JEL: G21; G28; G38 Abstract: Corporate Social Responsibility is in terms of expenditures which the banks or other registered companies incur either following the government ordinance or guidelines or sometimes on their own. The CSR expenditure is an additional amount used for welfare activities which benefit the society at large. In this study we focus on twelve banks. These include six banks each from Indian public sector and private sector banks. We carry out analysis using data for 2015-21 for these banks. We intended to explore the focus of CSR expenditure of the selected twelve banks. We observed diversity in the CSR expenditure pattern of public sector banks and their focus differs relative to private sector. Our analysis of private sector banks indicate priority within health, education, and residually among other areas. We further found that: CSR expenditure on Health and sports also plays a possibly positive role in increasing PAT, number of CSR projects are influenced positively by its urban branches and there has been an increasing amount being spent on education which also includes financial literacy programmes. Length: 50 pages Creation-Date: 2023-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/10/Working-Paper-245.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-245 Template-Type: ReDIF-Paper 1.0 Title: Financing Urban Services Through Cost Recoveries from Semi-Public goods – The Case of Drinking Water Supply Author-Name: J V M Sarma Author-Workplace-Name: (Corresponding Author)Professor in charge of the Centre for Public Finance, Madras School of Economics, Chennai Author-Email: jvm_sarma@mse.ac.in Abstract: Non-tax revenues in the form of cost recoveries of public services provided by governments are the most important source of revenue for urban local governments in India. However, most governments lack rational pricing policy for these services and generally charge token prices, which may hardly relate to their supply and distribution costs. The financial sustainability of the drinking water supply system involves ‘cost recovery’ principle, and the tariff rate structures should be designed in such a way that revenue yield should compensate the operation and maintenance cost. However, the current water pricing practices are deficient in the sense that often the price of urban water supply is lower than the costs incurred for its provision. In this paper it is attempted to design an objective tariff system that is efficient, adequate, equitable and is suitable for recovery of the costs involved in the drinking water sector. The model basically aims at linking the water tariff rates to the volumetric consumption of water, with adequate progressivity. Length: 40 pages Creation-Date: 2023-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/10/Working-Paper-244.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-244 Template-Type: ReDIF-Paper 1.0 Title: Spatial Durbin Model of Regional Incomes in India: The Role of Public, Private and Human Capital Author-Name: Vivek Jadhav Author-Workplace-Name: (Corresponding Author)Ph.D. Scholar, Madras School of Economics, Chennai Author-Email: vivek@mse.ac.in; vivekjadhav118@gmail.com Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor & Dean Research, Madras School of Economics, Chennai Author-Email: brinda@mse.ac.in Keywords: Public capital, Regional Income, Spatial Durbin Model, Augmented MRW model Classification-JEL: O47, R12, R53, C21 Abstract: Most regional income studies in India examine only the convergence of regional per capita incomes with a limited number of studies analyzing the relative role of its determinants. Spatial Durbin model of regional income and growth based on the augmented Mankiw-Romer-Weil (MRW) -with public, private, household and human capitals as the determinants - is estimated using the 2015 Indicus data on per worker incomes for 103 regions (clusters of districts) of India. The results of the spatial model support spillover effect of public, human and private capital from neighbouring regions on per worker Gross Regional Domestic Product (GRDP) as found in several studies for European regions. We additionally find that public capital, which is not accounted for separately in the developed country regional models, is a relatively more important determinant for a developing country like India than private capital or human capital for this data. In the spatial growth model of per worker GRDP, none of the determinants except the state capital dummy variable have significant impact on the regional growth rate between 2001 and 2015. This may be a data limitation and perhaps a panel data model may be more suited for such an analysis. Length: 51 pages Creation-Date: 2023-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/09/WORKING-PAPER-243.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-243 Template-Type: ReDIF-Paper 1.0 Title: Application of Volatility-Managed Portfolios in the Context of a Volatility Index Author-Name: Abhishek Subramanian Author-Name: Parthajit Kayal Author-Workplace-Name: (Corresponding Author)Assistant Professor, Madras School of Economics Author-Email: parthajit@mse.ac.in. Keywords: Volatility-managed portfolios, Volatility-management, Momentum Classification-JEL: G10, G11, G12 Abstract: This paper studies the volatility-managed portfolios of Moreira and Muir (2017) and analyses whether the volatility-management trading strategy provides a large utility gain for mean-variance investors for the CBOE Volatility Index (VIX) across multiple equity factors. Upon direct comparison, we document that the volatility-managed scaled factor earns higher returns compared to its original unscaled counterpart. The results from our in-sample spanning regression supports the above findings indicating that volatility-managed factors outperform the original factor by extending the mean-variance frontier even after controlling for additional factors. This result is significant in particular with the volatility-managed momentum factor. The ex-post optimization parameters also suggest a positive Sharpe ratio and CER percent (Certainty Equivalent Return) across equity factors. Length: 25 pages Creation-Date: 2023-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/09/WORKING-PAPER-242.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-242 Template-Type: ReDIF-Paper 1.0 Title: Impact of Transfers on Elementary Education Expenditure and Measuring Equalization Transfers to Indian States Author-Name: Jyotsna Rosario Author-Workplace-Name: UGC Senior Research Fellow at Madras School of Economics, Gandhi Mandapam Road, Kotturpuram, Chennai - 600025, India Author-Email: jyotsna@mse.ac.in Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Fiscal equalization, Australian transfer mechanism, elementary education, public education expenditure, Indian States, panel data Classification-JEL: I22, H52, H72, H77, J18 Abstract: This study examines the impact of Central transfers on elementary education expenditure and determines fiscal equalization transfers using the data for 28 Indian States from 2009-10 to 2020-21, the Australia’s expenditure equalization framework and the static panel data methodology. Based on the estimated values from the expenditure model and two benchmarks: all States’ average and top three States’ average per student expenditure on elementary education, it computes the State specific finance gap and total transfers needs. Results indicate that States with larger fiscal capacity tend to spend more on elementary education and the existing transfers mechanism has failed to compensate the lagging States. Bihar, West Bengal, Uttar Pradesh, and Madhya Pradesh have a large expenditure gap. Given the magnitude of the Centre's budget, the estimated additional transfers seem to be feasible. The findings of the study will be useful for policymakers and researchers to create appropriate strategies and design equalization transfers that can enable all Indian Sates to provide a standard level of elementary education. Length: 45 pages Creation-Date: 2023-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/07/Working-Paper-241.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-241 Template-Type: ReDIF-Paper 1.0 Title: Sustainability and Threshold Value of Public Debt of Centre and All State Governments in India Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: P.S. Renjith Author-Workplace-Name: Assistant Professor, Gulati Institute of Finance and Taxation, India Author-Email: renjith@gift.res.in Keywords: Sustainable Debt, Bohn Model, Penalized Spline, threshold model Classification-JEL: H63, C23, D72, E62, H72 Abstract: This study examines the sustainability and the threshold level of public debt of Centre and all State Governments in India using the latest data from 1990-91 to 2020-21 and statistical methods and threshold regression method. The results of these methods suggest that the current levels of public debt of both Centre and all States are unsustainable, and the debt sustainability threshold is about 40 percent for the Centre and 22 percent for all States. There is a greater need for the Centre and all States to control their debt levels as they are currently growth reducing. The simulation exercises based on the debt dynamics suggest that the Indian economy (nominal) should grow at 12 percent and fiscal deficit target should be 2 percent each for the Centre and all States from 2023-24 onwards so that the Centre will attain the debt sustainability target before 2027-28 and all States in 2030-31. The relevant policy strategy for all Governments is revenue augmentation and containing public expenditures including unproductive subsidies. Length: 39 pages Creation-Date: 2023-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/07/Working-Paper-240.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-240 Template-Type: ReDIF-Paper 1.0 Title: Evolving Contours of Centre-State Fiscal Relations: Inconsistencies, Ad-Hocism and Centralization Author-Name: D.K. Srivastava Author-Workplace-Name: (Corresponding Author)Chief Policy Advisor, EY India and formerly Director, Madras School of Economics Author-Email: srivasta@mse.ac.in Keywords: FRBMA, GST, fiscal transfers, Finance Commission, equalization, centralization Classification-JEL: E61, H10, H21, H77 Abstract: This paper highlights features of growing inconsistencies, ad hocism and centralization in the working of intergovernmental fiscal relations in India in recent years. To illustrate these issues, relevant examples are drawn from the 2018 amendment of Centre’s FRBM Act, determination of the inter-se distribution of the divisible pool of taxes amongst the states, and the working of the GST Council. Methods are also suggested as to how reforms can be introduced in order to reverse these undesirable features. In the case of Centre’s FRBMA, we suggest alternative but internally consistent combinations of debt and fiscal deficit relative to GDP. In the context of fiscal transfers, we recommend the incorporation of relevant information reflecting cost and need disabilities directly into the broad-based devolution criteria. In the case of GST, we recommend inclusion of important excluded items such as taxation of petroleum and alcoholic beverages while giving additional revenue autonomy to states by the introduction of a non-rebatable cess on polluting and demerit goods and services. Length: 32 pages Creation-Date: 2023-03 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/07/Working-Paper-239.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2023-239 Template-Type: ReDIF-Paper 1.0 Title: Equalization Transfers Based On Spending Needs and Fiscal Capacity of State Governments in India Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: K. Shanmugam Author-Workplace-Name: Chief Secretary of Government of Tamil Nadu and Senior Research Fellow of Madras School of Economics Author-Email: shanmugamka1960@gmail.com Keywords: Fiscal Fiscal Transfers, Fiscal Equalization, Expenditure Needs, Fiscal Capacity, Indian States, Panel Data Methods Classification-JEL: H77, H73, H72, C23 Abstract: This study addresses an important policy issue pertaining to determination of equalization transfers to Indian States. It empirically estimates the effect of transfers on expenditures of 29 Indian States using the panel data methodology. It also determines the transfers based on the spending needs and fiscal capacity of States. Results indicate a strong crowding-in effect of transfers on public spending of States and the presence of fly paper effect. The fiscal transfers positively relate to revenue expenditures in 13 out of 18 General Category States and 8 out of 11 Special Category States. Amounts of equalization transfers determined for all 29 States in four alternative scenarios range between ₹. 555 billion and ₹.16048 billion. We hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design fiscal transfer policy such that all citizens can avail a standard level of public services in India. Length: 38 pages Creation-Date: 2022-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/02/Working-Paper-238.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-238 Template-Type: ReDIF-Paper 1.0 Title: Designing Transfers Policy with Normatively Determined Revenues and Expenditures of State Governments in India Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: K. Shanmugam Author-Workplace-Name: Chief Secretary of Government of Tamil Nadu and Senior Research Fellow of Madras School of Economics Author-Email: shanmugamka1960@gmail.com Keywords: Fiscal equalisation, expenditure needs, fiscal capacity, Indian states Classification-JEL: H77, H73, H72, C23. Abstract: This study addresses an important policy issue of designing equalisation transfers from the union government of India to the states. It empirically measures the own revenue efficiency and potential of General Category and Special Category States using the frontier approach for panel data. It also analyses the effect of transfers on states’ own revenue and its components. Results indicate a strong crowding-out effect of transfers in General Category States and a strong crowding-in effect in Special Category States. Amounts of additional transfers required to provide equal level of public services for all 29 States in four alternative scenarios range between ?1072 billion and ?15,948 billion. The range is based on alternate benchmarks of fiscal capacities and expenditure needs. We hope that these results will be useful to policymakers and other stakeholders to design appropriate fiscal transfer strategies such that all citizens can avail a standard level of public services in India. Length: 47 pages Creation-Date: 2022-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/02/Working-Paper-237.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-237 Template-Type: ReDIF-Paper 1.0 Title: Impact of Fiscal Transfers Policy on Regional Growth Convergence in India Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: K. Shanmugam Author-Workplace-Name: Chief Secretary of Government of Tamil Nadu and Senior Research Fellow of Madras School of Economics Author-Email: shanmugamka1960@gmail.com Keywords: Growth Convergence, Fiscal Transfers, Indian States, Panel Data Methods Classification-JEL: E22,E62, R11, R12, R23, C23 Abstract: This study is an attempt to empirically analyze the effect of fiscal transfers on growth and regional growth convergence during 2005-2019, using the standard growth convergence model for panel data. Results indicate the growth convergence across Indian States. The regional income gaps reduced at a rate of 17.7-31.9 percent per annum. The fiscal transfers contribute to the growth of 22 out of 29 States and also contribute significantly to the convergence. Moreover, there is strong evidence for convergence across General Category States and across Special Category States, indicating club convergence. The average income growth is higher in Special Category States and higher in post global crisis period. It is our hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design fiscal transfer policy such that it will speed up the convergence process. Length: 34 pages Creation-Date: 2022-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/02/Working-Paper-236.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-236 Template-Type: ReDIF-Paper 1.0 Title: Empirical Analysis on Sustainability of Public Debt in Indian States Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: P.S. Renjith Author-Workplace-Name: Assistant Professor, Gulati Institute of Finance and Taxation, India Author-Email: renjith@gift.res.in Keywords: Sustainable Debt, Indian States, Bohn Model, Penalized Spline Classification-JEL: E62, H63, H72, H74 Abstract: This article utilizes the Bohn framework for panel data and penalized spline technique for testing public debt sustainability in 20 major Indian states during 2007-08 to 2018-19. The study shows that the primary surplus reacts positively to public debt only in 4 states, indicating debt sustainability in these states. Interestingly, the reaction coefficients are time-varying in 10 states, of which three are sustainable. Further, we descriptively verified whether the sustainable debt is welfare-enhancing as well during the study period. We found that debt is neither sustainable nor welfare-enhancing in the case of 12 states, so they need to take corrective actions. Length: 34 pages Creation-Date: 2022-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/02/Working-Paper-235.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-235 Template-Type: ReDIF-Paper 1.0 Title: Incidence of Corporate Income Tax: Estimates from Indian Manufacturing Firms Author-Name: K. Sankarganesh Author-Workplace-Name: Ph.D. Research Scholar, Madras School of Economics, Chennai Author-Email: sankar.kamaa40@gmail.com Author-Name: K. R. Shanmugam Author-Workplace-Name: (Corresponding Author)Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Investment Corporate tax incidence, General equilibrium analysis, Indian manufacturing firms, Panel data, SUR estimation method Classification-JEL: H32, J30, H25, H22, C33 Abstract: The purpose of this paper is to examine the incidence of corporate tax on capital and labour in Indian manufacturing sector. The paper employs ‘Seemingly Unrelated Regression Method’ with add-up restriction based on the work of Desai, Foley and Hines (2007). The study shows that the corporate tax has a significant adverse impact on both wages paid to employees and profit after tax. Capital owners bear 96.3 percent of the tax burden and labours bear only 3.7 percent. The adverse effect on wages is slightly higher in public firms than in private firms. The relative tax burdens of labour and capital remained the same in the pre-2008 global economic crisis and post crisis periods. The impact on both wages and profits increase with age and size of firms but decrease with leverage. These results will be useful to policymakers and other stakeholders to take appropriate strategies to design the corporate tax policy such that it is more redistributive and not burden to labours in manufacturing firms in India. The study considered only manufacturing sector for the period 2005-2019. This is the first study to analyse the relative contribution/burden of corporate tax shared by capital and labour in Indian manufacturing sector. The paper contributes to the scant empirical literature on corporate tax incidence. Length: 30 pages Creation-Date: 2022-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/02/Working-Paper-234.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-234 Template-Type: ReDIF-Paper 1.0 Title: Effect of Corporate Income Tax on Investment Decisions of Indian Manufacturing Firms Author-Name: K. Sankarganesh Author-Workplace-Name: Ph.D. Research Scholar, Madras School of Economics, Chennai Author-Email: sankar.kamaa40@gmail.com Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Investment, Effect tax rate, Corporation income tax, panel data methods Classification-JEL: D21, E22, E51, H25, C23 Abstract: This study is an attempt to empirically analyse the effect of corporate income tax on investment of manufacturing firms in India during 2005-2019, using the standard panel two way fixed effects model estimation techniques. It is found that the effective corporate tax has a negative and significant impact on the corporate investment. Moreover, the estimated effective tax elasticity is relatively low as compared to the magnitude found in other countries. Our analysis also indicates that the deduction rate has a positive impact on investment while interest-debt ratio and leverage ratio have a negative impact. The effective rate increases with age and size of firms. It is our hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design the corporate tax policy such that it will not hinder business investment in India. Length: 33 pages Creation-Date: 2022-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/01/Working-Paper-233.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-233 Template-Type: ReDIF-Paper 1.0 Title: Achieving One Trillion Dollar Economy for Tamil Nadu: Some Implications and Concerns Author-Name: C. Rangarajan Author-Workplace-Name: Chairman, Madras School of Economics Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Economic growth, exchange rate movement, incremental capital output ratio, sustainable threshold debt Classification-JEL: H63, D72, H72, C22, E32 Abstract: This study is an attempt to empirically analyse the effect of corporate income tax on investment of manufacturing firms in India during 2005-2019, using the standard panel two way fixed effects model estimation techniques. It is found that the effective corporate tax has a negative and significant impact on the corporate investment. Moreover, the estimated effective tax elasticity is relatively low as compared to the magnitude found in other countries. Our analysis also indicates that the deduction rate has a positive impact on investment while interest-debt ratio and leverage ratio have a negative impact. The effective rate increases with age and size of firms. It is our hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design the corporate tax policy such that it will not hinder business investment in India. Length: 42 pages Creation-Date: 2022-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/12/WORKING-PAPER-232-2.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-232 Template-Type: ReDIF-Paper 1.0 Title: Tamil Nadu State Finances: Issues and Options Author-Name: Pinaki Chakraborty Author-Workplace-Name: Former Director, National Institute of Public Finance and Policy, New Delhi, And was Economic Advisor to the Fourteenth Finance Commission. Author-Email: pinakicha@gmail.com Keywords: Finance Classification-JEL: Q54, H63, C23, D72 Abstract: This paper analyses emerging fiscal issues for the State of Tamil Nadu. Various fiscal shocks during the covid and their impact on the fiscal balance of the State has been quantified. The paper suggests specific policy issues related to own resource mobilisation, public expenditure management and management of public debt for post-covid fiscal recovery. Length: 30 pages Creation-Date: 2022-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/12/Working-Paper-231.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-231 Template-Type: ReDIF-Paper 1.0 Title: Fiscal Federalism in India: A Case for Reassigning of Tax Powers Author-Name: R. Srinivasan Author-Workplace-Name: Full-Time Member, State Planning Commission, Government of Tamil Nadu, Chennai - 600005 Author-Email: info@mse.ac.in Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Professor, School of Economics, University of Hyderabad, Hyderabad - 500046 Keywords: Fiscal Federalism, Vertical Fiscal Imbalance, Tax Reassignment Classification-JEL: H10, H77 Abstract: In an ideal federation, each level of government should have its own revenue resources to sufficiently finance its own expenditures. In most of the federal countries, due to overlapping revenue and expenditure assignments warranted by their constitution, the fiscal balance is elusive. Vertical Fiscal Imbalance (VFI) arises when the own revenue potential of regional governments is inadequate to meet their own expenditure. As noted in the literature, VFI adversely affects the fiscal performance of the regional government. This study examines the VFI for India from 2005 to 2021 and provides evidence that it is raising over the period, and a feasible solution rests in the reassignment of commodity taxation powers to the states. Length: 31 pages Creation-Date: 2022-10 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/11/Working-Paper-230.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-230 Template-Type: ReDIF-Paper 1.0 Title: Compliance Costs of GST for Small Business Enterprises in Tamil Nadu Author-Name: S. Vishnuhadevi Author-Workplace-Name: PhD student, Department of Economics, Stella Maris College, Chennai Author-Email: vishnuhadevi.s@gmail.com Author-Name: D. Hima Bindu Author-Workplace-Name: Associate Professor, Department of Economics, Stella Maris College, Chennai Author-Email: himabindu@stellamariscollege.edu.in Keywords: tax compliance costs; GST compliance costs; VAT compliance costs; small businesses; India; Tamil Nadu Classification-JEL: H20, H25, H29 Abstract: The main objective of this study is to examine the level of compliance burden through estimating the GST compliance costs incurred by the small businesses in Tamil Nadu. Further, to estimate the aggregate GST compliance costs incurred by the business in absolute terms and relative to Gross State Domestic Product (GSDP) and GST revenue of Tamil Nadu for the year 2019-20, and finally to identify the factors associated with the GST compliance costs using classical regression analysis. The results reveal that the overall weighed mean of the GST compliance costs is Rs. Rs. 32091 and the aggregate GST compliance costs is Rs. 17844 million which is around 0.10 percent and 4.65 percent of GSDP and GST revenue respectively. Further, the GST compliance costs incurred by the smallest firms is 1.45 percent of their annual turnover, and the same for largest firms it is only about 0.02 percent, which shows the regressive nature of the compliance costs as reported in the previous studies. Lastly, the regression results reveal that the volume of business, sector of the business, size of the business, firms with refund claims, and the manner with which the GST returns are completed are the important factors that are associated with the GST compliance costs incurred by the small businesses in Tamil Nadu. Length: 51 pages Creation-Date: 2022-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/10/Working-Paper-229.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-229 Template-Type: ReDIF-Paper 1.0 Title: Examining the Efficiency of Biodiversity Finance Action Plan across the Indian Megacities Author-Name: Zareena Begum Irfan Author-Workplace-Name: Professor and Controller of Examinations, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Urban biodiversity, human well-being, urban planning, City Biodiversity Index, biodiversity finance, quality of life Classification-JEL: Q570, I310, Q560, R110 Abstract: Human well-being is quite intrinsically linked to ecosystem services and biodiversity. There is a growing amount of literature attempting to understand the mechanisms of these interlinkages. Though there is considerable progress globally with respect to human well-being, challenges still remain in terms of access to resources. On the biodiversity front, anthropogenic interference continues to threaten species. Reviewing the Aichi Biodiversity Targets which were to be achieved in 2020 worldwide reveals that none could be attained fully. In India, city- level efforts in biodiversity conservation and integration with human well-being appear lacking. With the pressures of population growth and urbanisation, urban planners often leave less scope for open or green spaces in the city. The traditional trade-off between environment and economic development continues to play out in cities. This study reviews the biodiversity status of five highly populated Indian megacities – Bengaluru, Chennai, Delhi, Kolkata and Mumbai – using City Biodiversity Index framework. Subsequently, a set of indicators characterising the state of human well-being, environment, economy and urban development for 2019-20 is selected and used to create a composite score to facilitate comparison. Mumbai is the best performer overall and also in terms of urban biodiversity. Kolkata has the least score for urban biodiversity. Chennai ranks well in both quality of life and environment but scores low in urban planning. Delhi has the least overall score while Bengaluru tops the economic dimension. It is hoped that the comprehensive picture thus obtained would enable directing attention to required sectors. The spotlight is thus on extending the scope of the biodiversity index and maximising welfare through integrated policies at minimum cost. Length: 50 pages Creation-Date: 2022-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/10/Working-Paper-228.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-228 Template-Type: ReDIF-Paper 1.0 Title: Fiscal Transfers, Climate Risks, and Partisan Politics: Does the Nature of Climate Risk Matter? Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor & Dean of Academic Affairs, Madras School of Economics, Chennai, Tamil Nadu Author-Email: kavi@mse.ac.in Author-Name: Anubhab Pattanayak Author-Workplace-Name: Indian Institute of Technology Kharagpur, Kharagpur, West Bengal Author-Email: anubhab@hss.iitkgp.ac.in Keywords: Fiscal Federalism; Fiscal Transfers; Political Alignment; Climate Risk; Drought; Floods; India Classification-JEL: D72, H77, O23, Q54 Abstract: Natural calamities such as drought, floods and cyclones are not uncommon in India, with almost all states affected by one or the other form of hydro-meteorological risks every year. Potential changes in climate are expected to manifest in the form of increased frequency and severity of the climate risks. In a federal system of governance, the transfers from the Central government serve as an important mechanism for the State governments to effectively address the adverse impacts of the natural disasters. Interestingly, there is often a significant gap between the relief sought by the states to cope with the hydro-meteorological risks and the assistance provided by the Centre. Taking note of some recent evidence in the literature on the role of partisan politics in the context of fiscal transfers from the Centre to different states affected by natural calamities, this study explores whether the nature of climate risk provides scope for the Central government to exhibit favoritism towards states that are politically aligned than those that are not aligned. The empirical analysis based on total and non-plan fiscal grants from the Centre to different states over three decades and occurrence of drought and floods across different states over the same period, suggests that while grant allocation in response to drought is higher for the politically aligned states, no evidence for partisan politics could be established in case of grant allocation in response to flood. The study argues that the nature of risk – viz., relatively slow emergence of drought compared to sudden manifestation of flood events, could perhaps provide scope for partisan politics. In the context of changing landscape of political alignment and the dynamically changing nature of climate risks in India, the evidence from this study provides crucial inputs for better understanding of the political economy of disaster management. Length: 44 pages Creation-Date: 2022-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/09/WorkingPaper-227.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-227 Template-Type: ReDIF-Paper 1.0 Title: Sustainability and Threshold Value of Public Debt in Tamil Nadu Author-Name: K. R. Shanmugam Author-Workplace-Name: Director and Professor, Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: K. Shanmugam Author-Workplace-Name: Chief Secretary of Government of Tamil Nadu and Senior Research Fellow of Madras School of Economics Author-Email: shanmugamka1960@gmail.com Keywords: sustainability Classification-JEL: Q54 Abstract: This study examines the sustainability and the threshold level of public debt in Tamil Nadu using statistical methods and threshold regression method. The results of these methods suggest that the current level of debt in the state is unsustainable, and the debt sustainability threshold is about 18.5 percent which is slightly lower than the 20 percent norm sets by Fiscal Responsibility and Budget Management Review Committee for all Indian states. Since the roadmap suggested by the Fifteenth Finance Commission is not the sustainable level, the state should control its debt as it is not currently growth inducive. The simulation exercise based on the debt dynamics of the state suggests that the state economy should grow at 14 percent and fiscal deficit target should be 2 percent from 2023-24 onwards to attain the debt sustainability target in 2035-36 and with 16 percent growth the state could reach the target in 2030-31. The relevant policy strategy for the state is to increase its own revenue-GSDP ratio by 0.75 percent and contain its revenue expenditures by 0.75 percent from 2023-24. Length: 36 pages Creation-Date: 2022-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/11/Working-Paper-226.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-226 Template-Type: ReDIF-Paper 1.0 Title: Minimum Wages in the Presence of Wage and Non-Wage Sectors in India: An Exploratory Analysis of the Non-Farm Sector Author-Name: Mohit Sharma Author-Workplace-Name: Ph.D. Scholar, Madras School of Economics, Chennai Author-Email: mohit@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor & Dean Research, Madras School of Economics, Chennai Author-Email: brinda@mse.ac.in; Keywords: Minimum wage, Informality, Self-employment, Lighthouse effect, India Classification-JEL: J21, J23, J30, J31, J46, J50 Abstract: The Indian labour market is characterized by large informality and self-employment. While most of the literature in developing nations on minimum wages has focused on the impact of minimum wages on wages and the employment of the ‘wage earners’, this leaves out a large proportion of the self-employed workforce (non-wage earners). Using the novel data on minimum wages and with the availability of earnings data for self-employed workers in the recent Periodic Labour Force Survey (PLFS) rounds 2017-18, 2018-19, and 2019-20, this study attempts to explore the role of minimum wages on the earnings of all categories of workers including self-employed in the non-farm sector. We find that for unskilled and semi-skilled workers who have studied up to secondary education, higher levels of minimum wages reduce the earning gap between regular, own-account, and casual workers. This might indicate the “lighthouse effect”, where both casual and own-account workers (primarily engaged in informal activities) use minimum wages as a numeraire to carry out earnings negotiations. It has also been found that a higher level of minimum wage reduces the earnings disparity between males and females. Length: 47 pages Creation-Date: 2022-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Work-Paper-225.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-225 Template-Type: ReDIF-Paper 1.0 Title: Minimum Wages in the Presence of Wage and Non-Wage Sectors in India: An Exploratory Analysis of the Non-Farm Sector Author-Name: Mohit Sharma Author-Workplace-Name: Ph.D. Scholar, Madras School of Economics, Chennai Author-Email: mohit@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor & Dean Research, Madras School of Economics, Chennai Author-Email: brinda@mse.ac.in; Keywords: Minimum wage, Informality, Self-employment, Lighthouse effect, India Classification-JEL: J21, J23, J30, J31, J46, J50 Abstract: The Indian labour market is characterized by large informality and self-employment. While most of the literature in developing nations on minimum wages has focused on the impact of minimum wages on wages and the employment of the ‘wage earners’, this leaves out a large proportion of the self-employed workforce (non-wage earners). Using the novel data on minimum wages and with the availability of earnings data for self-employed workers in the recent Periodic Labour Force Survey (PLFS) rounds 2017-18, 2018-19, and 2019-20, this study attempts to explore the role of minimum wages on the earnings of all categories of workers including self-employed in the non-farm sector. We find that for unskilled and semi-skilled workers who have studied up to secondary education, higher levels of minimum wages reduce the earning gap between regular, own-account, and casual workers. This might indicate the “lighthouse effect”, where both casual and own-account workers (primarily engaged in informal activities) use minimum wages as a numeraire to carry out earnings negotiations. It has also been found that a higher level of minimum wage reduces the earnings disparity between males and females. Length: 47 pages Creation-Date: 2022-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Work-Paper-225.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-225 Template-Type: ReDIF-Paper 1.0 Title: Budgetary Advocacy and Public Finance Management for North-Eastern Region in India Author-Name: Shrabani Mukherjee Author-Workplace-Name: Associate Professor, Economics, Shiv Nadar University, Chennai Author-Email: shrabani0808@gmail.com Author-Name: Vivek Jadhav Author-Workplace-Name: Ph.D. Scholar, Madras School of Economics, Chennai Author-Email: vivek@mse.ac.in; vivekjadhav118@gmail.com Author-Name: Debdulal Thakur Author-Workplace-Name: Senior Research Fellow, LEAD at KREA University Author-Email: debdulalthakur@gmail.com Keywords: Public Financial Management, Political Federalism, Fractionalization, Polarization, Ethnic Diversity. Classification-JEL: H61, P48, E60, H72 Abstract: Democracy across the world has witnessed the evolution of the electoral This paper analyses the budgetary effectiveness of the northeast states in India by exploring the causality between realised gap in budget estimates with states’ degree of self-reliance, socio-economic and political constancy for a decade period, 2006-07 to 2015-16. There has been a trend in the gap between budgetary estimates. This paper constructs fractionalisation index, polarisation index, effective number of party index to judge the role of the central assistance in the standpoint of fiscal issues and governance accountability at the sub-national level. The panel ordered logistic model claims that the political concentration, ethnic diversity, state’s own revenue capacity play an important role in determining the ineptitude of the states in fiscal management. The provision of states' expenditure tends to be inconclusive with high ethnic diversity or polarization for multiple decision making units which affects the growth pace of the state. The paper claims that the adverse impact is more vibrant in case of planned expenditure which is considered as key to long run development for the states. Length: 37 pages Creation-Date: 2022-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Working-Paper-224.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-224 Template-Type: ReDIF-Paper 1.0 Title: Adaptation to Rainfall Extremes: Role of Dams in India Author-Name: Agnij Sur Author-Workplace-Name: Indian Statistical Institute, Delhi, Delhi Author-Email: agnij21r@isid.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor & Dean of Academic Affairs, Madras School of Economics, Chennai, Tamil Nadu Author-Email: kavi@mse.ac.in Author-Name: Anubhab Pattanayak Author-Workplace-Name: Indian Institute of Technology Kharagpur, Kharagpur, West Bengal Author-Email: anubhab@hss.iitkgp.ac.in Keywords: Rainfall Extremes; Dams; Adaptation; Development Classification-JEL: Q54; O13; O10 Abstract: Can large dams keep the floods at bay? In the last twenty years, major flood events in India have wreaked widespread destruction on people’s lives and livelihoods. With a threefold increase in extreme rainfall event in these years, severe flood damages are likely to increase without proper risk management. The increasing trend in constructing dams necessitates careful assessment of the effectiveness of these projects as a flood adaptation measure. The study employs a state-level dataset of India for 1969-2009 on flood damages, monthly average rainfall, and concentration of types of dams in each state taking 2001 census defined state borders. The analysis uses Feasible Generalized Least Squares for estimation, while employing panel corrected standard errors to correct for contemporaneous correlation in the dataset. Controlling for population density, dam concentration and unobserved regional heterogeneity, the study finds significant adverse impact of extreme rainfall on population during the South-West and North-East monsoon periods. The results highlight that large dams built for irrigation and hydroelectric power generation have historically exacerbated flood damages, whereas multipurpose dams have reduced such damages marginally. As the frequency and intensity of extreme rainfall events and floods are likely to increase under climate change conditions, the potential of mitigation measures such as Dam Safety Act 2021 and Flood Early Warning System (FLEWS) in averting flood damages assumes significance. Length: 34 pages Creation-Date: 2022-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/WORKING-PAPER-223.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-223 Template-Type: ReDIF-Paper 1.0 Title: Intergovernmental fiscal relations in India: Time for the Next Generation of Reforms Author-Name: D.K. Srivastava Author-Workplace-Name: Executive Council Member, Madras School of Economics, and Chief Policy Advisor, EY India and formerly Director, Madras School of Economics Author-Email: srivastava@mse.ac.in; dkscloud@gmail.com Keywords: Intergovernmental relations, fiscal reforms, tax-GDP ratio, debt sustainability, GST reforms, finance commission Classification-JEL: E61, E62, H21, H25, H63, H77 Abstract: The system of intergovernmental fiscal relations in India has steadily evolved over the last seven decades under the guidance provided by Finance Commissions. Various dimensions of the fiscal landscape in India have been subjected to periodic reforms. In spite of these, India’s tax-GDP ratio has effectively stagnated over the last thirty years. Recent GST reforms have also qualitatively and quantitatively affected the relative position of resources for the central and state governments. Debt and fiscal deficit stabilization which has been subjected to Fiscal Responsibility Legislations also requires a relook due to certain inbuilt inconsistencies which have been highlighted in the paper and in view of the current global challenges. This paper suggests that it is time for undertaking the next generation of reforms that would guide intergovernmental fiscal relations in India in the emerging future. The suggested reforms cover issues pertaining to uplifting India’s tax-GDP ratio, comprehensive GST reforms, mechanisms and formulae used in determining intergovernmental transfers, and Fiscal Responsibility Legislations. Length: 46 pages Creation-Date: 2022-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Working-Paper-222.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-222 Template-Type: ReDIF-Paper 1.0 Title: Evolving Issues and Future Directions in GST Reform in India Author-Name: M. Govinda Rao Author-Workplace-Name: Executive Council Member, Madras School of Economics Author-Email: mgroa48@gmail.com Keywords: Tax reform, Goods and services tax; Value added tax Classification-JEL: H20, H25 Abstract: The Goods and Services Tax (GST) was implemented in July 2017 to simplify the domestic consumption tax system by unifying various taxes, to minimise cascading effects of the taxes by setting off the tax paid at earlier stages of the production and distribution chain and to enhance revenue productivity by introducing self-policing embedded in the value added tax. However, the potential gains from the reform are yet to materialise. The promised increase in revenue productivity is yet to be realised. The tax base remains narrow due to a large list of exemptions. The inability to stabilize the technology platform has not helped to improve compliance. The multiple rates have complicated the tax structure, created scope for misclassification, inverted rate structure, and disputes arising therefrom. The exclusion of petroleum products and electricity from the GST base has continued significant cascading from the excluded taxes. In addition, the agreement on compensating the States for the loss of revenue will come to an end in June 2022, even before stabilising the reform. The paper makes detailed recommendations on the future reform agenda on the GST to reap the potential benefits of the reform and suggests that the compensation scheme may be extended by three years with modifications and used as an incentive to the States to agree for undertaking the much needed reform. Length: 55 pages Creation-Date: 2022-07 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Working-Paper-221.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-221 Template-Type: ReDIF-Paper 1.0 Title: Medium-term Projections of Vehicle Ownership, Energy Demand and Vehicular Emissions in India Author-Name: B. Ajay Krishna Author-Workplace-Name: Phd Research Scholar(Corresponding author), Madras School of Economics Author-Email: ajay@mse.ac.in Keywords: Vehicle Ownership; Carbon Emissions; Fuel Demand; Gompertz Function; Transport Policy Classification-JEL: Q47, Q54, R48, R49 Abstract: Rapid growth of private vehicle ownership in emerging economies like India has serious implications on its existing transport infrastructure, future energy demands and emission reduction targets. While vehicle ownership in India is considerably low compared to advanced economies, an expected economic growth, along with rising population and inability of public transport to meet the travel demands would lead to increase in future private vehicle stock, subsequent fuel demand and resulting vehicular emissions. This study contributes to the literature by projecting various medium-term future scenarios of vehicle stock, fuel demand and vehicular emission projections based on multiple economic growth rate and electric vehicle (EV) adoption scenarios. A non-linear Gompertz function has been estimated to describe the association between economic growth and vehicle ownership using time series data ranging from 1960 to 2019. Using an incremental addition to the vehicle stock based on past vehicle registration, study forecasts 107-145 million new vehicles will be added to existing stock by 2030. Subsequently, private transport fuel demand is predicted to peak around 60 million metric tons per annum during this period. Correspondingly, CO2 emission from private vehicle use is estimated to peak at 174 million tons per annum. Further, appropriate transport policy measures and investment spheres in terms of road network requirement have been explored which would facilitate reducing private vehicles dependency and regulate vehicular emissions. Length: 5 pages Creation-Date: 2022-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/10/Working-Paper-220.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-220 Template-Type: ReDIF-Paper 1.0 Title: Outcome of FTPT in Diversified Society: Evidence on Disproportionality from Loksabha Constituencies Author-Name: Vivek Sharadadevi Jadhav Author-Workplace-Name: Phd Research Scholar(Corresponding author), Madras School of Economics Author-Email: vivekjadhav118@gmail.com;vivek@mse.ac.in; Keywords: Religious Polarization, Electoral System, Religious, Fractionalization, Vote Concentration. Classification-JEL: D72, K16, H11, P48, Z12 Abstract: Democracy across the world has witnessed the evolution of the electoral system. First-Past-The-Post (FPTP) practiced in India does have certain disadvantages like disproportional representation. This paper analyses the election outcome in FPTP electoral system in a diverse society like India using constituency level information for the Loksabha election. This paper tries to understand how social, religious diversity, fractionalization affect the outcome in the FPTP system. The fractionalization index for religious diversity, polarization index religious polarization, Herfindahl–Hirschman Index for vote concentration are formed for Loksabha constituencies to understand the impact of religious diversity on vote concentration as well as vote share of winning candidates. Further regression analysis is done where state-specific and time-specific effects are controlled. It is found that fractionalization i.e. religious diversity affects the vote concentration negatively. It is also found that on average the vote concentration for SC/ST reserved constituencies is lower than general constituencies. This suggests that religious diversity reduces the vote concentration which further leads to disproportionality. It is important to think the ways to provide the space for the parties which are getting votes but not getting seats in Loksabha specifically for reserved constituencies. Length: 21 pages Creation-Date: 2022-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/05/Working-Paper-219.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-219 Template-Type: ReDIF-Paper 1.0 Title: Political Concentration, Religious Diversity and Human Development: Evidence from Indian States Author-Name: Shrabani Mukherjee Author-Workplace-Name: Associate Professor, Shiv Nadar University, Chennai Author-Name: Vivek Sharadadevi Jadhav Author-Workplace-Name: Phd Research Scholar(Corresponding author), Madras School of Economics Author-Email: vivekjadhav118@gmail.com Keywords: Fractionalisation, Social Diversity, Political Concentration, Economic Development, Panel Data Analysis Classification-JEL: D72, O53, Z12, O15 Abstract: This paper provides a framework that extricates the relationship between fractionalization and HDI and elucidates the impact of political polarisation on the pace of growth for major Indian states in order to determine the existing inequality across Indian states. A number of different composite indices have been constructed to measure ‘Fractionalization’ and ‘Polarization’ ‘Political Stability’ consisting multi-dimensional inter-related indicators to determine the impact of such parameters on HDI using a dynamic panel-data estimation considering the period from 1991 to 2019. The political concentration influences adversely the economic outcomes through obstructing the determination of provision of public good or allocation of resources in the complex decentralised federal structure. This study confirms the strong causality of religious diversity, women participation in political power, state’s share in total member pool of parliament with political stability which harms quality of governance. Length: 30 pages Creation-Date: 2022-03 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/04/Working-Paper-218.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-218 Template-Type: ReDIF-Paper 1.0 Title: Socio-Economic Factors and Conflicts in North-Eastern Region of India Author-Name: Nabeel Asharaf Author-Workplace-Name: Research Assistant, Madras School of Economics Author-Name: Brinda Viswanathan Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Insurgency, North East India, Economic Development, Social Sector Expenditure, Rainfall Classification-JEL: D74, H56, I30, I38 Abstract: According to the United Nations Counter-Terrorism Centre's plan of action, the highest priority in counter-terrorism strategy is poverty eradication with equitable and sustainable economic development. Given this context, an empirical analysis of the association between insurgency attacks and socio-economic indicators is carried out for the eight North-Eastern states of India. Very few studies exist for a high insurgency region of this country and this study is an attempt to fill that gap. The findings from this study show that from 1980 to 2017, higher per capita income is associated with fewer insurgencies, implying that when the economy is performing well, the opportunity cost of participating in the conflicts is low. On the other hand, for states and years, when there is a higher social sector expenditure as a share of the total expenditure, the insurgency is lower, implying that access to basic amenities provided as public goods improves well-being and reduces inequality and perhaps in turn reduces inter-group conflicts. Contrary to findings from studies in the Maoist regions, we find that a welfare program like NREGS is not associated with insurgency attacks across these states from 2006 to 2017. Based on the weather data from 2013 to 2018, a higher standard deviation of monthly rainfall is positively associated with the number of insurgency attacks again implying that loss of work and income increases the scope for insurgency attacks. However, the temperature remains insignificant in its association with insurgency attacks, perhaps due to less variation in it across these regions given the short time span of years covered in this study and more so in a region where precipitation is very high and quite varied. Length: 4 pages Creation-Date: 2022-03 File-URL: https://www.mse.ac.in/wp-content/uploads/2023/04/working-217-nabeel-abstract.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-217 Template-Type: ReDIF-Paper 1.0 Title: Multiple Dimensions of Cyclicality in Investing Author-Name: Thillaikkoothan Palanichamy Author-Workplace-Name: Madras School of Economics Author-Name: Parthajit Kayal Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: parthajit@mse.ac.in Keywords: Quality, Cycle, Investment, Portfolio Classification-JEL: G11, G12, G15 Abstract: Returns on Equity as an asset class tend to be erratic and uneven. Contrary to popular opinion, such fluctuations in returns cannot be attributed to business cyclicality alone. Historically, investors' attitude towards risk has had ramifications on how individual stocks and indices are priced. Commonalities across market up-cycles and down-cycles are examined using data on the Nifty-50 index. Based on firm-level characteristics, the investible universe is segregated into two categories: quality and Cyclical. The performance of the Quality and Cyclical portfolio across market cycles is analysed. Although markets are ‘efficient’ in the long run, investor perception plays an important role in short-term pricing. The Price to Earnings (P/E) ratio in spite of its shortcomings serves as a useful tool in evaluating prospective investments. Length: 74 pages Creation-Date: 2022-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/04/Working-Paper-216.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-216 Template-Type: ReDIF-Paper 1.0 Title: How Much Does Volatility Influence Stock Market Returns? – Empirical Evidence from India Author-Name: Malvika Saraf Author-Workplace-Name: Madras School of Economics Author-Name: Parthajit Kayal Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: parthajit@mse.ac.in Keywords: Volatility anomaly; investing; alpha; emerging markets; relative beta Classification-JEL: G11, G12, G15 Abstract: The purpose of this paper is to establish and estimate the extent of the volatility anomaly (VA), i.e., low volatility stocks achieve high average returns over time, in the Indian stock market We examine the impact of the beta, variance, relative beta, and relative variance measures on the expected stock returns for a cross-section of NIFTY500 companies, for the 10-year period July 2010 to June 2020. We comprehensively examine the data through robustness checks by undertaking the same procedure on a rolling year basis for different subsamples. We also consider the 6-month Covid pandemic phase from January to June 2020 to examine the role of risk and time on stock returns. Our empirical findings suggest that the VA is predominant in the medium to long term (5 to 10 years), but it seems to be negligible in the ultra-short and short time frames (6 months to 3 years). The overall findings suggest that the VA is most significant when the time period considered is 3 years or more. These results can prove to be highly useful for investors as well as portfolio managers. Length: 51 pages Creation-Date: 2022-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/03/Working-Paper-215.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-215 Template-Type: ReDIF-Paper 1.0 Title: Predicting Power of Ticker Search Volume in Indian Stock Market Author-Name: Ishani Chaudhuri Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Name: Parthajit Kayal Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: parthajit@mse.ac.in Keywords: Online Ticker; Google Search Volume; Stock Returns; Trading Volume Classification-JEL: G11, G12, G15 Abstract: This study examines the ability of online ticker searches to serve as a valid proxy for investor sentiment and forecast stock returns and trading volumes in the Indian financial market. In contrast to the common findings, we observe that ticker search volumes do not exhibit any predictive value for future excess stock returns. However, we find a weak but significant positive effect of ticker search volumes on trading volume with a two-week lag. A battery of robustness checks supports our findings. Our work warns the investors from possible misleading insights arising from search volume and stock returns related studies. Length: 33 pages Creation-Date: 2022-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/03/Working-Paper-214.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-214 Template-Type: ReDIF-Paper 1.0 Title: Potential Inequities in Covid -19 vaccinations Author-Name: Brijesh C Purohit Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: brijesh@mse.ac.in; brijeshpurohit@gmail.com Keywords: Inequities, Vaccinations, Covid 19, Global; India Classification-JEL: I140; I180 Abstract: The inequity in vaccination is caused by a variety of factors. With a view to explore the global and interstate factors we used inequity indices. Our research questions are twofold: First, what is the extent of global inequity in vaccination and intercountry disparity? And second, what are the various factors leading to inequitable vaccination benefits at the global level and in the Indian states and their contribution to overall inequity as estimated by our inequity index.? Using the information and computing the index of inequity, we make an intercountry and interstate comparison. Finally, we suggest that how a better management of different factors will have an impact on reduction in inequitable vaccination benefit. We bring out useful insights for public health policy for making it more welfare oriented. Length: 24 pages Creation-Date: 2022-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/03/Working-Paper-213-Brijesh.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2022-213 Template-Type: ReDIF-Paper 1.0 Title: Rural Urban Differentials in Health Insurance Demand Author-Name: Brijesh C Purohit Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: brijesh@mse.ac.in; brijeshpurohit@gmail.com Keywords: health insurance schemes; India; rural areas; urban areas; Orissa; Tamil Nadu Classification-JEL: I13; H51 Abstract: In this study an attempt is made to explore rural urban differentials in elasticity of health insurance demand in India. Both the Central and state governments have been trying to help people through their budgetary policies by providing state sponsored health insurance schemes. Keeping in view their efforts and rural urban disparities in the country, we have tried to make an attempt to evaluate whether the people have been provided appropriate information about these governmental policies and how the socio economic factors are influencing the individual household choices to adopt a particular type of health insurance scheme. This is based on latest National Family Health survey which provides health insurance demand data for rural and urban areas as well as aggregate level using household as units. Using logit model our results indicate that both in rural and urban areas these efforts have helped people to adopt suitable alternatives and the results indicate that socioeconomic factors and rising levels of income in urban areas relatively to rural areas have been reflected in more responsive nature of choices for different health insurance schemes. By contrast, though the impact of these factors is also significant in rural areas but with a lower elasticity of demand for health care insurance. Length: 31 pages Creation-Date: 2021-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/01/Working-Paper-212.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-212 Template-Type: ReDIF-Paper 1.0 Title: Are India’s farm debt waivers a political tool that impacts government finances? Author-Name: Sowmya Dhanaraj Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: sowmya@mse.ac.in Author-Name: Vidya Mahambare Author-Workplace-Name: Great Lakes Institute of Management Author-Name: Pragati Author-Workplace-Name: Madras School of Economics Keywords: debt waivers, agriculture policy, agriculture credit, welfare programs, electoral promises, state finances Classification-JEL: H53, H31, H81, Q18, Q14 Abstract: Farm debt waivers which are meant to be a one-time settlement of loans have become common in India. We find that the timing of waiver announcements by state governments between 2001-02 and 2018-19 is associated with the timing of elections rather than agrarian distress reflected in droughts or farmer suicides. The waivers, unanticipated shocks to government expenditure, are associated with an increased revenue deficit, which is accommodated by a nearly 1/3rd cut in capital expenditure to control fiscal deficit within a stipulated norm. Given its path dependence, lower capital expenditure also reduces the quality of government spending in subsequent years. Length: 48 pages Creation-Date: 2021-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/01/Working-Paper-211.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-211 Template-Type: ReDIF-Paper 1.0 Title: Role of ICT Dissemination and Digital Finance in Poverty Eradication and Income Inequality Reduction: A Sub-national Level Study from India Author-Name: Simontinti Das Author-Workplace-Name: Assistant Professor, Jadavpur University, Kolkata Author-Name: Amrita Chatterjee Author-Workplace-Name: (Corresponding author), Assistant Professor, Madras School of Economics, Chennai, India Author-Email: amrita@mse.ac.in Keywords: ICT innovation, Digital Finance, Poverty incidence, Income inequality, Rural-urban disparity Classification-JEL: O33, G2, I32, O18, R12 Abstract: Information and Communication technology (ICT) can boost economic growth and at the same time can create digital divide. The present paper explores both direct impact of ICT dissemination and its indirect impact through the channel of digital finance on poverty eradication and income inequality reduction at the sub-national level in India, considering rural-urban bifurcation. States are classified according to the incidence of poverty and income inequality. Ordered probit estimation confirms that the spread of ICT dissemination directly reduces the persistence of poverty in both urban and rural areas. Moreover, the application of ICT innovation in the financial sector or digital finance also has a positive impact on poverty eradication. However, in case of inequality removal, ICT innovation has no direct impact, though financial inclusion reduces inequality in both rural and urban areas. Interestingly, ICT diffusion in the banking sector dampens the positive role of financial inclusion on urban inequality reduction, whereas it has no impact on rural inequality. An important policy prescription should be strengthening ICT infrastructure along with a wider and uniform spread of digital finance among rural as well as urban populations so that more people can take advantage of ICT diffusion. Length: 52 pages Creation-Date: 2021-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/10/Working-Paper-210.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-210 Template-Type: ReDIF-Paper 1.0 Title: Essay on Non-linear Pricing in E-commerce Author-Name: Dipankar Das Author-Workplace-Name: Assistant Professor, BML Munjal University Author-Email: dipankar3das@gmail.com Author-Name: Vivek Sharadadevi Jadhav Author-Workplace-Name: (Corresponding author), Ph.D. Scholar, Madras School of Economics, Chennai, India Author-Email: vivekjadhav118@gmail.com Keywords: Non-linear Pricing, Trust, Antitrust Law, E-Commerce, Fuzzy preference Classification-JEL: L11, L41, L81 Abstract: The primary objective of the paper is to identify the pattern of non-linear pricing in the E-Commerce market and its usage. This paper also investigates whether the post-digitalization tying as a non-linear pricing strategy is an option or a compulsion, through formation of trust. Das and Jadhav (2021) take effort to understand the non-linear pricing in modern e-commerce. This work takes similar effort to analyse the usage of non-linear pricing by e-commerce firms. The researchers have used theoretical model using empirical evidence to find a new pattern of non-linear pricing strategy and its impact on e-commerce market behaviour. Length: 46 pages Creation-Date: 2021-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/10/Working-Paper-209.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-209 Template-Type: ReDIF-Paper 1.0 Title: Gender Differences in Double Burden of Malnutrition in India: Quantile Regression Estimates Author-Name: Archana Agnihotri Author-Workplace-Name: (Corresponding author), Research, Chennai, India Author-Email: archie2595@gmail.com Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics, Chennai, India Author-Email: brinda@mse.ac.in Keywords: BMI, Quantile Regression, Gendered Difference, Diet, Lifestyle, Sample Size Classification-JEL: C21, C83, I12, J16, L66 Abstract: India has witnessed growing prevalence of double burden of malnutrition among both men and women. Based on BMI quantile regression estimates using NFHS-4 data, a comparative assessment on the role of dietary patterns, lifestyle, education, health and hygiene, household’s demographic composition and region of residence on double burden of malnutrition, is provided separately for men and women in India. NFHS-4 data differs in sample size and nature of questions for men and women. In order to provide robustness checks gendered comparisons are also discussed by contrasting the results from full sample with the sub-samples for couples, and women only from the households of male sample. Within each BMI quintile BMI increases with education except for women in top quintile where the magnitude reduces for 10 or more years and even more for 12 or more years of education, after controlling for other factors. This perhaps is a reflection of an expectation for women to be lean than it may be for men as they are more likely to be younger and exposed to media particularly social media. Vegan diets worsen BMI for the lowest quintile while the same diet is beneficial to those at the top quintile. For men sedentary occupations are associated with overweight and for women household drudgery is associated with increased underweight. There is a broad geographic segregation of malnutrition with low BMI more prevalent in Central and Eastern India and high BMI in Southern and Northern India while double burden is more prevalent among men in Western India. Overall, the conditional quantile estimates are discerning of the covariates associated with double burden of malnutrition in India compared to the conditional mean (OLS) estimates. Length: 64 pages Creation-Date: 2021-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/10/Working-Paper-208.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-208 Template-Type: ReDIF-Paper 1.0 Title: Integration of Econometric Models and Machine Learning- Study on US Inflation and Unemployment Author-Name: Sri Rajitha Tattikota Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Email: pgdm19srirajitha@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: Inflation, Unemployment, Econometric models, Machine Learning Classification-JEL: C5, E24, E27, E31, E37 Abstract:In this study we compare the in-sample-accuracy to evaluate the performance of Econometric models and Machine Learning models on the Time Series data. Enclosed to explore techniques which perform better for Time Series Classification to predict the state (High, Medium, or Low) of each quarter by studying macroeconomic variables in the United States: Inflation and Unemployment. In the direction of improving the models using machine learning techniques and investigating how they are incorporated in time series data to improve the efficiency of the predictions. We perform a comparative analysis of various models for this classification problem. In ML, Logistic regression, K-Nearest neighbors, Support vector machines, Gradient boosting and Random forest models were explored. In Econometrics, Autoregressive Moving Average and Autoregressive Conditional Heteroskedasticity models were explored. The results showed that Machine learning models are superior compared to the traditional Econometric models for time series data. The best model for Unemployment data was EGARCH in Econometrics and K- Nearest Neighbors to predict both 2 states and 3 states in ML. The best model for Inflation data was EGARCH in Econometrics and Linear SVM, Random forest to predict 2 states and 3 states respectively in ML. Even though the ML models lack the interpretability and clarity in the exact internal process, these models have resulted exceptional in terms of accuracy in predictions. Econometric modelling would be more suitable, if we focus to only understand the effect and interpret the casual effect of the data. Length: 48 pages Creation-Date: 2021-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/10/Working-Paper-207.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-207 Template-Type: ReDIF-Paper 1.0 Title: Crop Diversity and Resilience to Droughts: Evidence from Indian Agriculture Author-Name: S. Madhumitha Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Name: Anubhab Pattanayak Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: anubhab@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Keywords: Crop diversity; Drought; Indian agriculture; Green Revolution Classification-JEL: Q10; Q15; Q54 Abstract: Agricultural intensification and technological specialisation have led to the prevalence of mono-culture in India. Diversity within crop species has been gradually declining since the advent of Green Revolution in the 1960s. With increasingly frequent weather shocks, agricultural systems face the risk of yield and income losses. A quantitative assessment of district level agricultural data for the period 1966-2015 is used to understand whether crop diversification can cushion yield and income losses for farmers during droughts. The results indicate that diversification enhanced resilience during a rainfall deficit period in the Green Revolution period. However, in the post-Green Revolution period, increased specialization mitigated the adverse effects of rainfall deficit. When simultaneous occurrence of rainfall deficit and high temperature is considered as an alternative characterization of drought, crop diversity did not provide any insulation against such weather extremes. In the absence of any weather extremes, monoculture is found to be more lucrative owing to both supply and demand side factors like improved inputs, irrigation and infrastructure facilities, government’s support prices and pattern of consumption demand. Spatial trends in crop diversification also revealed some anomalies to these general results since some states in the country have unique cropping patterns. Length: 40 pages Creation-Date: 2021-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/10/Working-Paper-206.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-206 Template-Type: ReDIF-Paper 1.0 Title: Crop Diversity and Resilience to Droughts: Evidence from Indian Agriculture Author-Name: S. Madhumitha Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Name: Anubhab Pattanayak Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: anubhab@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Keywords: Crop diversity; Drought; Indian agriculture; Green Revolution Classification-JEL: Q10; Q15; Q54 Abstract: Agricultural intensification and technological specialisation have led to the prevalence of mono-culture in India. Diversity within crop species has been gradually declining since the advent of Green Revolution in the 1960s. With increasingly frequent weather shocks, agricultural systems face the risk of yield and income losses. A quantitative assessment of district level agricultural data for the period 1966-2015 is used to understand whether crop diversification can cushion yield and income losses for farmers during droughts. The results indicate that diversification enhanced resilience during a rainfall deficit period in the Green Revolution period. However, in the post-Green Revolution period, increased specialization mitigated the adverse effects of rainfall deficit. When simultaneous occurrence of rainfall deficit and high temperature is considered as an alternative characterization of drought, crop diversity did not provide any insulation against such weather extremes. In the absence of any weather extremes, monoculture is found to be more lucrative owing to both supply and demand side factors like improved inputs, irrigation and infrastructure facilities, government’s support prices and pattern of consumption demand. Spatial trends in crop diversification also revealed some anomalies to these general results since some states in the country have unique cropping patterns. Length: 2 pages Creation-Date: 2021-02 File-URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Working-Paper-Abstract-205.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2021-205 Template-Type: ReDIF-Paper 1.0 Title: Impact of Climate Change on Economic Growth: A Case Study of India Author-Name: Medhavi Sandhani Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Email: ee18medhavi@mse.ac.in Author-Name: Anubhab Pattanayak Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: anubhab@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Keywords: Regional Growth; Climate Change; India Classification-JEL: E23, O13, Q54, R11 Abstract: This study examines climate change impact on economic growth in the Indian context. Using state and district level data on climate variables and growth rate of per capita real GDP, the present study evaluates the short- as well as medium-run effects of climate change on growth. The results based on state-level analysis are suggestive of negative effects of rising temperature on growth during 1980-2019. These aggregate level results are further reinforced by the results from district-level analysis. First, higher temperatures have significant negative impact for poorer districts with a 1?C rise in temperature leading to nearly 4.7 percent fall in growth rate of district per capita income. Second, higher temperatures not only have level effects, but also growth effects, especially for richer districts. Credit access, electrification and urbanization and increased roads and market network may play a significant role in mitigating the negative impact of climate change Length: 54 pages Creation-Date: 2020-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-204.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-204 Template-Type: ReDIF-Paper 1.0 Title: Going Beyond Gold: Can Equities be Safe-Haven? Author-Name: Parthajit Kayal Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: parthajit@mse.ac.in Author-Name: Janani Sri SG Author-Workplace-Name: Indian Institute of Management Bangalore Keywords: Safe-haven; Hedging; Copula Classification-JEL: G11, G12, G15 Abstract: Popular investment choice like fixed income, gold, and real estate has generated low returns over long horizons. Equity seems to have performed much better despite its’ inherent risk. Although, investors prefer safe-haven assets, they are increasingly moving to equities in search for better returns. We consider whether equity could be a safe-haven investment if chosen from quality stocks’ basket. We examine the safe-haven and hedging properties of the Nifty-50 constituent stocks over the period 2008–2020. To address this, we employ copula-based framework to model the dependence structure between stocks and five indices. We distinguish between safe-haven attributes and hedging features of the individual stocks. We show that the safe-haven properties of the Nifty-50 listed stocks are not as concentrated as gold but they show much low co-movement with the market. We call them pseudo–safe-haven as they are the safe-bets for investors seeking relatively safe-haven assets with impressive returns. Length: 45 pages Creation-Date: 2020-09 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-203.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-203 Template-Type: ReDIF-Paper 1.0 Title: Effect of Farming Systems for Nutrition on Nutritional Intakes: A Study of Two Regions in India Author-Name: Nithya D.J. Author-Workplace-Name: M.S.Swaminathan Research Foundation, Chennai Author-Name: S Raju Author-Workplace-Name: M.S.Swaminathan Research Foundation, Chennai Author-Name: R V Bhavani Author-Workplace-Name: M.S.Swaminathan Research Foundation, Chennai Author-Name: Akshaya Kumar Panda Author-Workplace-Name: M.S.Swaminathan Research Foundation, Chennai Author-Name: Rupal D.Wagh Author-Workplace-Name: M.S.Swaminathan Research Foundation, Chennai Author-Name: Brinda Viswanathan Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: brinda@mse.ac.in Keywords: Rural, Household Survey, Crop Diversification, Home Garden, Nutrition Classification-JEL: D13, I15, Q12, Q18, R11 Abstract: In nutrition insecure regions of rural India, farming systems with focus on nutrition (or FSN) can prove effective in improving access and availability for nutrient intake. In 2017, a few villages in Koraput and Wardha were involved to increase their crop diversity, intercropping of pulses and cereals, promotion of seasonal fruits and vegetables and nutrition awareness. About 75-80 percent of households voluntarily agreed to involve, for whom the reported dietary habits were recorded in 2014, before the FSN interventions and in 2017, after the interventions. This study reports the findings from reported dietary changes for the two years. Household food consumption is converted into its nutrient content and normalized by the demographic composition of the households. The intake of micronutrients like vitamin A, vitamin C, iron and calcium show larger improvements compared to calories and proteins. This is partly because the intervention focused more on dietary quality than in improving energy dense food. The changes are more apparent in Wardha as their nutrient intakes and dietary diversity were low in 2014. Households in Koraput benefitted substantially from the newly introduced schemes for clean cooking fuel and sanitation thereby improving hygienic environment that would enable improved nutrient absorption. Length: 44 pages Creation-Date: 2020-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-202.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-202 Template-Type: ReDIF-Paper 1.0 Title: Understanding the Water Crisis in India: Application of Causal Loop Modelling to Examine the Environment-Economy Interlinkage across Sectors Author-Name: Ashwin Ram Sridharan Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Name: Zareena Begum Irfan Author-Workplace-Name: (Corresponding author), Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Water Security, Water Scarcity, Water Use Efficiency, System Thinking, Causal Loop Diagrams Classification-JEL: Q20, Q25, Q28, Q51, Q53 Abstract: Water is considered as a wicked problem and hence relying on a linear and reductionist approach may no longer seems relevant in solving such complex systems. This paper adopts a system thinking principle to understand various water economy and environment challenges across sectors. System thinking has been evolving and increasingly being used to understand Complex Dynamic Systems. Based on a systematic review of literature, the present study has developed a Causal Loop Diagram (CLD) capturing key variables pertaining to quality aspects of water crisis. CLD are believed to create a broader and holistic understanding of the water management challenges by clearly exhibiting the relationship between the key variables. The CLD highlight the existing water pollution related challenges in India and proposes a pathway for sustainable management of water resources across agriculture, industry and domestic sectors. Though this paper discusses CLD based on Indian scenario, it holds good for any developing countries context. Length: 18 pages Creation-Date: 2020-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-201.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-201 Template-Type: ReDIF-Paper 1.0 Title: Double Burden of Malnutrition in India: Decadal Changes among Adult Men and Women Author-Name: Brinda Viswanathan Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: brinda@mse.ac.in Author-Name: Archana Agnihotri Author-Workplace-Name: Great Lakes Institute of Management Keywords: Malnutrition, Double Burden, BMI, Health Insurance, Hygiene Classification-JEL: I11, I18, I20, J18, O18 Abstract: The recent COVID-19 pandemic brings to the fore a high fatality rate amongst those with comorbidities of diabetes and hypertension that is often associated with obesity, while it also exposing the vulnerabilities among the less nourished population due to the infection and economic lockdown. An increasing number of developing countries like India have both undernourished people and overnourished individuals posing a large public health challenge. In these contexts, the study here analyses the decadal changes in double burden of malnutrition among adult men and women in India based on NFHS-3 and NFHS-4 data. Undernutrition is assessed by the thinness and overnutrition by overweight and obesity using Asian cut-off values for BMI. By 2015-16 the gender gaps in malnutrition have closed in, than it was in 2005-06 perhaps due to an increase in sample size for men. Undernutrition rates have declined in the past decade but are close to 20 percent or more in the population segments of 20-29 years, rural areas, among the poorest and poor asset quintiles, those with less than 5 years of schooling and in the central and eastern regions of India. The worrisome feature is that the increases in overnutrition rates have replaced the decline in undernutrition rates more than the increases in normal nutrition rates resulting in its widespread increase across all parts of country with 50 percent or more among the richest asset quintile, 15 or more years of schooling and more urbanized states of India. The silver lining is that overnutrition rates have declined marginally among those with 18 or more years of schooling in 2015-16. To address the double burden of malnutrition, the way forward would be to harness the large diversity in India’s food systems with the assistance of local governments and communities and nudging the individuals to a healthy diet and physical exercises using India’s varied fare of traditional and modern options-this could also be in sync with the ongoing call for localness and self-reliance. Length: 63 pages Creation-Date: 2020-08 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-200.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-200 Template-Type: ReDIF-Paper 1.0 Title: From Income to Household Welfare: Lessons from Refrigerator Ownership in India. Author-Name: Sowmya Dhanaraj Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: sowmya@mse.ac.in Author-Name: Vidya Mahambare Author-Workplace-Name: Great Lakes Institute of Management Author-Email: sowmya@mse.ac.in Author-Name: Poonam Munjal Author-Workplace-Name: National Council of Applied Economic Research Keywords: Economic development: urban, rural, Household behaviour, Family structure, Econometric modelling, ownership analysis Classification-JEL: O180, D120, J120, C50, D71 Abstract: This paper draws implications for the energy and education policies in developing countries based on the insights derived from studying the determinants of household refrigerator ownership in India. In our study the failure of the government policies to ensure reliable public services such as uninterrupted power supply and improving female education levels turn out to be the key stumbling blocks to raising household welfare in India. While a threshold level of household income is necessary for a purchase of a consumer durable, it is not a sufficient condition. Our results for the determinants of refrigerator ownership in India suggest that, even when households have sufficient purchasing power, the duration of a complementary good (electricity for >17 h per day) is critical for the ownership, all else held constant. Also, females in households tend to derive greater utility from the refrigerator usage due to its impact on lowering household burden of work and easing women’s entry into the labour market. Our results confirm the hypothesis that when women bargaining power is proxied by the level of education, households with a female with higher level of education have higher probability of refrigerator ownership. Length: 30 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-199.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-199 Template-Type: ReDIF-Paper 1.0 Title: Inventory Cycles and Business Cycles – Has the relationship lost its importance over the years: A Time-Varying Parameter Approach using U.S. Data Author-Name: Parijat Maitra Author-Workplace-Name: IIM-A Author-Email: naveen@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: Inventory to Sales Ratios; Inventory; Business Cycles; Trend Breaks Classification-JEL: E00, E32, E37 Abstract: Despite widespread recognition that fluctuations in inventories are one of the primary drivers of business cycles and the introduction of Just-In-Time (JIT) Production system in the 1980s has resulted in declining inventory to sales ratio, suggesting that the role of inventories in generating business cycles may be diminishing, surprisingly very little empirical work has been done to investigate how this relationship has varied over the years. In this study we use U.S. Business cycle and Inventory to sales ratio data from 1967 Q1 to 1996 Q4 and estimate their relationship in a Time-Varying Parameter framework. We find that the importance of inventory cycles w.r.t business cycles has declined over the years, with multiple structural breaks observed in the 1970s and the 1980s. However, our estimates also show that despite the decline in the strength of the relationship, fluctuations in inventories are still an important factor in business cycles, particularly in recessions. Length: 32` pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/WORKING-PAPER-198.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-198 Template-Type: ReDIF-Paper 1.0 Title: The Oil Story: Is it Still the Same? Author-Name: Swati Singh Author-Workplace-Name: MSE Author-Email: naveen@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: Macroeconomic Fluctuations; Oil shocks; Energy and the Macroeconomy; ARDL Model; VAR; Granger causality test; Error Variance Decomposition Classification-JEL: E32; C22; C32; Q43 Abstract: It is not to be doubted that the oil price shocks adversely impact the economy. Enough literature is present in support of this fact but, at the same time, it is equivalently important to determine the changing nature of this relationship. This paper studies the changing behavior of this relation from 1948-2018 and shows that the oil prices are no more as effective in explaining the changes in the output of the economy as it had been before the 1970s. Our results also show the extent to which oil intensity has reduced in effecting the output of the US economy along with explaining the short term and long term impacts of oil shocks. Through variance decomposition analysis, the paper explains the reason for this decline in oil importance in recent time. Various factors like changing technology and political and strategic implications are found to be a few of the many reasons behind this change. Length: 41` pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-197.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-197 Template-Type: ReDIF-Paper 1.0 Title: Inflation Targeting in the United Kingdom: Is there evidence for Asymmetric Preferences? Author-Name: Pranjal Rawat Author-Workplace-Name: MSE Author-Email: naveen@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: Phillips curve; Taylor Rules; Asymmetric Preferences; Deflationary Bias; GMM estimation; Linex Loss Function; Rational Expectations; Monetary Policy Classification-JEL: E31; E52; E6 Abstract: In recent times, inflation targeting has been one of the most successful monetary frameworks in advanced economics. However, critics claim that policy rates have been kept higher than necessary. They claim that central banks did not pursue a symmetric inflation target. If a central bank pursues symmetric inflation and output targets, the optimal monetary policy response is a linear forward-looking Taylor rule (Clarida et,. al 1999). We use the Linex Loss function as outlined in Nobay and Peel (2003) to relax the assumption of symmetric preferences. The presence of asymmetric preferences implies that monetary policy reacts not only to the conditional expectation of inflation and output gap but also to their conditional variances. Non-linear Taylor rules are estimated on UK data from 1995: Q2 and 2003: Q3. The results support the critics. Inflation targeting was indeed pursued with asymmetric preferences. The findings are robust to the Bank of England’s ex-ante forecasts, ‘real-time’ estimates of the output gap, non-linearities in the supply curve, and alternative forecast horizons. Policy rates have been about 30 basis points higher than necessary due to asymmetric preferences. Length: 46 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/working-paper-196.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-196 Template-Type: ReDIF-Paper 1.0 Title: Information Theoretic Ranking of Extreme Value Returns Author-Name: Parthajit Kayal Author-Workplace-Name: (Corresponding author), Madras School of Economics, Chennai, India Author-Email: parthajit@mse.ac.in Author-Name: Sumanjay Dutta Author-Workplace-Name: Research Scholar, Indian Institute of Science, CV Raman Rd, Bengaluru, Karnataka Author-Email: parthajit@mse.ac.in Author-Name: Vipul Khandelwal Author-Workplace-Name: Senior Business Analyst, Tata Consultancy Services (TCS), Sholinganallur, OMR, Chennai Author-Email: parthajit@mse.ac.in Author-Name: Rakesh Nigam Author-Workplace-Name:Professor, Madras School of Economics, Chennai, India Author-Email: rakesh@mse.ac.in Keywords: extreme value estimators, information theory Classification-JEL: G10, G140, G150, G170 Abstract: This study highlights the importance of the information contained extreme value ratios (or returns) in the volatility estimation of financial assets. Most popular extreme value estimators like Parkinson (1980), Garman Klass (1980), Rogers Satchell (1991) and Yang Zhang (2000) use a subset of all available extreme value ratios but not the full set. We examine if there are other extreme value ratios which contain more information than the most widely used ratios. This study shows empirically how much information is contained in various extreme value ratios of financial assets, using both real and simulated data. Using information theory, we find out their variability in relation to a uniform distribution in each quarter. We then rank them using the Kullback-Leibler metric (in accordance with a scoring methodology we developed in this study) to ascertain which set of ratios are more variable than others and thus may provide better estimation in computing volatility. We also calculate the rank of the matrix to identify the set of linearly independent ratios, for ascertaining the number of ratios that would be enough to generate a class of volatility estimators. The empirical results demonstrate that the need for incorporating other ratios in volatility estimation. We also observe that each dataset has other more informative ratios which are uniquely attributed to that dataset. Length: 38 pages Creation-Date: 2020-06 https://www.mse.ac.in/wp-content/uploads/2021/05/working-paper-195.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-195 Template-Type: ReDIF-Paper 1.0 Title: A Constant Gain Learning Framework to understand the behaviour of US Inflation and Unemployment in the 2nd half of 20th century Author-Name: M.Venkata Raamasrinivas Author-Workplace-Name: MSE Author-Email: naveen@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: natural rate of unemployment, persistence, stagflation, time inconsistency, state space, kalman filter, maximum likelihood estimation, constant gain (CG) learning Classification-JEL: E32, E37, E58, E52 Abstract: We build an adaptive learning model where policymakers use constant gain learning algorithm to update their knowledge/estimates of the model every time period. The optimal policy is enacted every time period by policymakers assuming their current knowledge of the model to be perfect. This framework is used to study the behavior of post war US inflation and unemployment. The model accurately explains the Great Inflation- while the rational expectations equilibrium is characterized by low inflation, learning leads to disequilibrium dynamics when initial knowledge of the model is incorrect. Specifically, under estimation of the natural rate, persistence of inflation and slope of Phillips Curve by policymakers explains the high and persistent nature of inflation from 1963 to 1980. The convergence of learning to rational expectations equilibrium explains the subsequent disinflation. We further show that, within the learning framework, policymakers exposed themselves to the time consistency problem. Between 1960-1979, they pursued an artificially low target for the unemployment rate. Since Volcker, policymakers have accepted the natural rate hypothesis and hence have avoided the inflationary bias arising from time consistency problem. Length: 31 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-194.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-194 Template-Type: ReDIF-Paper 1.0 Title: Institutional Design and Credibility Author-Name: Jyotsana Kala Author-Workplace-Name: JPMorgan Chase and Co. Author-Email: naveen@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: Divisia,central bank; central bank independence; inflation persistence; monetary policy credibility; policy making; time-inconsistency Classification-JEL: E52; E58; E31; E61; C32 Abstract: The optimal design of a monetary institution to achieve policy effectiveness has been of utmost importance to policy-makers. This paper presents an empirical analysis of the link between the structure of a monetary institution and inflation persistence in an economy. It is well established in literature that governance structure of a monetary institution affects the stability of an economy. But the mechanism by which it operates remains unclear. In this paper, we claim this mechanism to be the credibility of the monetary institution. A Central Bank with an autonomous and transparent governance structure is deemed to be more credible by agents, which in turn leads to higher inflation stability in the economy. We investigate this hypothesis using data for the UK. Our results suggest that credibility is the missing link. The institutional design of the Central Bank contributes to its credibility, which subsequently affects the degree of inflation persistence in the economy. Length: 37 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-paper-193.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-193 Template-Type: ReDIF-Paper 1.0 Title: If Monetary Aggregates, then Divisia Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Author-Name: Parush Arora Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Email: ge16parush@mse.ac.in Keywords: Divisia, Simple Sum, Monetary Aggregates, Phillips Curve, Inflation forecasting, P star model Classification-JEL: E31, E37, E47, E52, E58 Abstract: This paper empirically tests whether the inclusion of monetary aggregates in inflation forecasting models helps their forecasting ability or not. We have estimated the P-star model with Divisia M2, Divisia M3, simple sum M2, and simple sum M3 along with Phillips curve and ARIMA specifications to forecast inflation for India from April 1994 to December 2016. We find that inflation forecasting ability of both Divisia monetary aggregate and the simple sum monetary aggregates are similar. Though Divisia fits better than simple sum from 1993-2013, the information contained in Divisia does not explain the behaviour of inflation post-2013. Length: 27 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-192.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-192 Template-Type: ReDIF-Paper 1.0 Title: The Unnatural Rate of Unemployment: Reflections on the Barro-Gordon and Natural Rate Paradigms Author-Name: Abhiruchi Rathi Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Name: Naveen Srinivasan Author-Workplace-Name: (Corresponding author) Professor, Madras School of Economics, Chennai, India Author-Email: naveen@mse.ac.in Keywords: Phillips curve; Time-inconsistency; Natural rate; SVAR; Beveridge-Nelson decomposition; Labor-market institutions; IV estimation Classification-JEL: E31; E52; E61; C22; E24; C3 Abstract: Unemployment and inflation exhibit a positive correlation during the 1970s in the United States. Ireland (1999) uses the time-inconsistency framework to study long and short run dynamics between the two rates. However, for the long-run, we find that the conditions for cointegration are not met whereas the short-run restrictions grounded in economic theory are strongly rejected. We look at the moving natural rate theory for an alternative explanation of the abnormal behavior of inflation and unemployment. We employ a structural vector autoregression (SVAR) model to study the impact of shocks to natural rate on the two series. We use the Beveridge-Nelson decomposition to extract short-run natural rate estimates from the unemployment series. Further, we identify factors affecting the short-run natural rate using regressions. We conclude that changes in labor-market institutions like unemployment benefits, labor productivity and real wages, as well as changes in labor force growth and real interest rates explain significant variation in the estimated natural rate of unemployment Length: 53 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-191.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-191 Template-Type: ReDIF-Paper 1.0 Title: Impact of Trade with ASEAN on India’s Employment in Industrial Sector Author-Name: Devasmita Jena Author-Workplace-Name: (Corresponding author) Lecturer, Madras School of Economics, Chennai, India Author-Email: devasmita@mse.ac.in Author-Name: Swati Saini Author-Workplace-Name: Assistant Professor, Dyal Singh College, University of Delhi Author-Email: swatisaini1128@gmail.com Keywords: Trade, Employment, India-ASEAN Free Trade Agreement, KLEMS Classification-JEL: F1, F4, J2 Abstract: In recent time, India’s growing trade deficits with its partner countries have been a major policy concern, making Indian policymakers cautious about signing new free trade deals. In this paper, we argue that in addition to the impact of trade agreements on India’s trade balance, policy discussions on trade agreements should also take into account the impact of trade on a spectrum of other economic indicators, such as economic growth, income distribution and employment. In particular, the impact on employment is central to assess whether or not greater trade integration is helping or harming the country, since employment numbers capture both growth and distributional aspect of trade. This paper sheds light on this aspect by examining the impact of Association of South East Asian Nations (ASEAN)- India Free Trade Agreement (AIFTA) on industry-level employment in India during the period of 1996-97 to 2016-17. We use a dynamic econometric model in a panel framework and find that while export and import have had favorable impact on industrial sector employment prior to 2004-05, AIFTA led to decline in industrial sector employment post 2004-05. Length: 50 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-190.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-190 Template-Type: ReDIF-Paper 1.0 Title: The Role of Feminist Political Ecology (FPE) Framework in Studying How Gender and Natural Resources are Interlinked: The Case of Women in the Aftermath of Bangladesh’s Arsenic Contamination Author-Name: Chinmayi Srikanth Author-Workplace-Name: Research Scholar, Fellow Programme in Management, Indian Institute of Management Kozhikode, IIMK Campus P.O, Kerala 673 570 Author-Name: Zareena Begum Irfan Author-Workplace-Name: (Corresponding author) Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Feminist Political Ecology, Bangladesh, water, women, vulnerability Classification-JEL: J7 Abstract: The purpose of this paper is to shed light on the need for a gender-centric approach to studying the consequences of the scarcity of a natural resource due to arsenic contamination, particularly water, on the lives of women. The need for such an approach is met by the Feminist Political Ecology (FPE) Framework that identifies women as highly vulnerable as compared to their male counterparts and the most affected by such scarcity. The paper uses the case of Bangladesh’s arsenic contamination to explore the nuances of gender and how it changes their experience of the phenomenon. It also underlines the importance of FPE in painting a more realistic and complete picture of the vulnerability of women. Length: 22 pages Creation-Date: 2020-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-189.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-189 Template-Type: ReDIF-Paper 1.0 Title: Are Human Rights and Economic Well-Being Substitutes? The Evidence from the Migration Patterns in Bangladesh and Myanmar Author-Name: Ankan Ghosh Author-Workplace-Name: Madras School of Economics, Chennai, India Author-Name: Zareena Begum Irfan Author-Workplace-Name: (Corresponding author) Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Migration, migration, human rights, labours, socio-economic Classification-JEL: J7, J66, J61, F66, I3, Y4 Abstract: In the age of globalization international is an important phenomenon that we notice worldwide. International migration can happen for various reasons an there effect on the native country may be positive or negative and that is a matter of discussion. In this paper it is considered that migration happens for economic reason as well as social reasons. Economic reason may be better availability of jobs in other countries and a scope of greater income streams. Social factors include vulnerability in the native country due to political unrest, environmental damage factors and other social detentions in the native place. The paper discusses these factors as human rights, the unavailability of which will instigate people to migrate. The paper uses evidence from two countries- Bangladesh and Myanmar to see the same. A two country panel model was set up to get results which show that a trade-off between the aforementioned rights and economic variables exists. Length: 33 pages Creation-Date: 2020-01 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-188.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-188 Template-Type: ReDIF-Paper 1.0 Title: Political Cycles in MGNREGs Implementation Author-Name: K. Vinay Author-Workplace-Name: (Corresponding author) Officer, Citigroup, Chennai, India Author-Email: ae17vinay@mse.ac.in uthor-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: elections, employment, incumbent, MGNREGS, Hausman-Taylor Classification-JEL: C36, D72, D91, J08 Abstract: Nordhaus (1975) is one of the earliest studies to provide a theoretical assessment of political business cycles, explaining opportunistic behaviour of political parties before the elections. This study is an attempt to find the nature of association between electoral incentives and the use of welfare policies in a federal democratic system through the lens of India’s largest nationwide social security scheme, MGNREGS. Among the panel data random effects models, the Hausman-Taylor instrumental variable estimator is used for econometric modelling leveraging data at a granular month on month level from April 2012 to June 2019 for twenty-two Indian states. The demand for work and person-days of work are considered for the analysis capturing receptively the demand and supply side variables of the program. After controlling for rainfall, rural population and landless agricultural labour, an asymmetric behaviour is observed for the states governed by regional parties such that they tend to generate significantly lower person-days of work near the central elections but show a significantly higher demand for work near the state elections. Moreover, states ruled by aligned central and state parties generate higher than average demand for work under the scheme. The over-arching framework of multi-party democracy and the dynamics of center-state relations present in centrally sponsored schemes create scope for such behaviour. Length: 47 pages Creation-Date: 2020-01 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-187.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2020-187 Template-Type: ReDIF-Paper 1.0 Title: Can Women Empowerment Help to Reduce Open Defecation in India: Evidence from NFHS 4 Author-Name: Amrita Chatterjee Author-Workplace-Name: Assistant Professor, Madras School of Economics, Chennai, India Author-Email: amrita@mse.ac.in Author-Name: Shriya Agarwal Author-Workplace-Name: Associate, Idinsight Pvt. Ltd Author-Email: agarwal.shriya05@gmail.com Keywords: Sanitation; women empowerment, education, logistic regression, quantile regression Classification-JEL: 020, J16, D1, B23 Abstract: In this paper, it is argued that women, because of being disproportionately affected by lack of sanitation, can influence the household to build a toilet at home and therefore reduce the incidence of open defecation. Thus, the objective of this paper is to analyze the role that women empowerment can play in reducing open defecation at the household level. Using the National Family Health Survey (NFHS-4) for 2015-2016 for a cross section of 17 major states of India, the paper suggests that greater women autonomy in the form of higher decision making power and greater freedom of movement leads to increased chances of toilets in the house. Secondly, women can be influential neither by virtue of being the head of the household nor by working but only if such positions of power are complemented with education and media exposure. A district level analysis using Quantile regression suggests that the role of women autonomy is more pronounced in the well performing districts compared to districts with more open defecation. The importance of media exposure and education got reinforced. Length: 52 pages Creation-Date: 2019-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-186-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-186 Template-Type: ReDIF-Paper 1.0 Title: Weather Shocks, Agricultural Productivity and Farmer Suicides in India Author-Name: Sonal Barve Author-Workplace-Name: Research Intern, Reserve Bank of India Author-Email: ee17sonal@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Farmer Suicide; Weather Shocks; Agricultural Productivity; Contagion Effect; Classification-JEL: Q540, O130, D190, O100 Abstract: There are several reasons for farmer depression leading sometimes to the extreme measure of committing suicide. Globalization, commercialization, modernisation, erratic climatic conditions, individual expectations, contagion and government policies are some of the reasons attributed to farmer’s suicides. This study examines linkages between weather shock induced changes in agricultural productivity and farmer’s suicides in India using fixed effects panel data model with 25 Indian states and 14 years (1996-2009). Estimates from single equation model show no direct effect of weather shocks on farmer suicides while a two-equation specification – one for count of farmer suicides with endogenous agricultural variable and an agricultural equation with weather shocks – yields useful insights. The results from first stage estimation as expected suggest that (low) rainfall shock and high temperature shock adversely affect crop yield per hectare, while regions with higher share of irrigated area are able to counter to some extent the adverse effects of weather shocks. The negative binomial regression model for farmer suicide includes predicted yield along with one-period lag of farmer suicides and state’s suicide rates to capture the contagion effect. The results show that contagion effects are strong on farmer’s suicides while predicted crop yield has negative and significant influence indicating that farmer suicides are indirectly associated with weather shocks via the changes in agricultural productivity. Length: 47 pages Creation-Date: 2019-12 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-185-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-185 Template-Type: ReDIF-Paper 1.0 Title: Fiscal Transfers, Natural Calamities and Partisan Politics - Evidence from India Author-Name: Anubhab Pattanayak Author-Workplace-Name: Corresponding Author, Assistant Professor, Madras School of Economics Author-Email: anubhab@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Keywords: Fiscal Federalism; Political Alignment; Natural Calamities Classification-JEL: H77; O23; D72; Q54 Abstract: Do some sub-national governments receive higher transfers from the Central Government than others? Which channels exist for the Central Government to practice partisan politics? Taking note of the significant gap between the relief sought by the states in the context of natural calamities such as drought and the assistance given by the Centre, the present study attempts to contribute to the vast literature on fiscal transfers from the Centre to different states in India with particular focus on partisan politics. The empirical analysis based on total and non-plan fiscal grants from the Centre to different states and an index of drought over the past three decades suggests that the grant allocation in response to drought is higher when political alignment exists between the Centre and the states. The study further shows that the allocation of grants in response to drought is affected by the nature of political alignment and has changed over time. Length: 36 pages Creation-Date: 2019-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-184.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-184 Template-Type: ReDIF-Paper 1.0 Title: Assessment of Climate Change Impacts and Adaptation: A Methodological Review and Application to Indian Agriculture Author-Name: Anubhab Pattanayak Author-Workplace-Name: Corresponding Author, Assistant Professor, Madras School of Economics Author-Email: anubhab@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Keywords: Climate change impacts; Indian agriculture; Statistical models; Adaptation Classification-JEL: Q54; Q10; C10 Abstract: In the context of agriculture both crop modelling as well as statistical modelling approaches are used to assess climate change impacts. Studies comparing both approaches across developed as well as developing countries have argued that there is little or no difference in their estimates, resulting in further proliferation of statistical approaches. This paper presents a methodological review of the statistical approaches that broadly use cross-sectional and panel datasets to quantitatively assess the climate change impacts on agriculture. Arguing that adaptation is modelled differently in different models, the paper provides an estimate of the extent to which impacts could be moderated through long-term adaptation in the context of Indian agriculture. In addition, the paper provides a brief review of the vast parallel literature that exclusively uses time-series data for assessment of the impacts of climate/weather trends. Length: 23 pages Creation-Date: 2019-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-183.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-183 Template-Type: ReDIF-Paper 1.0 Title: Household Choice of Financial Borrowing and Its Source: Multinomial Probit Model with Selection Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Corresponding Author, Professor, Madras School of Economics, Chennai, India Author-Email: kavi@mse.ac.in Author-Name: Anubhab Pattanayak Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: anubhab@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brinda@mse.ac.in Author-Name: Ashish Chaturvedi Author-Workplace-Name: Director-Climate Change, GIZ, New Delhi, India Author-Email: ashish.chaturvedi@giz.de Keywords: Climate Change, Climate Risk, Adaptation, Loss and Damages, Climate Policy, Rural India Classification-JEL: Q15, Q54, Q56, Q57, Q58, R52, R58 Abstract: This paper summarizes the research and policy issues relating to climate change impacts, adaptation research and loss and damage assessments for rural India with focus on agriculture and water sectors. The climate change impact assessments have recently been proliferated by statistical models which primarily assess the role of weather as opposed to climate, thereby biasing the extent of impacts. Though the interface between climate change adaptation research and policy has evolved from a broad geographic understanding to the field level challenges of implementation, there is considerable overlap between developmental activities and adaptation activities. Further, it is expected that the climate change impacts will exceed adaptation limits manifesting in loss and damage due to frequent and/or severe climate extreme events. The loss and damage debate also highlights the challenges that development brings in reducing irreversible and unavoidable losses and damages on one hand and increasing losses and damages attributable to intolerability on the other hand. Length: 42 pages Creation-Date: 2019-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-182-1-2.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-182 Template-Type: ReDIF-Paper 1.0 Title: Household Choice of Financial Borrowing and Its Source: Multinomial Probit Model with Selection Author-Name: Kanika Rana Author-Workplace-Name: Corresponding Author, Consultant, Ernst and Young, Gurgaon Author-Email: aqf16kanika@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Household credit and sources, formal and informal institution, microfinance institutions, multinomial probit, Heckman selection Classification-JEL: C35, E51, G21 Abstract: In developing countries, the economically disempowered, borrow from multiple sources and also have multiple borrowings notwithstanding that some may be unable to access any form of credit. To ensure a greater amount of financial inclusion, it becomes necessary to understand what determines the choice between alternative loan source combinations while taking into account that borrowers may have distinct characteristics from non-borrowers. Access to formal credit sources, are elusive for the disadvantaged due to different demand and supply side perceptions. Microfinance institutions (MFI) play an intermediate role having some attributes of the informal network and some similar to formal institutions. This study uses an observational data set for 2011-12 to analyse the role of socio-economic-demographic characteristics in the household’s choice for different types of loan sources. In particular, the extensive nature of data allows us to study the mediating role played by MFI through its linkages with formal and informal sources. The results of Multinomial Probit with Heckman selection, to account for non-borrowing households, reveal that where institutional sources are still a preferred option for the relatively advantaged section of the population, presence of microfinance loans in combination with other loan sources has contributed in ensuring greater equity in credit access to all. However, women headed households or dalit households with lesser opportunities of networking are less likely to take credit from formal sources Length: 62 pages Creation-Date: 2019-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-181-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-181 Template-Type: ReDIF-Paper 1.0 Title: Farmer’s Perception on Soil Erosion in Rainfed Watershed Areas of Telangana, India Author-Name: Dayakar Peddi Author-Workplace-Name: Corresponding Author, ICSSR Research Fellow, Madras School of Economics, Chennai Author-Email: peddi@mse.ac.in Author-Name: Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Land degradation, Soil erosion, Soil conservation Classification-JEL: Q5, Q15, Q51, Q57 Abstract: Soil erosion is a major problem of agriculture in India. The objective of this study is to investigate how farmers perceive the severity of soil erosion in the rain fed watershed areas of Telangana, India. The study is based on a detailed survey of 400 households in two sub-watershed areas. The study findings suggest that farmer’s perception of soil erosion severity corresponds well with expectations of soil erosion determined by site specific factors such as slope of the plot, soil depth, soil texture, road connectivity, irrigation, crop intensity, and type of crops. The findings from the study also corroborate well with the several empirical studies from different parts of the world. Given this correspondence, it is argued that farmer’s expertise is important while assessing soil erosion severity. The farmer’s knowledge of the plot level soil erosion could complement the assessments made through secondary sources. The study findings further highlight the importance of using participatory approaches when working to reduce soil erosion. Length: 33 pages Creation-Date: 2019-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-180.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-180 Template-Type: ReDIF-Paper 1.0 Title: Social Performance Of Microfinance Institutions in South Asian Region: A Case Study of India, Bangladesh, Nepal and Sri Lanka Author-Name: S. Saravanan Author-Workplace-Name: Post-Doctoral Fellow, Madras School of Economics, Chennai Author-Email: saravanan@mse.ac.in Author-Name: Brijesh C. Purohit Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brijesh@mse.ac.in Keywords: Microfinance, social performance, measurement index, India, Bangladesh, Nepal, Sri Lanka Classification-JEL: G21, F34, I31, C01 Abstract: Over the years, microfinance institutions (MFIs) have been propagated for poverty alleviation and support to the underserved area. Different objectives discussed in the literature in regard to these institutions include poverty alleviation, financial efficiency, sustainability and social performance. The last one of these objectives, namely social performance has been least explored the least. This is owing largely to best and agreeable measurement methods. Questions float around the issues whether it should be only qualitative or could be satisfactorily measured quantitatively. In this paper we use the quantitative method. This is in line with some of the seminal studies that have deployed a social measurement index. We calculate and apply this social performance index. We use panel and logistic regressions to explore the impact of other important variables on social performance. Using the data for the years 2009-2014 for 88, 27, 25 and 15 MFIs in four south Asian countries namely, India, Bangladesh, Nepal and Sri Lanka respectively. Our results compare among these countries as well as other studies in the South Asian nations. The results indicate that assets and profitability position and maturity of MFIs play an important role in performing socially and there is no conflict between social performance, efficiency and sustainability of MFIs. Length: 34 pages Creation-Date: 2019-03 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-179.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-179 Template-Type: ReDIF-Paper 1.0 Title: Information and Communication Technology Diffusion and Financial Inclusion: An Interstate Analysis for India Author-Name: Amrita Chatterjee Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: amrita@mse.ac.in Author-Name: Simontini Das Author-Workplace-Name: Assistant Professor, Jadavpur University, Kolkata: 700032 Author-Email: simontini@gmail.com Keywords: Financial Inclusion, Information and Communication Technology Diffusion, Dynamic Panel Data Model Classification-JEL: L86, L96, C23, G21 Abstract: Financial Inclusion has its primary objective in providing access to useful and affordable financial products and services that meet the needs of so far unbanked population for transactions, payments, savings, credit and insurance in a responsible and sustainable way. The penetration of banking services in India has made reasonable progress though there are still regional disparities with especially the rural and female population lagging behind. However, not only access but also usage of financial services matters. Moreover, as there is a strong initiative towards digitalized cashless economy in India, it is important to examine whether the country is ready for a more technology-driven financial system. As far as the diffusion of telecommunication technology is concerned, India has made a remarkable progress in urban areas giving rise to significant digital divide between rural and urban India. With spread of mobile and mobile internet though, this divide has come down to some extent. Thus if this inclination towards mobile technology can be properly channelized to improve the access as well as usage of financial services through spread of mobile banking then more and more people can be brought under the purview of institutional credit system leading to reduction in poverty and inequality. The current paper intends to study the role of information and communication technology (ICT) diffusion in improving the status of financial inclusion across the different states of India. Two separate indices for Financial Inclusion and Information Technology Diffusion are formed and the states are clustered to club the states similar in terms of their performance. Then the paper tries to test whether ICT diffusion is one of the indicators of Financial Inclusion in India. The dynamic panel data analysis helped us to identify the role of technology as well as other socio-economic factors which can contribute in interstate disparities in FI. The results show that technology does play an important role in improving financial inclusion. As the elderly people in rural as well as urban areas are still not that familiar with mobile and internet, they may not be able to get benefited by ICT revolution. But lack of education and more importantly poor status of financial literacy play a very vital role in FI Length: 44 pages Creation-Date: 2019-01 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-178-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2019-178 Template-Type: ReDIF-Paper 1.0 Title: Household Income Dynamics and Investment in Children: Evidence from India Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: sowmya@mse.ac.in Author-Name: Smit Gade Author-Workplace-Name: Good Business Lab Author-Name: Christy Mariya Paul Author-Workplace-Name: Madras School of Economics Keywords: income shocks, child time use, test scores, dynamic panel estimation Classification-JEL:I20, I24, I30 Abstract: Income shocks on households in developing countries are known to have an impact on the investment in the education of children. In this paper, we explore the effects of various income and expenditure shocks on educational investment and cognitive outcomes of children. In order to understand the mechanisms through which shocks affect children’s human capital we employ a range of dependent variables that capture input, output and outcome measures of education. We use three rounds of household-level panel data from Young lives survey conducted in two southern states of India, Andhra Pradesh and Telangana. Dynamic Panel data model using system General Method of Moments (GMM) estimator is used for investigating the impact of various income and expenditure shocks on children’s education and cognitive abilities. We find that idiosyncratic shocks like paternal health shocks and livestock loss translate into lower inputs of children’s education which in turn reduce their cognitive ability captured through vocabulary and mathematics tests. The results also suggest that these shocks mainly affect children’s development through decreased time spent in school. Length: 37 pages Creation-Date: 2018-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-177.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-177 Template-Type: ReDIF-Paper 1.0 Title: Family Structure, Education and Women’s Employment in Rural India Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: sowmya@mse.ac.in Author-Name: Vidya Mahambare Author-Workplace-Name: Great Lakes Institute of Management, Chennai Keywords: non-farm employment, family structure, female autonomy, rural areas Classification-JEL: J21, J22, J12 Abstract: This paper investigates if residing in a joint family affects non-farm employment for married women in rural India. Our estimates based on a longitudinal survey of over 27000 women conducted in 2005 and 2012, and using the conditional logistic regression and instrumental variable approach suggest that living in a joint family lowers married women’s non-farm employment by more than 10 percent points. The adverse impact is higher for younger women, for women from families with higher social status, and for those residing in Northern India. We present evidence which suggests that women with higher education levels are not constrained from cultural and traditional norms that lower women’s decision-making power and mobility in a joint family. An increased education level is likely to raise women’s earning capacity as well as the quality of jobs which may help in lowering family pressure against work. The results suggest that public policies that encourage higher education, improving job accessibility along with affordable childcare, especially for women with less education will raise non-farm employment for women living in a joint family. Length: 43 pages Creation-Date: 2018-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-176.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-176 Template-Type: ReDIF-Paper 1.0 Title: Current Status of Mangroves in India: Benefits, Rising Threats Policy and Suggestions for the Way Forward Author-Name: Samyuktha Ashokkumar Author-Workplace-Name: MA Environmental Economics, Madras School of Economics Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Mangroves, Conservation, Ecosystem services, Climate change and Policy Classification-JEL: Q220, Q250, Q260, Q500, Q570, Q580 Abstract: Mangroves are one of the world’s most productive ecosystems which are at present in it’s threatened state. They provide a wide range of goods and services some of which have a direct value but more often provides many indirect benefits that seem to be hidden. The indiscriminate and exploitative nature towards extracting it’s resources have led to severe loss in area throughout the world. In India, Mangroves were exploited indiscriminately during the 1960s.Traditionally considered as wastelands and dump yards, its importance were understood only over time. Hence, active conservation and regeneration activities were undertaken since the beginning of 1980s, yet the present area cover is only a modest remaining of the past. Such activities are undertaken by both the government in terms of legislative measures and active local community involvement. In addition, threats from Global Climate Change pose additional concerns for it’s regeneration and restoration. The paper throws light on the status of mangrove cover in India, the benefits, threats and the existing policy framework .Existing legal and non-legal measures pose their own shortcomings and drawbacks in terms of lack of effective implementation of many such policies, lax of local communities towards continuous restoration activities, improper resources allocations between the two and thus lays the path for some measures that could in turn be adopted as lessons learnt from international case study examples. Length: 31 pages Creation-Date: 2018-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Papepr-175.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-175 Template-Type: ReDIF-Paper 1.0 Title: Current Status of Mangroves in India: Benefits, Rising Threats Policy and Suggestions for the Way Forward Author-Name: Samyuktha Ashokkumar Author-Workplace-Name: MA Environmental Economics, Madras School of Economics Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Mangroves, Conservation, Ecosystem services, Climate change and Policy Classification-JEL: Q220, Q250, Q260, Q500, Q570, Q580 Abstract: Mangroves are one of the world’s most productive ecosystems which are at present in it’s threatened state. They provide a wide range of goods and services some of which have a direct value but more often provides many indirect benefits that seem to be hidden. The indiscriminate and exploitative nature towards extracting it’s resources have led to severe loss in area throughout the world. In India, Mangroves were exploited indiscriminately during the 1960s.Traditionally considered as wastelands and dump yards, its importance were understood only over time. Hence, active conservation and regeneration activities were undertaken since the beginning of 1980s, yet the present area cover is only a modest remaining of the past. Such activities are undertaken by both the government in terms of legislative measures and active local community involvement. In addition, threats from Global Climate Change pose additional concerns for it’s regeneration and restoration. The paper throws light on the status of mangrove cover in India, the benefits, threats and the existing policy framework .Existing legal and non-legal measures pose their own shortcomings and drawbacks in terms of lack of effective implementation of many such policies, lax of local communities towards continuous restoration activities, improper resources allocations between the two and thus lays the path for some measures that could in turn be adopted as lessons learnt from international case study examples. Length: 22 pages Creation-Date: 2018-06 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-174.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-174 Template-Type: ReDIF-Paper 1.0 Title: Corporate Governance Practices in India Author-Name: Ekta Selarka Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: ekta@mse.ac.in Keywords: corporate governance, India, ownership structure, board of directors, firm performance Classification-JEL: G30, G32 Abstract: This paper provides the overview of corporate governance practices in India by providing the institutional background that paved the way for recent corporate governance reforms and practices since early 2000. We present the current status of various dimensions of corporate governance structure by using a sample of CNX 500 companies which are top listed companies of Indian corporate sector trading on National Stock Exchange. The paper explores the features of corporate governance practices in Indian firms by focusing specifically on ownership structure and concentration, board of directors and its practices, corporate social responsibility, market for corporate control and finally relationship between corporate governance and firm performance. The paper aims to provide our readers an overall picture of corporate governance and starting points for future research in different facets of corporate governance. Length: 40 pages Creation-Date: 2018-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-173.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-173 Template-Type: ReDIF-Paper 1.0 Title: Sustainability and Efficiency of Microfinance Institutions in South Asia Author-Name: Brijesh C. Purohit Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brijesh@mse.ac.in Author-Name: S. Saravanan Author-Workplace-Name: Post Doctoral fellow, Madras School of Economics Author-Email: saravanan@mse.ac.in Keywords: Micro finance institutions, South Asia, sustainability, efficiency, competition Classification-JEL: G21, G32, G33, C33, I31 Abstract: In this paper we focus on microfinance institutions in South Asia. These microfinance institutions (MFIs) provide credit to the poor who have no access to commercial banks. This is done to reduce poverty and to help the poor with setting up their own income generating businesses. There appears to be in general a conflict between the outreach activities of such MFIs and their sustainability. It may also influence the efficient functioning of such organizations. Therefore, the focus in literature has shifted from subsidizing MFIs to their financial sustainability and efficiency. It is now presumed that such institutions should be able to cover the cost of lending money out of the income generated from the outstanding loan portfolio and to reduce these costs as much as possible. Besides it there is an element of increasing competition among MFIs which is coupled with factors like commercialization, technological change and financial liberalization and regulation policies of the government. In view of such developments we analyze the behavior of microfinance institutions in South Asia comprising MFIs in India, Nepal, Bangladesh and Sri Lanka. We look into major aspects of access to poor by MFIs, sustainability in activities and finances as well as the efficiency of such organizations from different parameters. Using data for 5 years for 142 MFIs across these nations, our results indicate that the goals of sustainability and efficiency are not always mutually supportive. In the long run thus these organizations should choose their focus to those outreach activities in which they exhibit efficiency from different angles such that sustainability along with reduced dependence on lenders as well survival in competitive environment is feasible. Length: 51 pages Creation-Date: 2018-05 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-172.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-172 Template-Type: ReDIF-Paper 1.0 Title: Sustainable Debt Policies of Indian State Governments Author-Name: P. S. Renjith Author-Workplace-Name: Research Scholar, Madras School of Economics Author-Email: renjith@mse.ac.in Author-Name: K.R. Shanmugam Author-Workplace-Name: Professor and Director, Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Primary Balance, Sustainable Debt, Indian States, Bohn Framework Classification-JEL: E62, H63, H72, H740 Abstract: This article empirically tests whether the public debt is sustainable in 20 major Indian States during 2005-06 to 2014-15, using the Bohn framework for panel data and penalized spline techniques. Results of the study indicate that the debt of Indian State governments as a whole is sustainable. However, at the disaggregated level, the public debt is sustainable in only 12 States and in the remaining 8 States, it is unsustainable and they need corrective actions. Incidentally, in these 8 States, the debt growth is lower than the economic growth and the poverty ratio has come down significantly, indicating that they have seemed to use their debt policy to enhance the welfare of their citizens. We hope these results are useful to policy makers, international agencies and other stakeholders to take appropriate steps to sustain the debt of Indian States Length: 37 pages Creation-Date: 2018-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-171.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-171 Template-Type: ReDIF-Paper 1.0 Title: Catalyst Role of Indian Railways in Empowering Economy: Freight or Passenger Segment is on the Fast Track of Expansion or Exploitation? Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Divya Jain Author-Workplace-Name: Research Scholar, Madras School of Economics Author-Name: Satarupa Rakshit Author-Workplace-Name: Research Scholar, Madras School of Economics Author-Name: Ashwin Ram Author-Workplace-Name: Research Scholar, Madras School of Economics Keywords: Indian Railways; Freight segment; Passenger segment; Passenger-kilometers; Tonnes-kilometers Classification-JEL: R1, R4, R5, Q4 Abstract: Development of railways is important for the long run development of the country as it is sustainable both from logistics and cost to the economy aspects. However, at present the modal mix shows that railways are increasingly losing out to the road sector. The present research work examines the long run structural relationships of tonne-kilometer (TKM) and passenger-kilometer (PKM) for the freight and the passenger segments of railways with various economic variables in India. The authors make an attempt to understand the variables that affect the long run dynamics of this sector so that policy prescriptions are set in the correct perspective. Empirical analysis using cointegration and vector error correction analysis has been conducted and the relationship shows that there seems to be a long run relationship in TKM and PKM with the select economic variables. The adjustment mechanism for both the parameters is around 20-25%. The results also show that unlike our hypothesis, the industrial growth as captured by Index of Industrial Production does not granger causes our key parameter tonne-kilometer. The passenger-kilometer is however, determined by the gross domestic product and mineral oil price index. Length: 17 pages Creation-Date: 2018-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-169.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-170 Template-Type: ReDIF-Paper 1.0 Title: Modelling the Characteristics of Residential Energy Consumption: Empirical Evidence of Indian Scenario Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Divya Jain Author-Workplace-Name: Research Scholar, Madras School of Economics Author-Name: Satarupa Rakshit Author-Workplace-Name: Research Scholar, Madras School of Economics Author-Name: Ashwin Ram Author-Workplace-Name: Research Scholar, Madras School of Economics Keywords: urbanization, carbon emission, ecological modernization, energy consumption, economic expansion, human ecology, political economy Classification-JEL: C01, O31, 032, Q4, Q55, Q18, R21 Abstract: We find evidence for a day of the week calendar anomaly in Bitcoin returns and argue that not considering this anomaly results in a biased estimate of the market efficiency. Further, it also quantifies the degree of market inefficiency of Bitcoin over time using the methodology proposed by Ito and Sugiyama (2009) and found evidence in favor of very high degree of market inefficiency for the period spanning from July 2010 to January 2018. This result contradicts some of the recent studies that argue in favor of the market efficiency of Bitcoin Length: 17 pages Creation-Date: 2018-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-169.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-169 Template-Type: ReDIF-Paper 1.0 Title: Calendar Anomaly and the Degree of Market Inefficiency of Bitcoin Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Associate Professor, School of Economics, University of Hyderabad, Hyderabad-500046, India Author-Email: rajasethudurai.s@gmail.com; rdurai@uohyd.ac.in Author-Name: Sunil Paul Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: sunil@mse.ac.in Keywords: Bitcoin, Level of inefficiency, State-space model Classification-JEL: G14, C32 Abstract: We find evidence for a day of the week calendar anomaly in Bitcoin returns and argue that not considering this anomaly results in a biased estimate of the market efficiency. Further, it also quantifies the degree of market inefficiency of Bitcoin over time using the methodology proposed by Ito and Sugiyama (2009) and found evidence in favor of very high degree of market inefficiency for the period spanning from July 2010 to January 2018. This result contradicts some of the recent studies that argue in favor of the market efficiency of Bitcoin Length: 17 pages Creation-Date: 2018-04 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-Paper-168.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2018-168 Template-Type: ReDIF-Paper 1.0 Title: Predictors of Age-Specific Childhood Mortality in India Author-Name: G. Naline Author-Workplace-Name: Research Scholar, Madras School of Economics Author-Name: Brinda Viswanathan Author-Workplace-Name: Professor, Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Child Mortality, Multinomial logit, India Classification-JEL:C35, C38, C51, I12, I15 Abstract: Like many other developing nations, the age-specific mortality vary across regions and decline at different pace for India. Using a multinomial logit model, this study analyses the predictors for neonatal, post-neonatal, infant and under-five mortality. Mother’s height, age of mother at first birth, dietary pattern of the mother and education of parents are significant predictors for all the age-specific mortality. Equally important are access and usage of appropriate health inputs like tetanus shots, regular consumption of iron tablets and ante-natal visits.Compared to other age-specific mortality, neonatal mortality has the largest number of predictors that are statistically significant. Girls of higher birth order survive more during the first month than boys and reversal is true where later born boys have survival advantage after the first month. This highlights the biological advantage of girl-child survival only up to the first month and son-preference seems to create a disadvantage for girl child survival at later age-groups. Keeping all other factors constant, domestic violence is also an important predictor for neonatal mortality. . Length: 76 pages Creation-Date: 2017-11 File-URL: https://www.mse.ac.in/wp-content/uploads/2021/05/Working-167-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-167 Template-Type: ReDIF-Paper 1.0 Title: TASK FORCE ON IMPROVING EMPLOYMENT DATA -A CRITIQUE Author-Name: T.N. Srinivasan Author-Workplace-Name: Samuel C. Park Jr. Professor of Economics Emeritus and Emeritus Professor International and Area Studies Emeritus, Yale University and Distinguished Professor, Indian Institute of Technology, Madras, (2014-19)Keywords: Employment, Jobs, Data Abstract: The absence of reliable data on employment was well known in India. For ensuring that the sample sizes for its estimates from its annual employment and unemployment survey (EUS) were adequate, the National Sample Survey Office (NSSO) had instituted since 1980s the so called `thick’ rounds of EUS with large samples, while the annual so called `thin’ rounds with small samples continued. In addition to the EUS surveys the NSSO also canvassed the so called enterprise surveys with ownership, rather than household, as the basic unit of record. There were other surveys which provided estimates of Employment and Unemployment. On 11 May 2017 the Ministry of Labour Employment set up a Task Force for Improving Employment data (DGE_-Z_- 13011/08/2017-MP(G)). The Task Force submitted its report and invited comments from the public on it by July 23, 2017. This paper is a critical analysis of the report of the Task Force and also of sources of data on Employment and Unemployment in India. Length: 19 pages Creation-Date: 2017-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/09/WORKING-PAPER-166-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-166 Template-Type: ReDIF-Paper 1.0 Title: Financial Inclusion, Information and Communication Technology Diffusion and Economic Growth: A Panel Data Analysis Author-Name: Amrita Chatterjee Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: amrita@mse.ac.in Author-Name: Nitigya Anand Author-Workplace-Name: Anand Associate Solution Advisor, Deloitte & Touche Assurance and Enterprise Risk Services India Pvt. Ltd. Author-Email: ge15nitigya@mse.ac.in Keywords: Financial Inclusion, Growth, Information and Communication Technology, Dynamic Panel data model, System GMM estimator Classification-JEL: L86, L96, C23,O0, G2 Abstract: There have been enough evidences to accept that Financial Inclusion (FI) and Information and Communication Technology (ICT) play positive role in economic growth, even though there are some exceptions. Moreover, we cannot deny the fact that ICT like mobile phone and internet penetration can strengthen the inclusiveness of formal banking sector. The present study has first examined whether ICT development can be an important determinant of Financial Inclusion by using a fixed effect panel data model. The results show that ICT is indeed an important determinant of FI. The same panel data of 41 countries was then used to test whether the growth process of the countries are influenced by Financial Inclusion and ICT diffusion in a dynamic Panel Data Model. Further the paper has investigated the role of FI powered by a better ICT penetration in fostering the growth of the nations using system GMM method by incorporating interactions between FI and ICT indicators. The results suggest that both FI and ICT individually and together through their close interaction can improve current year’s growth. However, we need education, awareness and technical assistance to get sustained growth. Length: 55 pages Creation-Date: 2017-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/08/WP-165-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-165 Template-Type: ReDIF-Paper 1.0 Title: Microfinance and Women Empowerment- Empirical Evidence from the Indian States Author-Name: S.Saravanan Author-Workplace-Name: UGC Post Doctoral Fellow, Madras School of Economics Author-Email: saravanan@mse.ac.in Author-Name: Devi Prasad DASH Author-Workplace-Name: Department of Humanities and Social Sciences, Indian Institute of Technology, Ropar, Punjab-140001 Author-Email: devi100.dash@gmail.com Keywords: Microfinance, Self-Help Group, Women Empowerment, India Classification-JEL: G21, C23, J16 Abstract: Microcredit is essentially utilised as the source of empowerment among the poor women in both rural and urban areas of the Indian states. Based on a panel of the Indian states for the period 2007 to 2014, our study examines the impact of women empowerment via the number of women Self Help Groups and women employment opportunities. Our empirical evidence finds that both are complementary to each other. Furthermore, we notice that changes in percapita income and poverty rate influence the scope for women employment and outreach of women SHGs across the Indian states. Factors like increasing access to bank loans and female literacy also help improve the women empowerment drive. The implications of the findings are discussed in the paper. Length: 30 pages Creation-Date: 2017-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/08/WP-164-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-164 Template-Type: ReDIF-Paper 1.0 Title: Cost of Land Degradation in IndiaAuthor-Name: P. Dayakar Author-Workplace-Name: Research Scholar, Madras School of EconomicsAuthor-Email: peddi@mse.ac.in Keywords: Land Use Cover Change; Land Ecosystem Services; Land Degradation; Total Economic Value Classification-JEL: Q15; Q51; Q57 Abstract: This study attempts to make two main contributions to economic and ecological literature in the Indian context. The first one is to compute the economic cost of land degradation in India. The second one is to develop a systematic database on the valuation of terrestrial ecosystem services focussing on India-specific studies in referred as well as gray literature. To develop the database on the valuation of land ecosystem services, the extensive literature survey was conducted using standard search protocol. The survey outcome was segregated into 3 categories, namely forestland, grassland, and croplands. The survey outcome units are arranged systematically and standardized into monetary 2012 US Dollar values. These values enable to provide the direct and indirect value of economic costs of land ecosystem biome. The Total Economic Value (TEV) estimated for cropland, grassland, and forestland based on standardized respective ecosystem service values. The meta-analysis shows that the average TEV values ($/ha/y 2012 prices) are 7057, 4726 and 6343 for the forest, grass, and cropland terrestrial ecosystem biomes respectively. Regulatory service values are higher than other ecosystem values in the terrestrial land biome. The study also analyzes the economic cost of land degradation using the physical data from the Desertification and Land Degradation Atlas of India for the periods 2003-05 and 2011-13. The result shows that the total annual economic cost of land degradation is Rs. 4904 crore at all-India level. The distributional analysis suggests that the economic cost of land degradation ranged from Rs. crore -1519 to 1866 across Indian states. The cost of land degradation reported here are lower than those available in the literature (Reddy, 2003; Mythili, 2015) due to couple of reasons including use of TEV concept for valuation of ecosystem services lost due to land degradation, and systematic development of valuation database using India specific studies Length: 45 pages Creation-Date: 2017-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/06/Working-Paper-163.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-163 Template-Type: ReDIF-Paper 1.0 Title: Does Weather Sensitivity of Rice Yield Vary Across Regions? Evidence from Eastern and Southern India Author-Name: Anubhab Pattanayak Author-Workplace-Name: Lecturer, Madras School of EconomicsAuthor-Email: anubhab.pattanayak@gmail.comAuthor-Name: and K. S. Kavi Kumar Author-Workplace-Name: Professor, Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Rice; India; Climate Change; Regional Impacts; Poverty Classification-JEL: Q10; Q54; R50; I30; Abstract: With the objective of assessing climatic impacts at the regional (i.e., subnational) level, past studies employing statistical models have largely followed the approach of uniformly applying the climate response function estimated at the aggregate (national) level to extrapolate/interpolate the impacts for the region(s) of interest. Although impact estimates based on this approach could loosely indicate the magnitude of regional impacts (or at the least the direction of such impacts), they may exhibit significant overestimation or underestimation of the true regional impacts. Thus, following this approach could be misleading and will be inappropriate if the objective is effective adaptation planning and policy implementation at the regional level to withstand future climate change impacts. The present study is an extension of this literature and examines the above issue through an assessment of regional weather sensitivity of rice crop in the Indian context. Using disaggregated (district) level weather and non-weather data during 1969-2007 and region-specific rice growing season information, the crop-yield response functions for two dominant rice growing regions (East and South) are estimated. The study finds significant adverse effects of higher daytime temperature during all phases of crop growth on rice yield for both regions. However, the effects of higher nighttime temperature and rainfall across growth phases tend to differ across regions. The paper then examines whether an aggregate (all-India) response function represents well the regional impacts on rice yield due to a hypothetical scenario of pre-1960 climatic conditions prevailing during the period of study. Accordingly, comparison is made between regional impacts simulated using the all-India yield response function and impacts simulated using the region-specific yield response functions. The analysis suggests that regional impacts are overestimated when simulated using an all-India yield response function instead of using the region-specific yield response function. Regional impacts simulation results indicate that the average yield loss for the Southern and the Eastern regions due to past changes in climate has been to the tune of ?8 per cent and ?5 per cent respectively. Regional distribution of impacts shows that majority of districts in each region, especially in the East, suffered yield losses due to climate change in the past. The study highlights the need to conduct regional crop-weather sensitivity assessment using region-specific characteristics to understand regional vulnerability to climatic and non-climatic stressors and for region-level adaptation planning to tackle climate change. Length: 56 pages Creation-Date: 2017-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/07/WP-162-Web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-162 Template-Type: ReDIF-Paper 1.0 Title: Technical Efficiency of Agricultural Production in India: Evidence from REDS SurveyAuthor-Name: Kailash Chandra Pradhan Author-Workplace-Name: National Institute of Labour Economic Research and Development (NILERD), Sector A-7, Narela Institutional Area, Narela, Delhi-40 Author-Email: kailasheco@gmail.comAuthor-Name: shrabani Mukherjee Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: shrabani0808@gmail.com Keywords: Production function, agricultural farmers, technical efficiency India Classification-JEL: C33, D20 Abstract: The study aims to estimate the technical efficiency of agricultural production in India using production frontier model for both cross section and panel data for the years 1999 and 2007. Given the persistent problem of under utilization of capacity in Indian farm sector still there is a serious need to identify the determining factors for technical efficiency for agricultural production in order to accelerate sustainable productivity and technological improvement. Farmers' age and education level, household size, household?s management in production, proportion of irrigated area covered by canals, availability of wells, yielding variety of lands, services provided by the government, agricultural expenditure by local government are the factors which significantly contribute to efficiency in resource utilisation. Traditional method of farming or learning by doing is preferred to adoption of new technologies which creates technological lock-in. Length: 33 pages Creation-Date: 2017-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/06/Working-Paper-161.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-161 Template-Type: ReDIF-Paper 1.0 Title: An Alternative Argument of Green Solow Model in Developing Economy ContextAuthor-Name: Santosh Kumar Sahu Author-Workplace-Name: Assistant Professor, Madras School of EconomicsAuthor-Email: santosh@mse.ac.inAuthor-Name: Arjun Shatrunjay Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Keywords:Green Solow Model, abatement costs, technology, emission regulations, India Classification-JEL: C70, O44, Q52, Q56 Abstract: The paper attempts to understand the significance of the Green Solow Model, in the context of a developing country such as India. It gives particular importance to the role of population density, in understanding the drawbacks of the Green Solow Model. It further extends the argument to analyse the impacts of the emission regulations on a developing country, by proving relationship between price level on one hand, and abatement costs and emissions on the other. Lastly, interactions between countries, given different price scenarios are studied Length: 33 pages Creation-Date: 2017-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/03/Working-Paper-160-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-160 Template-Type: ReDIF-Paper 1.0 Title: Export Performance, Innovation, and Productivity in Indian Manufacturing FirmsAuthor-Name: Santosh Kumar Sahu Author-Workplace-Name: Assistant Professor, Madras School of EconomicsAuthor-Email: santosh@mse.ac.inAuthor-Name: Sunder Ramaswamy Author-Workplace-Name: Visiting Distinguished Professor of Economics, Madras School of EconomicsAuthor-Email: sunder@mse.ac.in Author-Name: Abishek Choutagunta Author-Workplace-Name: Institute of Law and Economics, Universität Hamburg Author-Email: abishek.choutagunta@emle.eu Keywords: Export Performance, Innovation, Productivity, Manufacturing firms, India Classification-JEL: D20, D24, L16, L6, L60 Abstract: This study re-examines the relationship between export performance and productivity in manufacturing firms in India for the period 2003-2015, using firm level information. Departing from the earlier studies on India economy, we argue that product innovations boost export performance of the economy. The hypothesis being that, in the post-economic-reforms era competitive export market scenario, productivity alone, without product innovation and participation in R and D cannot drive export performance. We observe that the argument of highly productive firms entering the export market without reallocating resources towards innovation and R and D seems to be invalid in our sample. Nevertheless, we find in our sample, that productivity as a selection criterion coupled with advertising and marketing strategies explains participation in R and D in boosting exports. Length: 46 pages Creation-Date: 2017-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/03/Working-159-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-159 Template-Type: ReDIF-Paper 1.0 Title: Trade, Financial Flows and Stock Market Interdependence: Evidence from Asian MarketsAuthor-Name: Sowmya Dhanaraj Author-Workplace-Name: Lecturer, Madras School of EconomicsAuthor-Email: sowmya@mse.ac.in Author-Name: Arun Kumar Gopalaswamy Author-Workplace-Name: IIT Madras, India Author-Email: sowmya@mse.ac.in Author-Name: M. Suresh Babu Author-Workplace-Name: IIT Madras, India Author-Email: sowmya@mse.ac.in Keywords: Dynamic market interdependence, US and Asian Newly Industrialized Economies (NIEs), Emerging Market Economies (EMEs), FEVD, Trade and Financial Flows Classification-JEL: F4, G1 Abstract: Liberalization and globalization of Newly Industrialized Economies have contributed to increased integration of capital markets. This study tests whether convergence of macroeconomic variables and enhanced bilateral trade and financial flows causes greater interdependence of markets. Daily closing indices and quarterly differentials in interest, inflation, growth rates, exchange rates, trade of goods and services, direct and portfolio investment were used. Results revealed that markets of Asia are not immune to shocks originating in US although co-movements of macroeconomic variables do not help in explaining level of interdependence. Portfolio flows were found to be important than trade flows in explaining market interdependence. Length: 37 pages Creation-Date: 2017-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/03/Working-Paper-158-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-158 Template-Type: ReDIF-Paper 1.0 Title: Child Work and Schooling in Rural North India What Does Time Use Data Say About Tradeoffs and Drivers of Human Capital Investment? Author-Name: Sudha Narayanan Author-Workplace-Name: Associate Professor, Indira Gandhi Institute of Development Research (IGIDR), Author-Email: sowmya@mse.ac.in Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Lecturer, Madras School of EconomicsAuthor-Email: sowmya@mse.ac.in Keywords: Human capital investment, time use, primary schooling, India, child labour, seemingly unrelated regression Classification-JEL: I20, D19 Abstract: This study examines time use data for 1244 children in the age-group 6- 12 years in 274 villages in eight states in rural north India to understand the tradeoffs between time spent in school, time spent at work, time spent on home study and leisure. Using a Seemingly Unrelated Regression (SURE) Model, we find that only a few variables influence allocation of time to different activities across the board. Overall, there seems to be no tradeoff between time spent at school and at work, whereas leisure time and home study appear to be compromised for the sake of work. Length: 17 pages Creation-Date: 2017-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/02/Working-Paper-157.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-157 Template-Type: ReDIF-Paper 1.0 Title: Examining the Land Use Change of the Ousteri Wetland using the Land Use Dynamic Degree Model Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Venkatachalam. L Author-Workplace-Name: Professor, Madras Institute of Development Studies, Gandhi Nagar, Adyar, ChennaiAuthor-Email: zareena@mse.ac.in Author-Name: Jayakumar S Author-Workplace-Name: Associate Professor, Department of Ecology, Pondicherry University, Puducherry Author-Email: zareena@mse.ac.in Author-Name: Satarupa Rakshit Author-Workplace-Name: Research Associate, Madras School of Economics Author-Email:zareena@mse.ac.in Keywords: Land use cover, Ousteri wetland, Dynamic Degree model, Ecosystem modification Classification-JEL: O13, Q15, Q56, N55, R11 Abstract: Land use/cover change is a major factor for global change because of its interactions with climate, cosystem processes, biodiversity, and, even more important, human activities, research on land use/cover change has become an important aspect of global change. The present research paper aims to investigate the land use changes over the time period, 2005 to 2014, in the Ousteri wetland. The information collected through the ecological, hydrological and geological analysis was used to carry out the quantitative research on Ousteri wetland land use/cover change. The temporal changes of land use characteristics were quantitatively analyzed and then the driving forces of land use changes were examined based on natural and artificial factors. As the result of natural factors and human disturbances, the area of wetland shrunk, bringing the conversion from wetland to terrestrial land use type. The annual conversion rates indicated the land use changes in Ousteri wetland. Length: 17 pages Creation-Date: 2017-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/02/Working-Paper-156.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-156 Template-Type: ReDIF-Paper 1.0 Title: EVALUATION INDEX SYSTEM (EIS) FOR THE ECOLOGICAL- ECONOMIC- SOCIAL PERFORMANCES OF OUSTERI WETLAND ACROSS PUDUCHERRY AND TAMIL NADU Author-Name: Zareena Begum Irfan,, Jayakumar S and Satarupa Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Venkatachalam. L Author-Workplace-Name: Professor, Madras Institute of Development Studies, Gandhi Nagar, Adyar, ChennaiAuthor-Email: zareena@mse.ac.in Author-Name: Jayakumar S Author-Workplace-Name: Associate Professor, Department of Ecology, Pondicherry University, Puducherry Author-Email: zareena@mse.ac.in Author-Name: Satarupa Rakshit Author-Workplace-Name: Research Associate, Madras School of Economics Author-Email:zareena@mse.ac.in Keywords: Wetland, Performance Evaluation, Evaluation Index System, Conservation Classification-JEL: O13, Q15, Q56, N55, R11 Abstract: Wetlands play a key role in the ecological conservation, in environmental quality improvement, and in human habitat environment improvement. Primer field investigations, primary survey and series of stakeholder meetings were utilised to evaluate the performance of the wetland. It was done using the complex index system covering wider aspect to correlate the comparative status of both Tamil Nadu and Puducherry zone of the Ousteri wetland. Compared with the researches applying the ecosystem service evaluation method, the proposed scoring method in this study can evaluate on some important performance indices (aquatic vegetation coverage, plant community integrity, integrity of management operating system, stakeholders feedback on the wetland protection, public satisfaction) that cannot be ignored and unable to be transformed to a monetary form. The Delphi method was used to screen preset 35 subindicators prior to evaluation. By using Delphi and Analytic Hierarchy Process method, as well as the weighted linear combination model, the ecological-economic-social performances were obtained. This indices system was applied to the case of Ousteri wetland with respect to Puducherry and Tamil Nadu scenario separately. With the help of the Evaluation Index system (EIS) established in this study, decision makers can obtain more omni-visual information so that an ecological subsidy policy by incorporating rewards and punishments mechanisms according to the performance evaluations can be formulated to enable the greatest returns on investment in the wetland conservative measure. Length: 29 pages Creation-Date: 2017-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2017/02/Working-paper-155-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2017-155 Template-Type: ReDIF-Paper 1.0 Title: Triggers and Barriers for ‘Exclusion’ To ‘Inclusion’ in the Financial Sector: A Country-Wise Scrutiny Author-Name: Keshav Sood Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: shrabani@mse.ac.in Author-Name: Shrabani Mukherjee Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: shrabani@mse.ac.in Keywords: Financial Inclusion, multidimensional, Principal Component Analysis, Fixed effects model Classification-JEL: G21, G23, C23, C38 Abstract: There have been very few works focusing on the determinants and barriers of financial inclusion. The objective of this study is two folded. Firstly, to measure a efficient composite multi-dimensional index for financial inclusion with both supply and demand-side factors using two stage Principal Component Analysis for 91 countries using the World Bank Findex database for two benchmark years, 2011 and 2014. Secondly, to track the binding determinants of financial inclusion using a panel fixed effects model. The middle and low income countries can reach up to their potential if sources of barriers have been tracked efficiently as this is the main constraint for inclusive financial system. Length: 29 pages Creation-Date: 2016-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/11/Working-paper-154.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-154 Template-Type: ReDIF-Paper 1.0 Title: Asymmetric Impact of Relative Price Shocks in Presence of Trend Inflation Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: sartajrasool@mse.ac.in Keywords: Inflation; distribution of relative price shocks; menu costs; asymmetry Classification-JEL: E30; E31; E52 Abstract: This study examines whether skewness of cross sectional distribution of relative price shocks has asymmetric impact on aggregate inflation. The empirical evidence from various countries suggests that the positively skewed shocks have different impact from that of negatively skewed shocks on aggregate inflation. Consistent with the predictions of menu cost models, the empirical results indicate that this asymmetry in the impact of relative price shocks mainly depends on the nature of trend that inflation exhibits for a given period. The crucial inference that emerges from the empirical findings is that the traditional approach of using a linear regression model, to examine the relationship between inflation and skewness during the period with trend inflation, is not appropriate as it may result in misspecification and misleading conclusions. Length: 19 pages Creation-Date: 2016-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/11/working-Paper-153-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-153 Template-Type: ReDIF-Paper 1.0 Title: Evaluating Asian FTAs: What do Gravity Equation Models Tell Us? Author-Name: Sunder Ramaswamy Author-Workplace-Name: Visiting Distinguished Professor of Economics,Madras School of Economics Author-Email: sunder@mse.ac.in Author-Name: Abishek Choutagunta Author-Workplace-Name: Madras School of Economics, Chennai Author-Email: ge14abishek@mse.ac.in Author-Name: Santosh K. Sahu Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: santosh@mse.ac.in Keywords: International Trade Flows, Gravity Model, Asia, PPML Classification-JEL: F13, F14, C23 Abstract: This research evaluates the performance of free trade agreements by analyzing the determinants of trade flows of Asian economies for a panel of thirty-one countries during 2007-2014 using a Gravity model. The estimated results suggest that certain Free Trade Agreements (FTAs) negatively contribute to trade flows across the region and that GDP and population, among other factors, can explain the total trade flows. The study also finds that trade costs which uses distance as a proxy, has a significant and negative effect on trade. The results are in-line with the expectations which can be drawn by looking at trends of trade flows in Asia and thus, a case is made for smoothening trade-flows across the region by reducing tariff and non-tariff barriers; pumping in investments on transport infrastructure, and improving productivity of the partners as a whole which has positive effects on GDP and thus trade.. Length: 34 pages Creation-Date: 2016-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/11/Working-Paper-152.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-152 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Outsourcing in the Automobile Sector in India Author-Name: Santosh K. Sahu Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: Ishan Roy Author-Workplace-Name: Madras School of Economics, Chennai Author-Email: ishan.roy91@gmail.com Keywords: Outsourcing, technology import, technical efficiency, automotive sector, India Classification-JEL: L10, L21, L22, L62 Abstract: This study involves the determination of outsourcing based on the market structure technology imports and technical efficiency for the automotive sector in India. An important characteristic of this study is that it divides the automotive sector into two sub-sectors (1) the automobile ancillaries sectors, which provides the parts and are the upstream firms and (2) the automobile assemblers who assemble the automobile and sell them to the consumers. Our analysis confirms the fact that when the data is segregated in the two sectors, factors like technical efficiency of firms have opposite effect on the outsourcing tendencies. Length: 31 pages Creation-Date: 2016-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/11/Working-Paper-151.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-151 Template-Type: ReDIF-Paper 1.0 Title: Anatomy of Input Demand Functions for Indian Farmers across Regions Author-Name: Shrabani Mukherjee Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: shrabani@mse.ac.in Author-Name: Kailash Chandra Pradhan Author-Workplace-Name: Madras School of Economics Author-Email: kailasheco@gmail.com Keywords: Agriculture, Restricted Translog Profit function, Input Demand, Seemingly Unrelated Regression, India Classification-JEL: C30, D61, I38 Abstract: This study models the optimum use of production inputs and analyse the behaviour of input demand functions of agricultural production through restricted transcendental logarithm profit function for four different regions in India using rural economic and demographic survey (REDS) data. The Seemingly Unrelated Regression (SUR) method of estimation reveals that the level of productivity of farms is significantly influenced by output prices, inputs like labour, fertilizer, pesticides. The results of ownprice elasticities for the demand of variable inputs are negative and price elastic. Fertilizer prices and area planted had a significant impact on the profit function altogether. The effect of output prices in eastern region is larger. Whereas, wage rate and other input prices are more effective for other regions. The cross-price elasticities for input indicated imperfect complementary relationships among the inputs. A well designed input distribution policy can mitigate the problem of low factor productivity and lack of technological improvements in agriculture.. Length: 30 pages Creation-Date: 2016-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-150.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-150 Template-Type: ReDIF-Paper 1.0 Title: Interwar Unemployment in the UK and US: Old and New Evidence Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Author-Name: Pratik Mitra Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Keywords: Interwar Unemployment; Persistence; Natural rate of unemployment; Kalman Filter Classification-JEL: E24, J64 Abstract: Two contrasting views have dominated research on unemployment during the interwar years. The conventional Keynesian view attributes the persistence of high unemployment in the UK and US during the interwar period to sluggish adjustment of nominal wages to demand shocks. In contrast, equilibrium models of unemployment suggest that the natural rate is itself endogenous, determined by technological, institutional, and demographic factors, and is therefore not necessarily constant over time. According to this view unemployment may remain elevated because some (or all) of the driving forces are persisting. How do we discriminate between these competing explanations? To this end, we estimate a timevarying parameter (TVP) model of the unemployment rate for the UK and US. Kalman filter estimates of the natural rate of unemployment suggest that most macroeconomic activity during the interwar period reflects persistent movements in steady state, not from steady state. We conclude that the observed persistence in unemployment appears to be consistent with multiple equilibria models and models with an endogeneous natural rate. Length: 26 pages Creation-Date: 2016-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-149.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-149 Template-Type: ReDIF-Paper 1.0 Title: Universal PDS: Efficiency and Equity Dimensions Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Madras School of Economics Author-Email: sowmya@mse.ac.in Author-Name: Smit Gade Author-Workplace-Name: Madras School of Economics Author-Email: smitgade1@gmail.com Keywords: Universal PDS, resource use efficiency, redistribution Classification-JEL: I30, I38 Abstract: India being home to the largest number of poor and malnourished population in the world, the tabling of National Food Security Bill has renewed the public pressure for universalization of PDS in India. In this regard, Tamil Nadu?s model of universal PDS has been cited for its success in providing comprehensive food security. We conducted a survey in Coimbatore-Tiruppur region of Tamil Nadu to assess the merits and demerits of universal system. The survey covering 154 households seeks to understand the utilization of the PDS by the poor and the non-poor households, if there is voluntary exclusion of better-off sections of the population from the system and the reasons behind them. It is found that there is low drop-out of non-poor households from the universal system. This is because around 25 percent of all households who are eligible for any PDS commodity reported selling one of the commodities or feeding them to livestock. Also, the entitlements of the poor to subsidized commodities are reduced in uniform universal system. Based on the survey experience, this study puts forward an analytical framework to analyse the resource use efficiency and redistribution achieved in the food distribution system of India. Based on the theoretical framework and the observations from the survey, we make further recommendations in designing an optimal PDS model. Length: 28 pages Creation-Date: 2016-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-148.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-148 Template-Type: ReDIF-Paper 1.0 Title: Benefits of Coastal Shipping: Scope for Sea Change in Domestic Freight Transportation in India Author-Name: Lavanya Ravikanth Anneboina Author-Workplace-Name: Madras School of Economics Author-Email: lavanya@mse.ac.in; lavi.anneboina@gmail.com Author-Name: K. S. Kavi Kumar Author-Workplace-Name: Professor,Madras School of Economics Author-Email: kavi@mse.ac.in; kavikumar@gmail.com Keywords: Coastal shipping; Freight transport; Cost savings; Transport policy Classification-JEL: L91; Q57; R40 Abstract: The share of coastal shipping in the modal mix of domestic freight transportation in India is currently very low despite it being more costeffective, fuel-efficient and environment-friendly compared to other modes of transportation. This paper estimates the benefits of coastal shipping, which are simply the costs avoided by transporting goods via sea as opposed to transporting them by road or rail. The economic, environmental and social benefits of coastal shipping are valued in the range of Rs. 16 – 64 billion per annum in 2012-13 prices. In physical terms, greenhouse gas emissions reductions amount to between 1 – 22 lakh tonnes of carbon per annum. The lower- and upper-bound values in the range represent cost savings (or emissions reductions) with respect to rail and road transport respectively. The results indicate that the country would stand to gain from a modal shift in freight transportation from road and rail transport to coastal shipping. Length: 35 pages Creation-Date: 2016-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-147.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-147 Template-Type: ReDIF-Paper 1.0 Title: Contribution of Mangroves to Marine Fisheries in India Author-Name: Lavanya Ravikanth Anneboina Author-Workplace-Name: Madras School of Economics Author-Email: lavanya@mse.ac.in; lavi.anneboina@gmail.com Author-Name: K. S. Kavi Kumar Author-Workplace-Name: Professor,Madras School of Economics Author-Email: kavi@mse.ac.in; kavikumar@gmail.com Keywords: Marine fishery; Mangrove cover; Value of mangroves; Ecosystem services Classification-JEL: Q22; Q23; Q51; Q57 Abstract: Mangroves support and enhance fisheries by serving as a breeding ground and nursery habitat for marine life. The mangrove-fishery link has been well established in the ecological literature. This paper, however, employs an economic analysis to examine the role of mangroves in increasing marine fish output in India. In particular, the effectiveness of mangroves in increasing marine fish production is analysed using secondary data on marine fish production and fishing inputs. The results based on econometric analysis indicate that mangroves contribute significantly to the enhancement of fish production in the coastal states of India. Further, the paper also analyses the contribution of mangroves to commercial marine fisheries output in India and the same is estimated to be in the range of 23 – 34 percent, which in economic terms is valued between Rs. 1.46 – 2.15 lakhs per hectare in 2012-13 prices. The relative contribution of mangroves to total fish catch estimated in the Indian context is comparable to that estimated in other countries. Length: 36 pages Creation-Date: 2016-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/10/Working-Paper-145-1.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-145 Template-Type: ReDIF-Paper 1.0 Title: The Tradeoffs between GHGs Emissions,Income Inequality and Productivity Author-Name: Unmesh Patnaik Author-Workplace-Name: Madras School of Economics Author-Email: unmeshpatnaik@gmail.com Author-Name: Santosh K. Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Keywords: GHGs emission, income inequality, TFP Classification-JEL: D62, D63, O13, O14, C33 Abstract: Rising emission of greenhouse gasses (GHGs) and growing economic inequalities have emerged as key challenges for policymakers over the past two decades and the problems are likely to intensify in the foreseeable future. Numerous studies in the past have examined the relationship between these and implications on growth and equity of nations. Contributing to this literature, the present paper examines cross country differences in historical GHGs emission from 1990 to 2014 and analyzes the relationship between income inequality and emission levels and productivity. Additionally, we also inspect the role of energy use, equity and emission intensity. In doing so, data from the World Development Indicator is used for clusters of countries while also estimating sector specific trends in GHGs emissions for priority sectors such as agriculture and industry. The hypothesis is to validate whether economic growth improves the trade off with equity, and vice-versa. With the Paris Agreement (COP21) making veiled reference to the principle of common but differentiated responsibilities (CBDR) in tackling global warming the findings from the analysis would also signal towards efficacy of the targets set under the intended nationally determined contributions (INDCs) Length: 30 pages Creation-Date: 2016-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-1442.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-144 Template-Type: ReDIF-Paper 1.0 Title: Revisiting the Determinants of Child Anthropometric Indicators in India Using Seemingly Unrelated Regressions Model Author-Name: G. Naline Author-Workplace-Name: Madras School of Economics Author-Email: naline@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Child under-nutrition, stunting, underweight, wasting, Seemingly Unrelated Regression, India Classification-JEL: C51, I12, I13, I14, J13, O15. Abstract: This study uses the NFHS-3 data to estimate SUR model for HAZ, WAZ and WHZ to understand how the determinants of intergenerational transmission, feeding and care practices and ICDS vary in their impact when these commonly used measures of child nutritional status are considered together in a systems framework. Asexpected mother’s height, BMI and anemia levels are all highly important in explaining the variations with large impact of height on HAZ, of BMI on WAZ and more widespread impact of anemia on WHZ. Initiation of breastfeeding within an hour of child’s birth, exclusive breastfeeding in the first six months, and inclusion of protein rich diets for the older children has a large impact on HAZ and so does access of daily food supplements from ICDS by rural children. Other predictors such as wealth status, safe water access, sanitation and use of clean cooking fuel by the households, are found to be strongly associated with all the indicators. The results from this study strengthen the evidence that though multiple determinants play a role in child’s growth the key factors are in the mother to child transmission and in quality of early child care of feeding habits and preventive and curative health care practices. Length: 56 pages Creation-Date: 2016-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-143.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-143 Template-Type: ReDIF-Paper 1.0 Title: Game Theoretical Approach to Regulate the Public-Owned River Water Utilities: A case study of Cauvery River Author-Name: Zareena Begum Irfan Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Jeeva Mary Jacob Author-Workplace-Name: Madras School of Economics Author-Email: jacob.jeeva@gmail.com Keywords: Water utility, Game Theory, Prisoner's Dilemma, Stag Hunt Classification-JEL: C72, D74, Q25, Q34, Q58 Abstract: Management of regulated water systems has become increasingly complex due to rapid socio-economic growth and environmental changes in river basins over recent decades. This paper focusses on the public-owned river water utility river basin conflicts that are increasingly marked by a heightened attention because of the political discourse surrounding it. In order to promote cooperation and resolve conflicts between states in a basin, policy makers must vigorously try to get the dialogue process on and avoid deadlocks in the process. Little theoretical and empirical research exists to understand when these negotiations are most effective and the mechanics behind these negotiations. Here we draw from diverse literature, economic and geographical, to capture and integrate the design elements associated with effective utility regulation along rivers on a national and international level. The utility sharing of waters of the river Cauvery has been the bone of contention of a serious conflict between the Indian states of Karnataka and Tamil Nadu. Decades of negotiations have not bore fruit till date. Even if treaties have been signed, they have been rejected and till date enforcement mechanisms are not put in place so as to hasten the negotiation process so as to avoid further escalation of irregularities in the water utilization. This study aims at defining few enforcement mechanisms based on the latest agreement brought out by the Cauvery Water Disputes Tribunal 2007 which was rejected and though appeals were filed by riparian states no amendments have been made so far. Non-Cooperative games have been used to model the regulation of the water utility and policy implications there on have been drawn out. Length: 29 pages Creation-Date: 2016-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-142.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-142 Template-Type: ReDIF-Paper 1.0 Title: Does Carbon Tax Makes Sense? Assessing Global Scenario and Addressing Indian Perspective Author-Name: Mohana Mondal Author-Workplace-Name: Joint Director, National Institute of Labour Economics Research and Development (NILERD), NITI Aayog, Govt. of India. Author-Email: eemohana@mse.ac.in Author-Name: Zareena Begum Irfan Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Sunder Ramaswamy Author-Workplace-Name: Madras School of Economics Author-Email: sunder@mse.ac.in Keywords: Pollution, Pollution Control, Carbon tax, India, Environmental Impact, GHG tax, Air Pollution, Ecotax, Environmental Regulation Classification-JEL: O330, O380, Q520, Q530, Q560, Q580 Abstract: Carbon taxes have been frequently advocated as a cost-effective instrument for reducing emissions. However, in the practice of environmental policies, only few countries have implemented taxes based on the carbon content of the energy products. Current circumstances of climate science may permit a reconsideration of direction for existing policy efforts related to global warming issues. This paper presents a plan that provides an achievable path toward a global policy on Green House Gas (GHG) emissions. At the heart of it is a small carbon tax (actually a GHG tax). The proceeds of that tax are to be used strategically to provide stable, long term support of a broad based research and development effort focused on energy sources, energy use, and emission mitigation. Hence, the aim of framing a concept note is to compare the carbon taxation system across nations. The scenario prevailing in different countries is examined and addressed for the Indian structure. Carbon taxes with regard to their competitiveness, distributional and environmental impacts. The evidence shows that carbon taxes may be an interesting policy option and that their main negative impacts may be compensated through the design of the tax and the use of the generated fiscal revenues. Length: 24 pages Creation-Date: 2016-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-141.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-141 Template-Type: ReDIF-Paper 1.0 Title: Economic Incentives for the Conservation of Bharathapuzha River: Focus on Sand Mining Author-Name: Lakshmi Sreedhar Author-Workplace-Name: Joint Director, National Institute of Labour Economics Research and Development (NILERD), NITI Aayog, Govt. of India. Author-Email: eelakshmi@mse.ac.in Author-Name: Zareena Begum Irfan Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Conservation, Economics incentives, River Bharathapuzha, Sand mining Classification-JEL: Q250, Q260, Q290, Q570 Abstract: Rivers in Kerala are assailed by pollution, sedimentation, sand mining, and constriction of flows. The indiscriminate and unscientific sand mining, even in the midst of many regulatory and protective measures for their conservation, have made the condition of these rivers pathetic. Bharathapuzha basin is the largest among all the 44 river basins of Kerala and the second longest river of the State. The drying up of Bharathapuzha River has become a matter of grave concern to the scientists and environmentalists. This paper tries to establish that implementing economic incentives is a possible method which can be adopted in the conservation practices of Bharathapuzha River. Length: 22 pages Creation-Date: 2016-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-140.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-140 Template-Type: ReDIF-Paper 1.0 Title: Covariate and Idiosyncratic Shocks and Coping Strategies for Poor and Non-poor Rural Households in India Author-Name: Kailash Chandra Pradhan Author-Workplace-Name: Joint Director, National Institute of Labour Economics Research and Development (NILERD), NITI Aayog, Govt. of India. Author-Email: kailasheco@gmail.com Author-Name: Shrabani Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: shrabani@mse.ac.in; shrabani0808@gmail.com Keywords: Rural Households, Shocks, Coping Strategies, Poverty, Probit Model Classification-JEL: D10, D81, I30 Abstract: A probit analysis estimates the relationship between different shocks and their corresponding choices of coping actions for poor and non-poor rural households using data set from Additional Rural Incomes Survey/Rural Economic and Demographic Survey (ARIS/REDS) surveys of National Council of Applied Economic Research (NCAER) from rural India across 17 states. Both poor and non-poor households experience the covariate and idiosyncratic shocks and take the coping strategies differently. Regarding types of coping measure, asking for remittances from relatives, taking on public support programs, reallocating household resources, borrowing from formal and informal sources, using savings and selling assets are dominant. Extremely poor starve to mange distress of sudden shocks. Local governance and welfare programs provided by Rural Local Bodies fail to control the starving for poor households during the idiosyncratic shocks. Households’ education plays significant role in adopting appropriate coping strategies depending on nature of shocks. Repeated sequence of same kind of shocks brings out the scope of chronic poverty and vulnerability. Length: 37 pages Creation-Date: 2016-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-139.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-139 Template-Type: ReDIF-Paper 1.0 Title: Kerosene Consumption in India: Welfare and Environmental Issues Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Fuel Subsidy; Welfare Effects; Indoor Air Pollution; Distributional Impact; India Classification-JEL: D6; H2; Q5; R1 Abstract: The adverse fiscal effects of fuel subsidies in developing countries like India are well documented. More recently, few studies have highlighted the fiscal, welfare and environmental effects of possible removal of subsidies on fuels in general. In the Indian context the leakages and errors of targeting, especially in case of kerosene supplied through public distribution system (PDS) have also been discussed widely in the literature. Using the National Sample Survey data for two recent rounds corresponding to the years 2009-10 and 2011-12, the present study explores the welfare and environmental implications of decline in the provision of kerosene through PDS. Focusing on kerosene used by the households for cooking purposes, the paper argues that kerosene has significant role in the household energy-mix and it helps in reducing the indoor air pollution. The study further highlights that the kerosene targeting has improved in recent years, that the subsidies have been progressive across geographical zones and sectors, and that economically and socially weaker groups of the society benefit more through implicit transfers associated with kerosene subsidies. While efforts to minimize and eliminate the diversion of kerosene to alternate markets including transport sector must continue, the phasing out of kerosene should be carried out gradually and cautiously to reduce adverse fallouts such as households moving down the energy ladder to use inferior fuels like dung and agricultural residue. Length: 39 pages Creation-Date: 2016-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-138.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-138 Template-Type: ReDIF-Paper 1.0 Title: Consumer’s Acceptance towards Genetically Modified Crops and Growth of the Economy: A Theoretical Approach Author-Name: Amrita Chatterjee Author-Workplace-Name: Madras School of Economics Author-Email: amrita@mse.ac.in Author-Name: Arpita Ghose Author-Workplace-Name: Professor, Department of Economics, Jadavpur University Author-Email: amrita@mse.ac.in Keywords: consumer acceptance, dynamic optimization, economic growth, genetically modified crop Classification-JEL: O41, Q16, C61, C62 Abstract: This paper develops a three-sector theoretical growth model to capture the role of consumers’ acceptance towards the second generation of genetically modified (GM) crops in the long run growth process of the economy. An Acceptance (towards GM crop) parameter is defined as a ratio of consumption of GM to traditional variety of food, whose growth rate is determined by growth rate of human capital. Dynamic stability of the system is ensured provided the value of acceptance parameter is within a certain range. A range of the acceptance parameter is also obtained which ensures not only the dynamic stability of the system but also ensures higher rate of growth of an economy that produces both GM and non-GM crops compared to an economy that does not produce GM crops. Length: 39 pages Creation-Date: 2016-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-1371.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2016-137 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Child Health: An Empirical Analysis Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Madras School of Economics Author-Email: sowmya@mse.ac.in Keywords: child health, nutrition, SEM, multilevel analysis, determinants Classification-JEL: I10, I14, I18 Abstract: Infant and child mortality rates in India have fallen by almost half from the time of adoption of millennium development goals to 2012 but there has not been a concurrent decrease in morbidity and under-nutrition rates. This may be due to a greater focus on treatment interventions vis-à-vis preventive interventions that reduce child deaths; the latter helps in overall child wellbeing by reducing under-nourishment and number of days lost due to illness. This study seeks to identify the mechanisms through which household and community-level socioeconomic factors affect child health and thereby identify preventive interventions that are of greatest consequence. We use the longitudinal data of Young Lives project that tracks the lives of two birth cohorts: 2000 children born in 2001-02 and 1000 children in 1994-95 and has information on multiple indicators of child health: morbidity episodes, health status as perceived by the caregiver, and nutritional status. Using multi-level analysis and structural equation modeling, we simultaneously analyse the effect of socioeconomic factors on multiple proximate factors like drinking water, sanitation and breastfeeding and, the effect of these factors on child health and nutrition. We find that household wealth, mother’s education and community level factors determine the socioeconomic status (SES) of the household. Low SES is in turn associated with high exposure (through crowding, open defecation, mud flooring), and low resistance (through inappropriate complementary feeding practices and partial immunization care) to diseases. However, we find that children belonging to households of low SES are more likely to be breastfed for longer duration. Among the proximate factors, open defecation, and inappropriate feeding practices and birth characteristics like low gestational age and birth weight significantly increase infant morbidity rates. These factors combined with drinking unsafe water, receiving partial or no immunization care and poor living conditions lead to high under-nutrition rates in infants. Length: 41 pages Creation-Date: 2015-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-136.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-136 Template-Type: ReDIF-Paper 1.0 Title: Does Corporate Governance Matter in Determinants and Use of Cash: Evidence from India Author-Name: Saumitra Bhaduri Author-Workplace-Name: Madras School of Economics Author-Email: saumitra@mse.ac.in Author-Name: Ekta Selarka Author-Workplace-Name: Madras School of Economics Author-Email: ekta@mse.ac.in Keywords: Cash holdings, Ownership concentration, corporate governance, India Classification-JEL: G32, G34 Abstract: Our study investigates the determinants and use of cash holdings by Indian companies. Using a large sample of manufacturing firms that are publicly traded on Bombay Stock exchange for the period of 1998-2012, we present a dynamic panel data regression framework to accommodate the persistence in cash holdings which is typically ignored in the literature. We find significance evidence of persistence in corporate cash holdings of Indian firms. Using this framework, we predict the excess cash holdings and find that firms with higher concentration of insider ownership as well as higher divergence between cash flow and control rights of insiders hold positive excess cash. Not only they hold excess cash but they accumulate cash holdings. The study also finds that business groups on average hold higher cash reserves but at the same time, dissipate cash over time quickly then their standalone counterparts. Further, we find that positive excess cash positively affects dividend payout and propensity to acquisitions. However the study finds that corporate governance plays no role in disbursement of excess cash as dividends or undertaking acquisitions. This indicates absence of agency motive in explaining the dividend payout and propensity of firms to acquire. Length: 43 pages Creation-Date: 2015-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-135.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-135 Template-Type: ReDIF-Paper 1.0 Title: Inflation and the Dispersion of Component Price Indices: A Case for Four Percent Solution Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com; sartajrasool@mse.ac.in Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Author-Name: M. Ramachandran Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Keywords: Inflation uncertainty, relative price dispersion, rolling cointegration, threshold inflation Classification-JEL: E30; E31; E52 Abstract: Unlike earlier literature that documented positive association between inflation and the dispersion of relative prices over time, the empirical evidence from this study suggests that the relative price dispersion increases in response to the deviation of inflation from certain threshold/target level in either direction rather than the inflation per se. More importantly, the inflation rate at which the dispersion of relative prices is minimized turn out to be 4 percent for US and Japan; hence, supporting the proposal of 4 percent inflation target for both the countries. Length: 23 pages Creation-Date: 2015-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-134.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-134 Template-Type: ReDIF-Paper 1.0 Title: Female Headed Households and Poverty: Analysis using Household level data Author-Name: Priyanka Julka Author-Workplace-Name: Madras School of Economics Author-Email: eepriyanka@mse.ac.in Author-Name: Sukanya Das Author-Workplace-Name: Madras School of Economics Author-Email: sukanya@mse.ac.in Keywords: Feminization of Poverty, Household Headship, Gender Poverty, Tamil Nadu,Odisha Classification-JEL: I30, I32, I39 Abstract: The relationship between gender and poverty is a complex and debatable topic more than ever and thus a potential area for policy makers to focus. The aim of this paper is to review existing literature and find evidence on linkages of whether gender affects poverty in two agro-biodiversity hotspots- two study sites -Tamil Nadu and Odisha, having different socio-economic setup. It tries to address the research question of whether female - headed households are poorest of the poor. The results depicts that gender has a significant impact on poverty in Tamil Nadu leaving further scope for research. Length: 35 pages Creation-Date: 2015-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-133.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-133 Template-Type: ReDIF-Paper 1.0 Title: Is Financial Inclusion Cause or Outcome? A State-Wise Assessment in India Author-Name: Shrabani Mukherjee Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: shrabani@mse.ac.in Author-Name: Subhadri Sankar Mallik Author-Workplace-Name: Madras School of Economics Author-Email: shrabani@mse.ac.in Keywords: Financial Inclusion, PCA Analysis, Random effect model, Ordered Probit Random effect model Classification-JEL: G21, G32, C30, C33 Abstract: Financial inclusion is considered as cause as well as outcome of inclusive growth. This study tries to construct a comprehensive measure of financial inclusion and evaluate the extent of financial inclusion for 20 major states in India for the period from 2008 to 2012 using principal component Analysis. Further, it intends to examine the extent of causal relationship between financial inclusion and macroeconomic variables such as agricultural growth, industrial growth and progress in elementary and secondary education for the states. A Panel data analysis claimed strong one way causality between financial inclusion and agricultural growth and elementary education. However, reverse causality which is acclaimed by the theory, doesn’t occur. Length: 33 pages Creation-Date: 2015-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-132.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-132 Template-Type: ReDIF-Paper 1.0 Title: Impact of Agricultural Related Technology Adoption on Poverty: A Study of Select Households in Rural India Author-Name: Santosh K. Sahu Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: Sukanya Das Author-Workplace-Name: Madras School of Economics Author-Email: sukanya@mse.ac.in Keywords: Agriculture related technology adoption, propensity score matching, poverty, Odisha, India Classification-JEL: C13, C15, O32, O38 Abstract: This paper applies a program evaluation technique to assess the causal effect of adoption of agricultural related technologies on consumption expenditure and poverty measured by different indices. The paper is based on a cross-sectional household level data collected during 2014 from a sample of 270 households in rural India. Sensitivity analysis is conducted to test the robustness of the propensity score based results using the “rbounds test” and the mean absolute standardized bias between adopters and non-adopters. The analysis reveals robust, positive and significant impacts of agricultural related technologies adoption on per capita consumption expenditure and on poverty reduction for the sample households in rural India. Length: 32 pages Creation-Date: 2015-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-131.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-131 Template-Type: ReDIF-Paper 1.0 Title: Women on Board and Performance of Family Firms: Evidence from India Author-Name: Jayati Sarkar Author-Workplace-Name: Madras School of Economics Author-Email: ekta@mse.ac.in Author-Name: Ekta Selarka Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: ekta@mse.ac.in Keywords: Board of Directors, gender diversity, promoter control, ownership, regulation Classification-JEL: G32, G34, G38 Abstract: This paper provides evidence on the effect of women directors on the performance of family firms with a case study of India. Existing literature on the subject has primarily focused on widely held firms, notably in the US. Given that ownership structure and governance environment of family firms are distinctly different from those of non-family firms, the evidence on the relationship between women on board and firm performance in the context of widely held firms may not apply in the context of family firms. India provides an ideal setting for analyzing this question as the presence of family firms is pervasive and since 2013 India has instituted gender quotas on corporate boards. Using a data-set of 10218 firm year observations over a ten year period from 2005 to 2014 which spans the pre-quota and post-quota years, we find robust evidence that women directors on corporate boards positively impact firm value and that this effect increases with the number of women directors on board. However, we find that the positive effect of gender diversity on firm performance weakens with the extent to which the family exerts control through occupying key management positions on the board. In addition, women directors affiliated to the family have no significant effect on firm value, whereas - independent women directors do. Our results with respect to profitability are somewhat different; while as in the case of market value, women directors positively impact profitability with the positive effect driven by independent women directors, the effect does not vary with the extent of family control. Taken together, our results suggest that though gender diversity on corporate boards may positively impact firm performance in family firms in general, the extent of family control can have a significant bearing on this relationship. The findings from this study could be instructive for emerging economies like India in promoting gender-based quotas on corporate boards. Length: 85 pages Creation-Date: 2015-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-130.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-130 Template-Type: ReDIF-Paper 1.0 Title: Related Party Transactions and Stock Price Crash Risk: Evidence from India Author-Name: Ekta Selarka Author-Workplace-Name: Assistant Professor, Madras School of Economics Author-Email: ekta@mse.ac.in Author-Name: Subhra Choudhury Author-Workplace-Name: Madras School of Economics Author-Email: subhra@mse.ac.in Keywords: Related party transactions, Stock price crash risk, Ownership structure, India Classification-JEL: G12; G14; G32 Abstract: Related Party Transactions disclosures in Annual Reports have recently gained more attention of the Indian policymakers. This paper aims at finding out the effect of related party transactions disclosure on the stock price crash risk faced by the firms. Using a large sample of all the NSE listed firms for the period 2005-2012 this study provides evidence that related party disclosure decreases the stock price crash risk faced by the firms. This study is consistent with the view that information asymmetry increases crash risk. Related party transactions disclosure decreases information asymmetry in the market and thus reduces stock price crash risk. Moreover the study shows that the effect of disclosure about related party transactions is significantly more for higher risk firms. Length: 56 pages Creation-Date: 2015-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-129.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-129 Template-Type: ReDIF-Paper 1.0 Title: Analyzing the Aid Effectiveness on the Living Standard: A Check-up on South East Asian Countries Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Arpita Nehra Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Mohana Mondal Author-Workplace-Name: Research Associate, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Disaggregated developmental aid, Aid for water and sanitation, Health Aid, Millennium Development Goals (MDG), Infant Mortality Rate, Improves sanitation Facilities, GDP, Health Expenditure, Aid Effectiveness Classification-JEL: I130, O11, Q010, O530, I310, I380 Abstract: The present research work aims to analyse the effect that the disaggregated developmental aid has had on the health status and the standard of living in the urban sector after the MDGs were established. Infant Mortality and Improved sanitation facilities are taken as indicators for health status and urbanisation respectively; and the relationship between disaggregated health aid with infant mortality rate and disaggregated aid for water and sanitation with improved sanitation facilities was analysed for the years from 2002-2012 using data from 8 developing countries of Southeast Asia. Findings suggest that the developmental aid has not been effective in both the health sector and urbanisation sector. Moreover, improvement in health status has been growth driven. With the advent of the Sustainable Development goals; the most important thing to ensure is that the disbursed aid is used effectively to achieve the very purposes it is being given for and to reduce the gaps in various classes of developing countries in the region. Length: 25 pages Creation-Date: 2015-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-128.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-128 Template-Type: ReDIF-Paper 1.0 Title: The Culmination of the MDG’s: A New Arena of the Sustainable Development Goals Author-Name: Zareena Begum Irfan Author-Workplace-Name: Associate Professor, Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Arpita Nehra Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Mohana Mondal Author-Workplace-Name: Research Associate, Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Millennium Development Goals, Sustainable Development Goals, Infant Mortality rate, Employment, Malaria, HIV/AIDS, Development Classification-JEL: O180, O5, I00, Y10, O530, Q01, O130 Abstract: Established in 2000;the Millennium Development Goals had played a major role in bringing back the developmental issues to focus. Nearing the end of the stipulated time when they had to be achieved and standing at the edge of establishing the Sustainable development goals, we must comprehend the limitations of the MDGs and formulate SDGs in a way that it overcomes them. This paper is an attempt to observe the trends that the major indicators for health and urbanisation had followed after the MDGs had been established. One of the major issues which is clearly seen in the background of the achievement of targets to reach MDG goals and which must be addressed immediately in the developing countries is: increasing rural-urban and rich-poor gap in these countries. Inclusive growth as a target in the upcoming SDGs does give some hope, however, it must be taken care that the SDGs are not reduced to simply achieving some numbers but they broaden the development narrative beyond the narrow growth perspective. Length: 26 pages Creation-Date: 2015-10 File-URL:http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-127.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-127 Template-Type: ReDIF-Paper 1.0 Title: Investigating Household Preferences for Restoring Pallikaranai Marsh Author-Name: Suganya Balakumar Author-Workplace-Name: Madras School of Economics Author-Email: suganyabalakumar@gmail.com Author-Name: Sukanya Das Author-Workplace-Name: Madras School of Economics Author-Email: dasghosh.sukanya@gmail.com Keywords: Pallinkaranai, Contingent valuation, Chennai, bivariate probit regression Classification-JEL: Q510, C83, Q260 Abstract: The study examines households’ willingness to pay for the conservation of Pallinkaranai marsh located in the south of Chennai, Tamil Nadu. A stated preference method, namely, Contingent Valuation method (CVM) over 213 households has been employed. The results reveal that farmers are willing to pay for the restoration of the marsh which provides higher level of water quality, recreational benefit and restorartion of flora and fauna. Length: 38 pages Creation-Date: 2015-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-126.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-126 Template-Type: ReDIF-Paper 1.0 Title: Effect of Macroeconomic News Releases on Bond Yields in India China and Japan Author-Name:Sreejata Banerjee Author-Workplace-Name: Visiting Professor, Madras School of Economics Author-Email: sreejata@mse.ac.in Author-Name: Divya Sinha Author-Workplace-Name: Madras School of Economics Author-Email: sreejata@mse.ac.in Keywords: Bond yield, Macroeconomic news, Event study, Market efficiency Classification-JEL: E43, G12,G140 Abstract: This paper studies the effect of domestic macroeconomic news releases on the change in the bond yields of India, China and Japan. We apply event study method to observe whether the large set of new information or surprise news is reflected immediately in bond yields. The daily yields of Government Bond with different maturity are regressed over the surprise factors. The bond yields are observed to react differently to the surprise factor of different indicators. Indian bond yield respond much more actively than bonds in China and Japan. Bonds of all the countries respond to the change in US government bonds, while Japan’s response is more than China , India’s response is the weakest. Testing for the existence of the weak form of market efficiency reveals that it holds for longer term bond markets in India and in Japan, but for China it holds for both short and long term bond market. Length: 47 pages Creation-Date: 2015-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-125.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-125 Template-Type: ReDIF-Paper 1.0 Title: Recreational Value of Coastal and Marine Ecosystems in India: A Partial Estimate Author-Name: Pranab Mukhopadhyay Author-Workplace-Name: Department of Economics, Goa University, Goa and Visiting Scholars, Madras School of Economics Author-Email: pm@unigoa.ac.in Author-Name: Vanessa da Costa Author-Workplace-Name: Department of Economics, Goa University, Goa and Visiting Scholars, Madras School of Economics Author-Email: pm@unigoa.ac.in Keywords: Recreational Services in India, Travel Cost Method, Coastal and Marine Ecosystems Classification-JEL: Q26, Q57 Abstract: Recreation is an important ecosystem service in coastal and marine ecosystems. The methodology for valuing recreational services is well developed in the literature. To the best of our knowledge, this is the first attempt at estimating a country-wide value for this service. Using the zonal travel cost method we estimate the partial value of this service to be Rs 531.7 billion in 2012-13 for domestic tourists when consumer’s surplus component is not added. Therefore, this represents a floor value. This constituted about 0.49% of the GDP (at current prices in that year). It is expected that the final value of these services will be higher than what this estimate suggests as it constitutes only what the consumers (recreational visitors) spent in their travel by way of cost of travel, accommodation and income forgone (opportunity cost). The main purpose of this exercise is to understand how these ecosystems services are valued by individuals as there is no direct way to recognize their value. It then helps us to allocate resources better and conserve natural capital. Length: 32 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-124.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-124 Template-Type: ReDIF-Paper 1.0 Title: Analyzing the Water Footprint of Indian Dairy Industry Author-Name: Zareena B. Irfan Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Mohana Mondal Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Water Scarcity, Water Footprint, Dairy Industry, India Classification-JEL: P28, Q29, Q56, Q57 Abstract: Water footprint is a multidimensional indicator, showing water consumption volumes by source and by type of pollution; all components of a total water footprint are specified geographically and temporally. The issue of water scarcity in India is getting serious day-by-day. Water scarcity is fast becoming urban India's number one woe, with government's own data revealing that residents in 22 out of 32 major cities have to deal with daily shortages. In this paper the authors have calculated the water footprint in Indian dairy industry to assess the water intensity. Length: 20 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-123.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-123 Template-Type: ReDIF-Paper 1.0 Title: Mergers and Acquisitions in the Indian Pharmaceutical Sector Author-Name: Santosh K. Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: Nitika Agarwal Author-Workplace-Name: Madras School of Economics Author-Email: genitika@mse.ac.in Keywords: Mergers, Acquisitions, Indian Pharmaceutical Sector Classification-JEL: G34, L65, C13 Abstract: Mergers and acquisitions (M and A) are common strategies of firms to increase its performance. Although, the motives of M and A are different however, the determinants are discreet. This study tries to determine the factors affecting M and A activities in the Indian pharmaceutical sector. The empirical findings suggest; export intensity, import intensity, firm size and research and development intensity as the major determinants of M and A in the Indian pharmaceutical sector. In the context of acquisition, there is a riskiness associated with any business strategy, for to which a firm may choose to finance the deal either via cash, stock or assets. This study further looks at the firm’s decision on the types of acquisitions and arrives at the determinants of such decisions. The factors such as capital intensity was found more important when acquisition by share was undertaken compared to others. The success of the M and A is observed by considering the financial performance of the firm measured in terms of profit margin at firm level. Using propensity score matching technique, this study concludes that M and A have positive effect on the profit margin in the post M and A scenario. Length: 41 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-122.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-122 Template-Type: ReDIF-Paper 1.0 Title: Efficiency in Education Sector: A Case of Rajasthan State (India) Author-Name: Brijesh C. Purohit Author-Workplace-Name: Madras School of Economics Author-Email: brijesh@mse.ac.in; brijeshpurohit@gmail.com Keywords: Efficiency; education sector; Rajasthan; stochastic frontier model Classification-JEL: C14 ; H52 Abstract: Rajasthan being India's largest state comprising 10.4 percent of India's total area is located on the western side of the country. The state is divided into 33 districts. Over the 1990s and early 2000s, enrolment rates at the primary level were rising and gender gap converging, though female enrolment rate is still to catch up with that of male. There also exist considerable differential across districts in the State. As per survey in 2012, overall literacy varies from 55.58 percent (Jalore) to 77.48 percent (in Kota). In this paper, considering the district level variations in literacy and other pertinent socio-economic variables we explore whether efficiency in education in district level enrolments is merely a reflection of the other conditions or is it owing to lack of efficient utilization of available educational input variables. Thus we estimate district level efficiency in enrolments at primary and upper-primary levels, in government and private schools, in Rajasthan and look into reasons for their differentials. Using data for the period 2008-2012 and applying stochastic frontier analysis our results indicate that a strong role is being played by economic development parameters like income and urbanization. And simultaneously direct educational interventions seem to play a positive role in enhancing enrolments at different levels. Therefore an education policy should capture district specific gaps to strengthen the outcomes. This may thus necessitate more information at district level both in terms of educational and economic parameters and this information gap needs to be overcome through planning process. Length: 41 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-121.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-121 Template-Type: ReDIF-Paper 1.0 Title: Health Shocks and Coping Strategies: State Health Insurance Scheme of Andhra Pradesh, India Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Madras School of Economics Author-Email: sowmya@mse.ac.in Keywords: Health shocks, coping strategies, state health insurance scheme, three-level random intercept model Classification-JEL: I10, I13 Abstract: The objectives of the study are three-fold: to investigate who are vulnerable to welfare loss from health shocks, what are the household responses to cope with the economic burden of health shocks and if policy responses like state health insurance schemes are effective in reducing the economic vulnerability. Existing literature have investigated the impact of state health insurance schemes in reducing the vulnerability to financials risks of medical care using catastrophic health expenditure (CHE) measure. This has several limitations like setting arbitrary threshold levels, exclusion of those that did not seek medical care due to inability to pay and non-accounting for risks posed by different sources of financing. So we use self-reported measure of reduction in economic well-being of households due to serious illness or death of one or more members from the recent Young Lives longitudinal study in Andhra Pradesh, India. Three-level random intercept logistic regression analysis that accounts for role of contextual or environmental factors like access to healthcare is used to determine the characteristics of vulnerable population and effectiveness of the state insurance scheme. Length: 40 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-120.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-120 Template-Type: ReDIF-Paper 1.0 Title: PRODUCTIVITY, ENERGY INTENSITY AND OUTPUT: A UNIT LEVEL ANALYSIS OF THE INDIAN MANUFACTURING SECTORAuthor-Name: Santosh K. Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: Himani Sharma Author-Workplace-Name: Madras School of Economics Author-Email: gehimani@mse.ac.in Keywords: Total Factor Productivity, Energy Intensity, Indian Manufacturing Sector Classification-JEL: D2, D22, Q4 Abstract: This study examines the Total Factor Productivity (TFP) growth of the preexisting units on a balanced sample for ten years (1998-1999 to 2007-2008) following the Levinsohn and Petrin (2003) technique. This study uses data from the Annual Survey of Industries at factory level. The results of the study indicate that most of the industries achieved positive TFP growth except a few; and thus within plant efficiency exists in Indian manufacturing sector. A further analysis of determinants of energy intensity using panel data model shows that productive plants in terms of TFP, are energy efficient. It is also observed that medium low-tech and high-tech industries on the basis of OECD classifications are energy efficient compared to the low-tech and the medium high-tech industries. The study also validates the “productivity dilemma hypothesis” for the sample firms indicating TFP and plant output are the major determinants of energy intensity. Length: 32 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-119.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-119 Template-Type: ReDIF-Paper 1.0 Title: Health Shocks and Inter-Generational Transmission of Inequality Author-Name: Sowmya Dhanaraj Author-Workplace-Name: Madras School of Economics Author-Email: sowmya@mse.ac.in Keywords: Parental health shocks, school enrollment, grade attainment Classification-JEL: O15, O12, I30 Abstract: This study explores the inter-generational effects of health shocks using longitudinal data of Young Lives project conducted in the southern state of India, Andhra Pradesh for two cohorts of children (younger and older). It is found that health shocks to poorer parents reduce investments in human capital of children thereby reducing their future earnings, and perpetuating poverty and inequality. There is a temporary delay in primary school enrollment in the case of younger cohort, while schooling attainment is reduced by 0.26 years for older children. This paper further contributes to the literature on important dimensions like role of timing of the shocks and the pathways through which they affect human capital investment, differential effects of paternal and maternal shocks on different cohort groups, ability of the children and quality of schooling in schooling attainment. Length: 35 pages Creation-Date: 2015-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-118.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-118 Template-Type: ReDIF-Paper 1.0 Title: Impact of Water and Sanitation on Selected Water Borne Diseases in India Author-Name: Brijesh C. Purohit Author-Workplace-Name: Madras School of Economics Author-Email: brijesh@mse.ac.in Keywords: Health, water borne diseases, states, efficiency Classification-JEL: Q 25, Q 28, H 51, C 14 Abstract: One of the Millennium Development Goals is to provide improved sanitation facilities along with availability of potable water; which are indeed the two basic needs for human survival. However, despite significant investments over the last 20 years, India still faces the most daunting sanitation challenge and its sanitation is rated as the second worst in the world after China. At present only 28 per cent of people in rural areas have access to toilets leading to severe burden of preventable diseases. With a view to assessing health impact of water borne diseases this study provides first an assessment of direct impact of water and sanitation facilities on incidence of selected diseases in major Indian states. This is followed by an estimation of input efficiency estimates for 28 Indian States. This is done using data envelopment analysis. It is suggested by our results that there is a positive impact of reducing the incidence of selected diseases by the state investments on water and sanitation facilities. However, the differentials impact across states of these inputs in reducing the incidence of four water borne diseases, namely, acute diarrhoea, enteric fever, viral hepatitis and malaria could be minimized to a certain extent if these inputs are targeted more effectively and some changes are made in other funding sources like NRHM. Length: 31 pages Creation-Date: 2015-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-117.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-117 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Energy and CO2 Emission Intensities: A Study of Manufacturing Firms in India Author-Name: Santosh K. Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: Deepanjali Mehta Author-Workplace-Name: Madras School of Economics Author-Email: aqfdeepanjali@mse.ac.in Keywords: Energy Consumption, CO2 Emission, Indian Manufacturing Industries Classification-JEL: Q4, B23 Abstract: This paper investigates the determinants of energy and emission intensities of manufacturing firms in India, from 2000 to 2014. Given that Indian manufacturing sector is one of the world’s most polluting sectors in terms of CO2 emissions; we arrive at firm level determinants of energy and carbon dioxide emission intensities from consumption of three primary sources of energy, namely (1) Coal, (2) Natural Gas and (3) Petroleum. Based on the methodological argument by Barrows and Olliviery (2014), we employ two different definitions in calculating energy intensity and relate with firm characteristics. Data for this study is collected from Prowess 4.0. The results of the regression analysis suggest that there are inter-firm differences in energy and emission intensity. Given that the emission coefficients are derived from the bottom-up approach, firms that are energy intensives are also found to be emission intensives. The results of the study indicate that smaller and larger firms are both energy and emission intensives compared to the medium sized firms. Similarly, firms spending more in research and development activities are found to be energy and emission efficient compare to others. Hence, in the global competitive business environment, Government of India should carefully formulate policies suitable for the medium sized firms to make them energy and emission efficient. Length: 39 pages Creation-Date: 2015-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-116.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-116 Template-Type: ReDIF-Paper 1.0 Title: Money and Inflation: Evidence from P-Star Model Author-Name: Sunil Paul Author-Workplace-Name:Madras School of Economics Author-Email: sunilpaul@mse.ac.in Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com; sartajrasool@mse.ac.in Author-Name: M. Ramachandran Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sunilpaul@mse.ac.in Keywords: Inflation, P-star, Philips curve, Divisia monetary aggregates Classification-JEL: C43; E49 Abstract: This study uses P-star model to examine the role of money in explaining inflation in India. In particular, we compare the performance of traditional Phillips curve approach against P-star model in forecasting inflation. Moreover, the study estimates P-star model using the alternative measures of money such as simple sum and Divisia M3, to examine the relevance of aggregation theoretic monetary aggregates in explaining inflation. The empirical results indicate that P-star model with real money gap has an edge over traditional Phillips curve approach in forecasting inflation. More importantly, we found that the P-star model estimated with Divisia real money gap performs better than its simple sum counterpart. These results highlight the role of money in explaining inflation in India.Length: 39 pages Creation-Date: 2015-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-115.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-115 Template-Type: ReDIF-Paper 1.0 Title: Price Rigidity, Inflation and the Distribution of Relative Price Changes Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com; sartajrasool@mse.ac.in Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com; sartajrasool@mse.ac.in Author-Name: M. Ramachandran Author-Workplace-Name:Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Keywords: Inflation, Skewness, Relative price changes, Menu cost Classification-JEL: E30; E31; E52 Abstract: This study examines whether skewness of the cross sectional distribution of relative price changes is positively associated with aggregate inflation as predicted by the Menu cost model of Ball and Mankiw (1994, 1995). Further, the study examines the size and frequency of price changes across various commodities and the distribution of relative price changes. The results from highly disaggregated Indian Wholesale Price Index data suggest that the skewness of relative price changes explains a significant proportion of short-run fluctuations in aggregate inflation. More importantly, the results indicate that the average size of price increases is greater than the size of price decreases implying downward rigidity in the prices of various commodities. Length: 43 pages Creation-Date: 2015-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-114.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-114 Template-Type: ReDIF-Paper 1.0 Title: Efficiency in Elementary Education in Urban India: An exploratory Analysis using DEA Author-Name: Brijesh C. Purohit Author-Workplace-Name: Madras School of Economics Author-Email: brijesh@mse.ac.in Keywords: Efficiency; DEA; Education; India Classification-JEL: C14 ; H52 Abstract: Increasing literacy in the Indian states is possible by increasing enrolments in elementary education. This study explores the later by primary and upper primary enrolments for nineteen major Indian states for the year 2012-13. Using a non-parametric approach, namely DEA, the results for urban primary and upper primary enrolments indicate that many of the states may be able to improve efficiency of input usage or maximize enrolments more efficiently provided that an adequate infrastructure could be expanded which keeps pace with rising population growths in the states. In rural areas an additional supportive input, namely, electricity supply for villages may also help in enhancing the objective of increasing elementary education in the states. Length: 26 pages Creation-Date: 2015-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-113.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-113 Template-Type: ReDIF-Paper 1.0 Title: Health Shocks and Short-Term Consumption GrowthAuthor-Name: Sowmya Dhanaraj Author-Name:sowmya Author-Workplace-Name: Madras School of Economics Author-Email: sowmya@mse.ac.in Keywords: health shocks, coping strategies, non-medical consumption, micro-credit, social capital Classification-JEL: I15, I31 Abstract: Health shocks can affect the household economy through a substantial rise in out-of-pocket medical expenditure and/or loss of income. In such a situation, households use a range of coping mechanisms to protect nonmedical consumption. This study empirically investigates whether households are able to insure consumption in the short-term when one or more members face serious illness/death. We also analyse if health shocks have asymmetrical effects on household welfare depending on the members facing the shocks and if access to micro-credit and social capital improves the smoothing ability of the households.Length: 29 pages Creation-Date: 2015-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-112.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-112 Template-Type: ReDIF-Paper 1.0 Title: The Conundrum of Profitability Versus Soundness For Banks by Ownership Type: Evidence from the Indian Banking Sector Author-Name: Sreejata Banerjee and Malathi Velamuri Author-Workplace-Name: Madras School of Economics Author-Email: sreejata@mse.ac.in Author-Name: Malathi Velamuri Author-Workplace-Name: Madras School of Economics Author-Email: sreejata@mse.ac.in Author-Name: Malathi Velamuri Author-Workplace-Name: Visiting Faculty, Chennai Mathematical Institute Author-Email: malathi@cmi.ac.in Keywords: Profitability, Soundness, Ownership effect Classification-JEL: G21 ,G28, C 33 Abstract: Banks pursue profit like any business, but in their role as custodians of domestic savings, they are required to be cautious. Riskier but profitable advances may cause asset quality deterioration, thus affecting the longterm viability of the entity. Financial sector reforms in India from the early 1990s, have raised the level of competition for banks of different ownerships - public sector (PSB), old private banks, new private banks and foreign banks. We use panel data on 75 banks across the ownership spectrum, for the period 2000-13, to examine their performance vis-à-vis these two measures – profitability and soundness. We find evidence of significant heterogeneity in performance across ownership type. Overall, we find that there is a negative association between the profitability and soundness measures, though these effects vary by ownership type. PSBs’ business constrained by social outreach commitments perform comparatively worse. The smaller old private banks appear to be the strongest with dedicated client base despite the pressure of nonperforming assets have consistent profits reflected in the return on equity and return on assets. Foreign banks maintain high capital adequacy ratio and relatively higher return on assets. The results provide evidence that good human resource policy is vital for bank performance. Length: 48 pages Creation-Date: 2015-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-111.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-111 Template-Type: ReDIF-Paper 1.0 Title: Caught in the ‘Net’: Fish Consumption Patterns of Coastal Regions in India Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Lavanya Ravikanth Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Lavanya Ravikanth Author-Workplace-Name: Madras School of Economics Author-Email: lavanya@mse.ac.in Keywords: Fish consumption; Nutritional intake; Distributional issues Classification-JEL: D10; D60; R10 Abstract: Fish is an important source of food and livelihood for people. Owing to their proximity to the sea, coastal communities have long depended on this resource to meet their nutritional needs. Does this, however, still hold true today? This paper analyses the fish consumption patterns of rural and urban populations in coastal States and Union Territories (UTs) in India, and how these have changed over time. The analysis is based on unit record data on fish consumption obtained from National Sample Surveys conducted in 1983 and 2009-10. Distributional aspects of fish consumption both within and across coastal States/UTs, and over time are assessed. The results suggest that despite an increase in fish production over time, people living close to the coast in almost all States and UTs report a decline in consumption. Among other things, the paper explores the role of trade in explaining the wedge between production and consumption. Length: 37 pages Creation-Date: 2015-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-110.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-110 Template-Type: ReDIF-Paper 1.0 Title: The Income Mobility in Rural India: Evidence From ARIS/ REDS Surveys Author-Name: Kailash Chandra Pradhan Author-Workplace-Name:Madras School of Economics Author-Email: kailasheco@gmail.com Author-Name: Shrabani Mukherjee Author-Workplace-Name: Joint Director at NILERD, NITI Aayog, Govt. of India Author-Email: shrabani0808@gmail.com Author-Name: Shrabani Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: shrabani0808@gmail.com; shrabani0808@gmail.com Keywords: Income Mobility, Measurement Error, Poverty and Welfare Analysis, Rural India Classification-JEL: D31, I 32, D73, O12 Abstract: Economic mobility is a significant consequence of income inequality and growth. In this paper, we have used a unique ARIS/ REDS surveys data set for rural India spanning 3 decades to determine the reasons and magnitude of income mobility. The triggers that have been identified include land ownership, affirmative actions and occupation. There exists wide income diversity among education level, family size, land ownership and different caste groups. The income mobility continues to be low. Further, the land reforms and advantages from affirmative actions have not made significant impact on the income mobility over the periods. Length: 37 pages Creation-Date: 2015-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-109.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-109 Template-Type: ReDIF-Paper 1.0 Title: Monetary Policy Credibility: Is there a Magic Bullet? Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics Author-Email: naveen @mse.ac.in Author-Name: Vidya Mahambare Author-Workplace-Name: Madras School of Economics Author-Email: naveen @mse.ac.in Author-Name: Francesco Perugini Author-Workplace-Name: Department of Economics, Society, and Politics, University of Urbino, Italy Author-Email: naveen @mse.ac.in Keywords: Monetary Policy, Credibility, Institutions Classification-JEL: E31, E52, E58 Abstract: This paper examines the concept of monetary policy credibility from both the theoretical and practical viewpoints. It also discusses the advantages of high credibility and explains measures that can be taken to enhance it. The article reviews a number of studies that have examined the credibility of monetary policy making over the past decade. Our main conclusion is that credibility is an elusive thing. The only way to be sure of acquiring it is to earn it by deeds. The existing theoretical literature would benefit a great deal by taking this into consideration. Length: 28 pages Creation-Date: 2015-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-108.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-108 Template-Type: ReDIF-Paper 1.0 Title: Public Economics and Sustainable Developments Policy Author-Name: U.Sankar Author-Workplace-Name:Madras School of Economics Author-Email: usankar@mse.ac.in Keywords: Public economics, General, Public Goods, Environment and Development, Sustainability, Ecological Economics, Ecosystem Services, Government Policy Classification-JEL: H10, H41, Q56, Q57, Q58 Abstract: The domain of public economics is increasing as governments‘ policy goal is shifting from economic development to sustainable development. Government has to act as a trustee representing future generations, and public policies must balance and integrate the three pillars (economic, social and environmental) of sustainable development, recognizing the ecological limits to growth. As per the UN development Agenda, sustainable development goals (SDGs) are meant for the period 2015-2030.This paper reviews the global concerns about ecological limits and the need for global partnership and considers the preparatory steps for adoption of SDGs and the means of implementation. Length: 35 pages Creation-Date: 2015-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-107.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-107 Template-Type: ReDIF-Paper 1.0 Title: Parent’s Choice Function for Ward’s School Continuation in Rural India: A Case Study in West Bengal Author-Name: Debdulal Thakur Author-Workplace-Name: BITS-PILANI (Goa Campus) Author-Email: debdulalthakur@gmail.com; debdulal@goa.bits-pilani.ac.in Author-Name: Shrabani Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: shrabani0808@gmail.com; shrabani0808@gmail.com Keywords: School Education, Dropouts, Household?s Choice, Ordered Probit Analysis, Primary Survey Data Classification-JEL: C25, C80, D19, I21, I25 Abstract: In this paper we present a choice function of a rural household about her/his ward?s schooling. It makes an empirical evaluation on the basis of simple theoretical framework using primary data set, surveyed from two backward districts of West Bengal. It explores the underlying causes of discontinuation of school of wards by examining choice function of the parents using ordered probit analysis. The likelihood of drop out is higher in primary level towards low income category households and significantly depends on parents? attributes which are mostly endogenous in an educational production function and other exogenous difficulties in accessing school. It is also triggered up by lack of expectation about the future impact of child education on life. Length: 30 pages Creation-Date: 2015-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-106.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-106 Template-Type: ReDIF-Paper 1.0 Title: Biofuel Feedstock Cultivation in India: Implications for Food Security and Rural Livelihoods Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: R.S. Soundar Rajan Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: R. Manivasagan Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Bio-ethanol; Bio-diesel; Energy Policy; Economic Viability; Rural Livelihoods Classification-JEL: Q42; Q56; O13 Abstract: Biofuels are acquiring importance due to their potential to mitigate greenhouse gas emissions. The two most important biofuels – viz., bioethanol and bio-diesel, are largely considered supplementary to the transport fuels. India has extensive programs and aims to blend 20 percent of transport fuels with biofuels by 2017. This paper focuses on three aspects in the context of biofuel production and policy in India. First, the paper looks at feasibility of meeting the biofuel blending targets envisaged. While jatropha remains as the main feedstock for biodiesel production, sweet sorghum could be considered as alternative feedstock to sugarcane for bioethanol production. Secondly, the paper analyzes the competitiveness of jatropha and sweet sorghum using the cost of cultivation data for a number of crops grown in major states of India during the decade of 2000s. The results suggest that both jatropha and sweet sorghum could pose threat to coarse cereals production. Lastly, the paper critically analyzes the viability of jatropha plantations based on insights from field survey conducted in the Southern state of Tamil Nadu. The paper argues that despite aggressive approach adopted by the Government of India, inadequate attention paid to the institutional issues has resulted in unsatisfactory progress in achieving the bio-diesel blending targets. Length: 31 pages Creation-Date: 2015-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-105.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-105 Template-Type: ReDIF-Paper 1.0 Title: Can Univariate Time Series Models of Inflation Help Discriminate Between Alternative Sources of Inflation PersistenceAuthor-Name: Naveen Srinivasan Author-Name: Pankaj Kumar Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Keywords: Inflation Persistence; Identification; Kalman Filter Classification-JEL: E31, E52, E58 Abstract: When it comes to measuring inflation persistence, a common practice in empirical research is to estimate univariate autoregressive moving average (ARMA) time series models and measure persistence as the sum of the estimated AR coefficients. We examine four potential sources of lag dynamics in inflation: the evolution of policymakers willingness to stabilize output, shifts in the mean inflation rate, imperfect credibility and learning and unemployment persistence. We show that the reduced-form solution for inflation in all these models have an ARMA(p,q) representation. By implication estimating a reduced-form for inflation will not be able to distinguish among these alternative hypotheses. We illustrate this using US and UK data. Length: 39 pages Creation-Date: 2015-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-104.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-104 Template-Type: ReDIF-Paper 1.0 Title: Capital Controls, Exchange Market Intervention and International Reserve Accumulation in India Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Author-Name: Vidya Mahambare Author-Workplace-Name: Great Lakes Institute of Management, Chennai Author-Email: naveen@mse.ac.in Author-Name: M. Ramachandran Author-Workplace-Name: Professor, Department of Economics, Pondicherry University Author-Email: naveen@mse.ac.in Keywords: Reserve accretion; Capital controls; Exports competitiveness Classification-JEL: E58; F31; F32 Abstract: The build up of international reserves by many Asian countries over the last decade or so has attracted widespread interest and debate. This paper seeks to make a contribution to this discussion from the point of view of India. The empirical results are designed to identify the extent to which the accumulation of reserves in India has been driven by two motives which are commonly identified with respect to the recent accumulation of reserves by the Asian EMEs, namely a demand to have insurance against external shocks and a demand to have a high level of export competitiveness, so as to have export-led growth. Our results provide evidence in support of both the motives in explaining India’s international reserves accumulation strategy, although, their relative importance does seem to vary overtime depending on external factors. This in turn offers some helpful insights into the causes and likely future path of the global imbalances. Length: 34 pages Creation-Date: 2015-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-103.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-103 Template-Type: ReDIF-Paper 1.0 Title: Stress Test of Banks in India: A VAR Approach Author-Name: Sreejata Banerjee Author-Workplace-Name: Madras School of Economics Author-Email: sreejata@mse.ac.in; sreejata@cmi.ac.in Author-Name: Divya Murali Author-Workplace-Name: Research Associate at Athenainfonomics Author-Email: divya.m@athenainfonomics.in; divyamurali13@gmail.com Keywords: Macro Stress test, Non-performing Assets, Impulse response function, Vector Auto Regression, Granger Causality Classification-JEL: C33, E32, E37 Abstract: Banking crisis have serious repercussion causing loss of household savings and decline in confidence and soundness in the banking sector. The present study is an attempt to analyze this aspect in light of the challenges of financial sector reforms faced by banks in India . Stress test of banks operating in India is undertaken to identify factors that adversely influence banks’ non-performing assets (NPA) which is the key indicator of banks’ soundness. We examine the response of bank’s NPA to unexpected shocks from external and domestic macroeconomic factors namely interest rate, exchange rate, GDP. NPAs are regressed in Vector Auto Regressive model on a set of macroeconomic variables with quarterly data from 1997 to 2012 to examine whether there is divergence in the response across the four types ownership: public, old private, new private, and foreign. Granger Causality, IRF and FEVD are used to verify the VAR results. Interest rate significantly impairs asset quality for all banks in two-way causality. Exchange rate, net foreign institutional investor flow and deposits Granger cause public banks’ NPA. GDP gap Granger cause NPA in old private and foreign banks. IRF show banks are vulnerable to inflation shock requiring 8 quarters to stabilize. The stress test clearly demonstrates that all banks need to re-capitalize and improve asset quality. Length: 37 pages Creation-Date: 2015-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-102.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-102 Template-Type: ReDIF-Paper 1.0 Title: To Consume or to Conserve: Examining Water Conservation Model for Wheat Cultivation in India Author-Name: Zareena Begum Irfan Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Bina Gupta Author-Workplace-Name: Department of Environmental Science, Indian Institute of Technology Roorkee, Roorkee, Uttarakhand Author-Email: zareena@mse.ac.in Keywords: Canal Irrigation, Incentive, Water Use, Crop yield Classification-JEL: Q15; Q25; Q18 Abstract: Constitutionally in India, the individual states have responsibility for water, forests, and agriculture. Major canal irrigation accounts for over 80 percent of India's irrigation. The intensive wheat irrigated system in Haryana and Uttar Pradesh states of India is observed to analyze the impact of incentive mechanism favoring the crop yield and water use. The regions selected for the present study are built on a long tradition of canal irrigation. Findings from farm surveys are used to examine water management and water productivity in the Haryana and Uttar Pradesh state. Attributes of the irrigation sources help explain the widespread interest in groundwater use and the relative demise of canal water use. Sole consumption of groundwater as irrigation source was altered by the initiation of conjunctive water of both surface and ground through the incentive pathway by municipal level irrigation managers. A combination of technological, land use and market based approaches is likely to be most effective in achieving sustainable water management in these intensive cereal systems. Based on the data set for the Indo-Gangetic Plain, the overall goal of this paper was to examine how the irrigation management reform has proceeded since the early stages of implementation and what the impacts are of the incentive mechanisms on water use and crop yields. The results show that irrigation management reform has accelerated in the study sites. The econometric model results indicate that using incentive mechanisms to promote water savings is effective under the arrangement of contracting management. However, if incentives are provided to the irrigation managers, the wheat yield declines significantly. The results imply that at the later stage of the reform, the cost of reducing water use by providing incentives to managers includes negative impacts on crop yields. Therefore, the design of win–win supporting policies is aimed to be achieved from the present study to ensure the healthy development of the irrigation management reform. Length: 34 pages Creation-Date: 2015-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-101.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-101 Template-Type: ReDIF-Paper 1.0 Title: An Inter-Country Analysis on Growth of Non-Bank Financial Intermediaries Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Non-Bank Financial Sector, Regulation, Systemic Risk, Global Economies Classification-JEL: E44, G21 Abstract: Non-Bank Financial Institutions (NBFIs) or shadow banks are internationally recognized as financial intermediaries. There have been debates in the literature on the exact relation (complementary or substitutability) between non-banking and banking sectors and between financial sector development/liberalization and economic growth. This study analyzes these issues using the data from 25 major nations in the world during 2006-13 and panel data methodology. Results of the study suggest that (i) NBFIs hold nearly 22 percent of the total financial system assets; (ii) both credit risk and funding risk associated with interconnectedness between banks and non-banks sectors was larger for NBFIs than for banks in almost all nations; (iii) banks and Non-banking institutions are competing each other; (iv) financial sector represented by banking sector plays a significant role in determining GDP growth of nations, thereby confirming the Schumpeterian idea of finance spurring growth and (v) the economic growth and non-banking sectors growth are positively related, supporting the Robinsonian conjecture of economic growth leading to more dynamic financial sector development. The NBFI regulation is generally underdeveloped in almost all countries. The most nations do not have policy instruments that are specially designed for dealing with systemic risks associated with NBFIs. A perpetual challenge for financial regulators and supervisors in various nations is to choose appropriate regulatory mechanism suited to their countries. Length: 36 pages Creation-Date: 2015-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-100.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-100 Template-Type: ReDIF-Paper 1.0 Title: Inflation Forecasting and the Distribution of Price Changes Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com Author-Name: Sunil Paul Author-Workplace-Name: Madras School of Economics Author-Email: sunilpaul@mse.ac.in Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com Keywords: skewness, relative price changes, asymmetry, inflation forecasting Classification-JEL: E30; E31; E52 Abstract: This study shows that replacing the traditional measure of asymmetry that is skewness in the inflation forecasting model with an alternative asymmetry measure that captures the joint influence of both skewness and variance on inflation significantly improves the forecast at various horizons. The empirical evidence suggests that it is more appropriate to use such measure of asymmetry in inflation forecast model as it has edge over simple measure of skewness in predicting inflation. These findings are consistent with the prediction of menu cost model that the variance of cross sectional distribution of relative price changes amplifies the impact of skewness on inflation. Length: 20 pages Creation-Date: 2015-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-99-for-Web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-099 Template-Type: ReDIF-Paper 1.0 Title: Technology Import, R and D Spillover and Export: A Study of Automobile Sector in India Author-Name: Santosh K. Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: K. Narayanan Author-Workplace-Name: Department of Humanities and Social Sciences, Indian Institute of Technology Bombay, Powai, Mumbai Author-Email: knn@iitb.ac.in Keywords: Decision to export, Export intensity, Indian automobile sector, R and D intensity, Technology import intensity Classification-JEL: L10, L21, L22, L62 Abstract: We examine the importance of a firm’s R and D activity, technology import and intra-sectoral R and D spillovers on the decision to export and export intensity using firm level panel data for the Indian automobile sector from 2000-2014. R and D and technology import activities are found to be important determinants of export activity. There is evidence that R and D spillovers exert positive effects on firms’ export intensity and decision to export. In addition to these results, firm age and size are nonlinearly related to export decision and export intensity. Energy efficiency plays important role in export behavior for firms that are continuously exporting and those who are exporting at least for one year. Length: 52 pages Creation-Date: 2015-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-98.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-098 Template-Type: ReDIF-Paper 1.0 Title: Entrepreneurial Choice of Investment Capital for House-Based Industries: A case study in West Bengal Author-Name: Shrabani Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: shrabani@mse.ac.in; shrabani0808@gmail.com Keywords: Formal Credit, Informal Credit, Entrepreneurial Decision, Ordered Probit Analysis Classification-JEL: C13, D22, D23, R30 Abstract: The lack of access to formal credit at affordable cost (effective interest) is the most critical constraint faced by the rural entrepreneurs to get involved in productive profitable business activities. This study explores the causes behind the widespread existence of informal credits as investment capital for small house-based business. Based on a primary survey on house based industrial owners in back ward areas of West Bengal it tries to capture the binding constraints in decision process for entrepreneurs to obtain their investment capital from subsidized formal credit market. A binary probit confirms imperfect substitutability between formal and informal credit in investment decision and an ordered probit analysis claims that huge complexity in lending process of formal sector becomes major restraint to access the institutional credit and thus makes the formal credit costlier than alternative sources to use it for industrious purposes. Length: 36 pages Creation-Date: 2015-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-97.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-097 Template-Type: ReDIF-Paper 1.0 Title: A Dynamic Economic Model of Soil Conservation Involving Genetically Modified Crop Author-Name: Amrita Chatterjee Author-Workplace-Name: Madras School of Economics Author-Email: amrita@mse.ac.in Author-Name: Arpita Ghose Author-Workplace-Name: Jadavpur University Author-Email: dhararpita@yahoo.co.in Keywords: Dynamic Optimization, Genetically Modified crops, soil erosion, soil conservation, steady state. Classification-JEL: C61, C62, Q2, Q16, Q28 Abstract: This paper attempts to model the positive role of cultivation of Genetically Modified (GM) crop with its soil-anchoring root-characteristic and use of conservation-tillage technology, in saving organic matter contents in the topsoil and reducing soil erosion. In a dynamic optimization framework the farmer produces an optimal combination of a GM and a Non-GM variety of the same crop at the steady state, though the steady state is approached most rapidly by producing a single crop. The improvement in the capacity to anchor the soil and an increase in organic matter content in top-soil will raise the long run soil stock under certain conditions. However, the policies to increase R&D investment in genetic modification and imposition of an input subsidy on GM sector will lead to an increment in area under GM cultivation though their effect on long run soil stock is uncertain. Length: 39 pages Creation-Date: 2015-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-96.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2015-096 Template-Type: ReDIF-Paper 1.0 Title: Volatility Spillover between Oil and Stock Market Returns Author-Name: B. Anand Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sunilpaul@mse.ac.in Author-Name: Sunil Paul Author-Workplace-Name: Madras School of Economics Author-Email: sunilpaul@mse.ac.in Author-Name: M. Ramachandran Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sunilpaul@mse.ac.in Keywords: Crude oil, Volatility Spillover, BEKK, Continuous Wavelet Transform Classification-JEL: C32, C1, E0 Abstract: In the recent past, international crude oil markets have witnessed significant fluctuations and such fluctuations tend to have ramifications on the economy as a whole. In this regard, this paper makes an attempt to model such volatility spillover from oil price returns to the returns `of the Indian stock market. The study also makes a comparative analysis of the volatility transmission mechanism between the periods prior to and after the eruption of global financial crisis. The empirical analysis employs BEKK parameterization of bivariate GARCH model and various tools of continuous wavelet transform to understand the dynamics of volatility spillover between these two markets. The empirical evidence suggests that the fluctuations in the crude oil price returns exert significant impact on the volatility of stock market returns. More importantly, such volatility spillovers are found to be much stronger during the post financial crisis period and the results obtained from the wavelet analysis indicate the dominance of high frequency components in the oil-stock market relationship. Length: 35 pages Creation-Date: 2014-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-95.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-095 Template-Type: ReDIF-Paper 1.0 Title: Asymmetric Price Adjustment - Evidence For India Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com; sartajrasool@mse.ac.in Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Author-Name: M. Ramachandran Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Keywords: Menu cost, asymmetric price adjustment, relative price, error correction Classification-JEL: C32, E31, E52 Abstract: We construct an error correction mechanism to examine whether firms’ price adjustment is asymmetric as anticipated by Ball and Mankiw (1994). We have used monthly time series data on prices of 418 commodities, which constitute 97 percent of commodity price basket used in the construction of wholesale price index in India. The empirical evidence indicates that the price adjustment of most of the firms exhibits strong asymmetry; shocks that increases firms’ desired prices causes quicker and larger rise in prices whereas shocks that lower desired prices causes smaller or no fall in prices. Also, we identify a threshold value for each firm below which it does not allow its relative price to fall. These evidences imply that larger relative price variability can trigger inflation even in the absence of demand shocks. Moreover, the distribution of output is likely to be negatively skewed even if the demand shocks are symmetric. Length: 25 pages Creation-Date: 2014-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-94.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-094 Template-Type: ReDIF-Paper 1.0 Title: Women’s Malnutrition in India: The Role of Economic and Social Status Author-Name: Shikha Dahiya Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: BMI, Women, Quantile Regression, Income, Dietary Diversity Classification-JEL: C40, I12, J10, O18 Abstract: This study has used India Human Development Survey, 2005 to study the factors influencing the Body Mass Index (BMI) of women between 20 to 40 years of age in India. BMI captures both undernutrition and over nutrition and a quantile regression model has been used to capture the differential impact of the explanatory variables across the wide range of its values. Variables like per capita income, per capita consumption expenditure and wealth are all important in explaining the variations in BMI but the impact varies across the quantiles. Impact of per capita consumption expenditure is higher than that of the per capita income indicating the effectiveness with which the resources are converted to consumption. Higher levels of wealth status impact BMI more across all the quantiles. Women’s autonomy index shows a positive impact only for higher levels of the index value but the magnitude is very small. In comparison to this, poor dietary diversity, women with younger children, and those working in agriculture related economic activities are worse off with significantly higher impact. Similarly access to clean and safe drinking water, good sanitation facility and use of clean cooking fuel like LPG have a favourable impact on women’s BMI. Length: 40 pages Creation-Date: 2014-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-93.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-093 Template-Type: ReDIF-Paper 1.0 Title: Energy Use Patterns and Firm Performance: Evidence from Indian Industries Author-Name: Santosh Kumar Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Keywords: Energy Use, Firm Performance, Indian Manufacturing, Energy Intensity, Profitability Classification-JEL: Q4, B23 Abstract: This paper is an attempt to understand the relationship between firm performances based on energy use patterns of Indian manufacturing industries. Determinates of firm performances are estimated for the full sample and for the sample of firms using similar energy sources. Econometric analysis of the data collected from the CMIE PROWESS at firm level from 2005-2013 reveals that the determinants of profitability vary across groups. Energy intensity is positively related to profitability for three models except for the firms using natural gas as primary source of energy. R and D intensity is positively related to profitability for the full sample and for the firms using petroleum. For the firms using coal as primary source of energy, less R and D intensive firms are found to be profitable. For all the cases, firm size is found to be nonlinearly related to profitability. In the policy front, shifting primary energy source from coal and petroleum to natural gas; firms can become energy efficient and profitable. Length: 39 pages Creation-Date: 2014-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-92.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-092 Template-Type: ReDIF-Paper 1.0 Title: A New Approach to Construct Core Inflation Author-Name: Sartaj Rasool Rather Author-Workplace-Name: Madras School of Economics Author-Email: sartajrasool@gmail.com Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Author-Name: M. Ramachandran Author-Workplace-Name: Department of Economics, Pondicherry University, Puducherry Author-Email: sartajrasool@gmail.com Keywords: Core inflation, Skewness, Leading indicator Classification-JEL: C43, E31, E52 Abstract: We propose a new methodology to construct core inflation which is, unlike other conventional methods, not based on ad hoc elimination/trimming of prices. The underlying inflation derived from our method is found to be a powerful leading indicator of headline inflation while other conventional measures do not seem to reflect such fundamental property of core inflation. Length: 17 pages Creation-Date: 2014-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-91.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-091 Template-Type: ReDIF-Paper 1.0 Title: Analyzing the Pathway to Improve Tiger Conservation in India Author-Name: Zareena Begum. I Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Author-Name: Amanat K. Gill Author-Workplace-Name: Madras School of Economics Author-Email: amanat@mse.ac.in Keywords: Community, Domestication, Parameterization, Poaching, Wildlife Management Classification-JEL: C02, C69, Q26, Q29 Abstract: Despite substantial conservation investments by governments and international agencies, the existence of tigers in the wild is still threatened. The main threats to the survival of wild tigers are poaching, prey depletion, and habitat degradation and fragmentation. All international trade in tiger parts has been prohibited since 1975, with China introducing a domestic ban in 1993. The domestic trade ban in China was followed by the establishment of captive tiger breeding farms in East Asia. China has considered partially lifting the trade ban to permit sales from tiger farms. This has been a matter of much debate with the proponents to the trade ban opposing it on the grounds that it result in an increase in the illegal killing of tigers and would also result in an increase in demand for tiger products, while the proponents to tiger farming favouring a supply side approach to conservation with products from tiger farms meeting all the demand. This research paper argues that it is possible to protect wild tigers by permitting the sale of products from tiger farms. India has mainly targeted tiger conservation with the establishment of tiger reserves all over the country, but this has resulted in the displacement of local communities from land that was traditionally belonged to them. Community based conservation seeks to conserve wildlife by giving local people a stake in its conservation and thus, providing an incentive to conserve it. This paper using a bio-economic model argues that giving local communities a stake in conservation of tigers like a share of tourism revenues aids conservation, as it would result in an increase in anti-poaching effort undertaken by the local communities, but this is contingent upon the additional revenue being higher than the cost of intrusion. Length: 39 pages Creation-Date: 2014-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-90.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-090 Template-Type: ReDIF-Paper 1.0 Title: Testing the Expectations Trap Hypothesis: A Time-Varying Parameter Approach Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Keywords: Monetary policy; Expectations Trap; Time-varying parameters; Flexible Least Squares Classification-JEL: E31; E42; E52; E58 Abstract: The expectations trap hypothesis is an influential but untested model of monetary policy. The hypothesis conjectures that high inflation during the 1970s was the outcome of a shift in private sector beliefs which were then validated by monetary policy. The subsequent fall in inflation was mainly due to changes in those beliefs. We provide a formal test of the model, using US data from 1948-2008. The flexible least squares approach of Kalaba and Tesfatsion (1988, 1989) is used to evaluate its empirical likelihood. Strong formal support is found for this proposition. Specifically, our results suggest that supply shocks interacting with private sector beliefs about the nature of monetary regime together account for the rise and fall of U.S. inflation. Length: 36 pages Creation-Date: 2014-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-89.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-089 Template-Type: ReDIF-Paper 1.0 Title: Perspectives on Valuation of Biodiversity Author-Name: Suneetha M. S. Author-Workplace-Name: Visiting Researcher, MSE and Adj. Senior Research Fellow, United Nations University – Institute for the Advanced Study of Sustainability, Japan Author-Email: subramanian@unu.edu Keywords: Economic valuation of biodiversity, stakeholder preferences, multistakeholder valuation, interdisciplinary approaches, biodiversity policy Classification-JEL: Q51; Q57 Abstract: Forward-looking RE models such as the popular New Keynesian (NK) model do not provide a unique prediction about how the model economy behaves. We need some mechanism that ensures determinacy. McCallum (2012) says it is not needed because models are learnable only with the determinate solution and so the NK model, once learnt in this way, will be determinate. We agree: the only learnable solution that has agents converge on the true NK model is the bubble-free one. But once they have converged they must then understand the model and its full solution therefore including the bubble. Hence the learnability criterion still fails to pick a unique RE solution in NK models. Length: 40 pages Creation-Date: 2014-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-88.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-088 Template-Type: ReDIF-Paper 1.0 Title: Can the Learnability Criterion Ensure Determinacy in New Keynesian Models? Author-Name: Patrick Minford Author-Workplace-Name: Cardiff Business School and CEPR, United Kingdom Author-Email: naveen@mse.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Keywords: India; New-Keynesian; Taylor Rule; Determinacy; E-stability; Learnability Classification-JEL: C62; D84 Abstract: Forward-looking RE models such as the popular New Keynesian (NK) model do not provide a unique prediction about how the model economy behaves. We need some mechanism that ensures determinacy. McCallum (2012) says it is not needed because models are learnable only with the determinate solution and so the NK model, once learnt in this way, will be determinate. We agree: the only learnable solution that has agents converge on the true NK model is the bubble-free one. But once they have converged they must then understand the model and its full solution therefore including the bubble. Hence the learnability criterion still fails to pick a unique RE solution in NK models. Length: 40 pages Creation-Date: 2014-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-87.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-087 Template-Type: ReDIF-Paper 1.0 Title: Agriculture and Child Under-Nutrition in India: A State Level Analysis Author-Name: Swarna Sadasivam Vepa Author-Workplace-Name: Economist (LANSA), M. S. Swaminathan Research Foundation (Chennai) and Visiting faculty Madras School of Economics (Chennai) Author-Email: svepa@mse.ac.in Author-Name: Vinodhini Umashankar Author-Workplace-Name: Research Associates (LANSA), M. S. Swaminathan Research Foundation, Author-Email: svepa@mse.ac.in Author-Name: R.V. Bhavani Author-Workplace-Name: Project Manager, (LANSA), M. S. Swaminathan Research Foundation, Chennai, Author-Email: svepa@mse.ac.in Author-Name: Rohit Parasar Author-Workplace-Name: Research Associates (LANSA), M. S. Swaminathan Research Foundation, Author-Email: svepa@mse.ac.in Keywords: India; Agriculture, productivity, female wages child undernutrition Classification-JEL: Q19, I18 Abstract: The literature review on agriculture-child nutrition linkage indicates that the evidence base is weak and inconclusive (Kadiyala et al., 2013). This paper explores the possible linkages between agricultural prosperity with rural child nutrition at the macro level, controlling for sanitation and safe drinking water, using panel data fixed effects and random effects models. The four alternate indicators of agricultural prosperity viz., agricultural growth, worker productivity, land productivity and food grain production per capita used alternatively enable us to conclude that negative influence of agricultural prosperity on child undernutrition exists, though the influence of various aspects of prosperity on underweight and stunting differ. Other aspects of agriculture considered, such as female agricultural wages help to reinforce the negative influence of agricultural prosperity on underweight in children and the land operational inequality dampens the impact of agricultural prosperity as it increases the incidence of stunting. Water and sanitation help reduce child undernutrition albeit differently on stunting and underweight. The same set of variables seems to influence stunting and underweight differently. Their trajectories seem to differ. The present study enables us to conclude that Indian agricultural growth through higher food grain production and through higher land productivity, when percolates through, labour productivity and higher wages, can reduce child undernutrition in rural India. However, public policy has to promote social provisioning of sanitation and health and make sure that agricultural growth is consistent. Public policy should ensure that growth translates into higher labour productivity and higher wages. Length: 49 pages Creation-Date: 2014-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-86.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-086 Template-Type: ReDIF-Paper 1.0 Title: Unravelling India’s Inflation Puzzle Author-Name: Pankaj Kumar Author-Workplace-Name: Indira Gandhi Institute of Development Research Author-Email: pankajk@igidr.ac.in Author-Name: Naveen Srinivasan Author-Workplace-Name: Madras School of Economics Author-Email: naveen@mse.ac.in Keywords: India; Inflation; Potential Output; Taylor Rule Classification-JEL: E31; E32; E52 Abstract: From 2003, the Indian economy enjoyed a boom in growth coupled with moderate inflation for five years. The economy grew at a rate close to 9 percent per year, until it was punctured by the global financial crisis of 2008. Since then, the persistence of inflation in an environment of falling economic growth has come out as a “puzzle” to policymakers’ and many in the financial market. Why has the current slowdown in growth not been disinflationary? This paper contends that there were two important policy errors that are behind the stagflationary outcome. The rapid deterioration in public finances in response to the global economic crisis while stimulating demand temporarily managed to pull down the potential growth rate of the economy. The RBI compounded the problem by being sluggish and soft on inflation after the economy bounced back from the effects of the global economic crisis because it systematically overestimated the potential growth rate of the economy. This meant that by the time monetary policy was tightened, high inflation and inflation expectations had already become entrenched. That is why the current growth slowdown has not been disinflationary Length: 35 pages Creation-Date: 2014-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-85.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-085 Template-Type: ReDIF-Paper 1.0 Title: Group Inequalities and ‘Scanlan’s Rule’: Two Apparent Conundrums and How We Might Address Them Author-Name: Peter J. Lambert Author-Workplace-Name: Department of Economics, University of Oregon, USA Author-Email: plambert@uorego.edu Author-Name: S. Subramanian Author-Workplace-Name: Madras Institute of Development Studies, India. Author-Email: ssubramanianecon@gmail.com Keywords: Groups, Favourable outcomes, Adverse outcomes, Scanlan’s Rule, Equity, Efficiency, Reverse discrimination Classification-JEL: D63, I13, I31, I32 Abstract: In situations where an adverse social outcome affects disadvantaged and advantaged groups in society differently, the rates at which those groups experience favorable or adverse outcomes tend to be systematically related to the overall prevalence of the outcome. Specifically, as the overall prevalence of that outcome reduces (e.g. as a result of a policy measure or social improvement), the adverse outcome may be found to reduce proportionately less among the group with the higher baseline rate (call it the “disadvantaged” group), while concomitantly the rate of escaping the unfavorable outcome rises proportionately less in the other (“advantaged”) group. The propensity for this to happen was first noticed by James P. Scanlan, and is sometimes referred to as ‘Scanlan's Rule’. The Rule might be seen as calling into question standard measurement devices for characterizing groups as being relatively disadvantaged or advantaged, and as suggesting that a concern for group inequality could stymie the possibility of social progress. This paper seeks to address these questions, and in so doing suggests that Scanlan’s Rule and its widespread occurrence across a number of social situations deserve to be acknowledged. However, it also suggests that the disturbing implications of the Rule alluded to earlier are probably unfounded, and that the Rule only bolsters the case for affirmative action in a variety of instances of group inequality. Length: 41 pages Creation-Date: 2014-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-84..pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2014-084 Template-Type: ReDIF-Paper 1.0 Title: R and D Spillovers Across the Supply Chain: Evidence from the Indian Automobile Industry Author-Name: Madhuri Saripalle Author-Workplace-Name: Madras School of Economics Author-Email: msaripalle@mse.ac.in Keywords: Industry studies, Research and Development, Country studies, Industrial Organization, Supply chain Classification-JEL: L6, L22 , O33 R and D Abstract: This study attempts to capture the impact of vertical and horizontal R and D spillovers across the supply chain. Empirical studies have captured vertical spillovers while finding the role of horizontal spillovers in R and D to be negligible, as the pool of accessible knowledge is the same for a cross section of firms within an industry. However, from a supply chain perspective, though firms may be suppliers to an industry, they belong to different industries themselves; and different tiers of the supply chain. The automobile industry is a good case in point: though auto component firms supply to the automobile sector, they come under diverse industrial classification schemes like rubber, electronics and engineering. The present study attempts to measure the horizontal spillovers within Indian Indian auto components Industry as well as spillovers coming vertically from the original equipment manufacturers (OEM) from a flow and a stock perspective. The trend in R and D expenditures undertaken by various component types suggests that most of the R and D occurs in the engine, suspension and tyre category indicating the adaptive nature of R and D, given India’s infrastructure. The study finds spillovers from within the component group are a substitute for firm’s own in-house R and D, while spillovers coming from outside the component group act as complements, thus indicating the integral nature of automobile design, requiring collaborative R and D effort. Among the OEMs, spillovers vary based on vehicle category suggesting that nature of OEM-supplier collaboration differs by vehicle types. Length: 46 pages Creation-Date: 2013-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Worrking-paperr-83.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-083 Template-Type: ReDIF-Paper 1.0 Title: Carbon Dioxide Emissions from Indian Manufacturing Industries: Role of Energy and Technology Intensity Author-Name: Santosh Kumar Sahu Author-Workplace-Name: Madras School of Economics Author-Email: santosh@mse.ac.in Author-Name: K. Narayanan Author-Workplace-Name: Institute Chair Professor and Head, Department of Humanities and Social Sciences, Indian Institute of Technology Bombay Author-Email: knn@iitb.ac.in Keywords: CO2 emission, Technology intensity, Firm heterogeneity, Panel data, Indian manufacturing Classification-JEL: Q4, B23 Abstract: Industrial energy efficiency has emerged as one of the key issues in India. The increasing demand for energy that leads to growing challenge of climate change has resulted major issues. It is obvious that high-energy intensity leads to high carbon intensity of the economy. This paper is an attempt to compute Carbon Dioxide (CO2) emission from fossil fuel consumption for firms in Indian manufacturing sector from 2000 to 2011 by adopting the IPCC Reference Approach. The contribution of this paper lies in estimating CO2 emission at the firm level and analyzing the factors that explain inter-firm variation in CO2 emission. The results indicate that there are differences in firm-level emission intensity and they, in turn, are systematically related to identifiable firm specific characteristics. This study found size, age, energy intensity and technology intensity as the major determinants of CO2 emission of Indian manufacturing firms. In addition, capital and labour intensity of the firms are also related to the firms’ CO2 emission intensity. We conclude the short run policy implications should be aimed at encouraging firms to invest more in R&D and technology sourcing and at long run firm should be able to adapt cleaner energy to reduce CO2 emission from the fuel consumption. Length: 40 pages Creation-Date: 2013-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-82.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-082 Template-Type: ReDIF-Paper 1.0 Title: Weather Sensitivity of Rice Yield: Evidence from India Author-Name: Anubhab Pattanayak Author-Workplace-Name: Madras School of Economics Author-Email: anubhab.pattanayak@gmail.com Author-Name: K. S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Rice; India; Climate Change Impacts; Poverty Classification-JEL: Q1; Q54; R1; R11; O15 Abstract: This study estimates the weather sensitivity of rice yield in India, using disaggregated (district) level information on rice and high resolution daily weather data over the period 1969-2007. Compared to existing India specific studies on rice which consider only the effects of nighttime (minimum) temperature, the present study takes into account the effects of both nighttime and daytime (maximum) temperatures along with other weather variables on rice yield. The results suggest that both nighttime and daytime temperatures adversely affect rice during different growth phases. The effect of higher nighttime temperature on rice yield was much lower than those estimated by previous studies. Further, the negative impact of higher daytime temperature on rice yield was much larger than the impact due to higher nighttime temperature. The study further estimates that average rice yield would have been 8.4 percent higher had the pre-1960 climatic conditions prevailed during the period of study. This translates into an annual average loss of 4.4 million tons/yr or a cumulative loss of 172 million tons over the 39 year period for India. The paper argues that such significant loss in rice production under climate change conditions in future will have strong implications for the region’s food-security and poverty, given that a large number of producers and consumers depend on rice for their livelihood and sustenance. Length: 45 pages Creation-Date: 2013-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-81.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-081 Template-Type: ReDIF-Paper 1.0 Title: Rural Migration, Weather and Agriculture: Evidence from Indian Census Data Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Author-Name: K. S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Weather Variability; Agricultural Impacts; Internal Migration; Developing Countries; Climate Change; Adaptation Classification-JEL: O15; Q54; R11 Abstract: This study explores the three way linkage between weather variability, agricultural performance and internal migration in India at state and district level using Indian Census data. We base all the analyses on a simultaneous equation model for panel data. The elasticity of inter-state out-migration rate with respect to the per capita net state domestic product is approximately (-)0.75. The crop-wise analysis, on the other hand, shows that the (negative) elasticities are higher and more substantial for rice (-1.85) than for wheat (-0.90). The district-level analysis shows larger magnitudes of estimated change in in-migration rates to relative changes in crop yields. The results suggest that the impact of yield change on the in-migration rate depends on both the inter-play between inter- and intra-district in-migration rates as well as the crop under consideration. The study findings could thus have significant policy relevance, especially in the context of global climate change and the prospect of migration serving as a potential adaptation strategy for people adversely affected by the impact of weather variability on crop yield. Length: 51 pages Creation-Date: 2013-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-80.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-080 Template-Type: ReDIF-Paper 1.0 Title: Weather and Migration in India: Evidence from NSS Data Author-Name: K. S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Internal Migration; Temporary & Permanent Migration; Developing Countries; Weather Variability Classification-JEL: O15; Q54; R11 Abstract: While a wide range of factors influence rural-rural and rural-urban migration in developing countries, there is significant interest in analyzing the role of agricultural distress and growing inter-regional differences in fuelling such movement. This strand of research acquires importance in the context of climate change adaptation. In the Indian context this analysis gets further complicated due to significant presence of temporary migration. Acknowledging that both temporary and permanent migration in India could be influenced among other things by the weather and its variability, this paper analyses the same using National Sample Survey data for the year 2007-08. The results based on rural Indian migration data suggest that weather has significant role in explaining temporary migration and relatively lesser influence on permanent migration. The study further highlights that both temperature and rainfall are important determinants of temporary migration while the permanent migration is broadly influenced by temperature alone. Length: 35 pages Creation-Date: 2013-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-79.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-079 Template-Type: ReDIF-Paper 1.0 Title: A Note on Excess Money Growth and Inflation Dynamics: Evidence from Threshold Regression Author-Name: Saumitra N Bhaduri Author-Workplace-Name: Madras School of Economics Author-Email: saumitra@mse.ac.in Author-Name: S. Raja Sethu Durai Author-Workplace-Name: Pondicherry University Author-Email: saumitra@mse.ac.in Keywords: Excess Money Growth, Quantity Theory of Money, Inflation, Threshold Regression Classification-JEL: E31, E51 Abstract: We test the effect of excess money growth on inflation using Threshold Regression technique developed by Hansen (2000). The empirical test is conducted using annual data from India for the period from 1953-54 to 2007-08. The results clearly exhibits that the relationship is not linear and without a strong credit growth, excess money growth has lesser inflationary effects. Length: 16 pages Creation-Date: 2013-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-78-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-078 Template-Type: ReDIF-Paper 1.0 Title: Revisiting the Growth-Inflation Nexus: A Wavelet Analysis Author-Name: Saumitra N Bhaduri Author-Workplace-Name: Madras School of Economics Author-Email: saumitra@mse.ac.in Keywords: Inflation, Decomposition, Wavelet Analysis Classification-JEL: E31 Abstract: Motivated by the concern that the recent surge in inflation could retard growth, the paper revisits the nexus between inflation and growth from the perspective of an emerging economy, India. Examining this relationship using a wavelet multi resolution analysis with varying time scale decomposition suggests a strong and persistent negative relationship between growth and inflation for a short time scale, while it is not significant for a longer time scale. Length: 21 pages Creation-Date: 2013-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-77-.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2013-077 Template-Type: ReDIF-Paper 1.0 Title: Science and Economics for Sustainable Development of India Author-Name: U. Sankar Author-Workplace-Name: Madras School of Economics Author-Email: usankar@mse.ac.in Keywords: Environmental uncertainties & risks, natural resources management, pollution prevention & control, scientific temper, sustainable development, Classification-JEL: Q2, Q5,O13, P28 Abstract: This paper deals with the interface between science and economics in environmental policy making in India. It explains Nehru’s concept of scientific temper and its influence in the formulation of science and technology policy and development of the science and technology system. It reviews the evolution of global environmental policy regime and the important role assigned to science to gain insights into ecological processes, to assess the nature and causes of environmental pollution and degradation, and to use scientific evidence as basis for formulation of environmental policies. Then it assesses the roles assigned to science and economics in formulation of policies relating to pollution prevention and control and management of natural resources in India. The implications of uncertainties and risks in environmental management are highlighted for public policy. Length: 29 pages Creation-Date: 2012-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-76.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-076 Template-Type: ReDIF-Paper 1.0 Title: Addressing Long-term Challenges to Food Security and Rural Livelihoods in South Asia Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Kamal Karunagoda Author-Workplace-Name: Department of Agriculture, Perdaeniya, Sri Lanka Author-Email: kavi@mse.ac.in Author-Name: Enamul Haque Author-Workplace-Name: Economic Research Group, Dhaka, Bangladesh Author-Email: kavi@mse.ac.in Author-Name: L. Venkatachelam Author-Workplace-Name: Madras Institute of Development Studies, Chennai, India Author-Email: kavi@mse.ac.in Author-Name: Girish Nath Bahal Author-Workplace-Name: Global Development Network, New Delhi, India Author-Email: kavi@mse.ac.in Keywords: Food Security; Agriculture; Smallholder Farmers; Climate Change; South Asia Classification-JEL: Q16, Q18, Q54, R11 Abstract: Notwithstanding its impressive economic growth, food insecurity in South Asia continues to be a stark reality for a large number of households. Despite several successful policy interventions by Governments, the number of mal-nourished children and adults remain alarmingly high in the region – higher than those in Sub-Saharan Africa. Agriculture continues to be a very important livelihood option for a vast majority of rural population, even though the sector’s contribution to the economy is shrinking. Against the backdrop of increasing divide between farm and non-farm income levels, this paper examines the potential long-term challenges that further aggravate the food insecurity in the region. Discussing the threats posed by changing demographic structure and urbanization, changing climate, increasing land and water scarcities for food production and food price volatility, the paper suggests several interventions could improve the food security situation in future. Among other things, the paper suggests strong emphasis on rice research; support for smallholder farmers for addressing risk and uncertainty and information deficit; improving agricultural and rural investment; land reforms; and women empowerment. Length: 72 pages Creation-Date: 2012-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-75.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-075 Template-Type: ReDIF-Paper 1.0 Title: Health Policy, Inequity and Convergence in India Author-Name: Brijesh C. Purohit Author-Workplace-Name: Madras School of Economics Author-Email: brijeshpurohit@gmail.com Keywords: Health Care, inequality, states, policy, convergence Classification-JEL: I14 ; I15; I18 Abstract: Existing situation in India is marked by laudable health indicators in terms of increased life expectancy which doubled since independence and eradication of some of the preventable diseases. Yet the main concern continues both for the policy makers and people in terms of inequity of health outcomes across rich and poor and rural and urban strata of the country. The objective of this study is to put to test the development paradigm that this inequity will converge and adjustment period will be lowered for equitable outcomes in health provided a fine tuning of health policy is carried out. The study makes use of information across twenty major states to analyze the process and speed of convergence by focusing on major determinant of health care. Our results indicate an affirmative answer to the tested development paradigm. It further chalks out the possible central and state level policy strategy to shorten the duration of convergence. Length: 46 pages Creation-Date: 2012-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-74.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-074 Template-Type: ReDIF-Paper 1.0 Title: Assessing Farmer’s Willingness to Participate in the On-farm Conservation of Minor Millet using Direct Compensation Payment Author-Name: Prabhakaran T. Raghu Author-Workplace-Name: International Maize and Wheat Improvement Center (CIMMYT) Author-Email: t.prabhakaran@cgiar.org Author-Name: Sukanya Das Author-Workplace-Name: Madras School of Economics Author-Email: sukanya@mse.ac.in Author-Name: S. Bala Ravi Author-Workplace-Name: M.S.Swaminathan Research Foundation, chennai Author-Email: t.prabhakaran@cgiar.org Author-Name: E.D.Israel Oliver King Author-Workplace-Name: M.S.Swaminathan Research Foundation, Namakkal Author-Email: t.prabhakaran@cgiar.org Keywords: Agro-biodiversity conservation, contingent valuation method, food security, kolli hills, minor millets, willingness to accept Classification-JEL: Q13, Q18, Q51 Abstract: The farmers, predominantly the small and tribal,, particularly in regions of rich agro-biodiversity immensely contribute to the on-farm conservation and enrichment of this diversity, often at personal cost. The past and present agricultural progress could not have happened without these genetic resources and associated knowledge conserved by farmers. On-farm conservation assumes more importance in the context of climate change in view of the gene evolution it promotes. Therefore, it plays crucial role to the future global food and nutritional security.. Kolli Hills in Tamil Nadu had been a region where six species of minor millets are under cultivation during last several hundred years. Farmers here over this period had evolved significant genetic variability in these crops. They are, however, under threat due to high competition from tapioca as well as the easy access to PDS rice at low prices. This study attempts to examine the role of farmer incentive mechanisms to conserve minor millets in Kolli Hills. The millet varieties were classified either as most preferred varieties (MPVs) or least preferred varieties (LPVs) by the farmer respondents based on their yield and consumption preferences. The farmer willingness to accept compensation to participate in the conservation programme is estimated using a contingent valuation method. Seemingly unrelated bivariate probit regression is used to estimate the determinants of willing to participate in on-farm conservation of minor millets. Length: 27 pages Creation-Date: 2012-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-73.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-073 Template-Type: ReDIF-Paper 1.0 Title: Stationarity Test for Aggregate Outputs in the Presence of Structural Breaks Author-Name: D.K. Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Structural breaks, Indian economy, Time series, Stationarity test Classification-JEL: C1, C22 Abstract: This study tests for the stationarity of aggregate output (GDP at factor cost) and its three major components, namely GDP agriculture, GDP industry and GDP services in the presence of structural breaks during 1950-51 to 2011-12. Results indicate that (i) the GDP has three break points; (ii) GDP agriculture contains one while the GDP industry and GDP services contain four breaks each; and (iii) all variables are trends stationary with one or more structural breaks. Our alternative test, which tests the null of unit root for the study variables after removing the effects of trend and structural breaks, also confirms that the aggregate output variables are trend stationary with structural breaks. We also compare the identified structural break dates with earlier studies. Length: 38 pages Creation-Date: 2012-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-72.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-072 Template-Type: ReDIF-Paper 1.0 Title: Compensating Wages for Occupational Risks of Farm Workers in India Author-Name: P. Indira Devi Author-Workplace-Name: Department of Agricultural Economics, College of Horticulture. Kerala Agricultural University, Thrissur Author-Email: induananth@gmail.com Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: M.G. Jayasree Author-Workplace-Name: Research Associate, Department of Agricultural Economics, Kerala Agricultural University, Thrissur Author-Email: induananth@gmail.com Keywords: Farm workers, Risk, Morbidity, Hedononic Wage Model Classification-JEL: J17, J28, J31 Abstract: Farm workers incur various occupational related risks. The question is whether they are adequately compensated for facing these risks? This paper attempts to measure the wage premiums that farm workers in India receive for health risks associated with their jobs, using a primary survey data collected from 282 farm workers who are pesticide applicators and 100 agricultural laborers who do not handle pesticide from Kerala in 2009-10 and the hedonic wage approach. Results indicate that the farm workers in India receive approximately an additional wage premium of Rs. 20 per hour for facing occupational health risks. Interestingly, the use of protecting gadgets reduces the risk of health damages that emphasizes the necessity of ensuring their usages. Length: 27 pages Creation-Date: 2012-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-71.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-071 Template-Type: ReDIF-Paper 1.0 Title: Efficiency of Raising Health Outcomes in the Indian States Author-Name: Prachitha J. Author-Workplace-Name: Madras School of Economics Author-Email: prachitha@mse.ac.in Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Public health expenditure, Indian States, Stochastic frontier, panel data Classification-JEL: I12, I18, O15 Abstract: As health is a state subject and merit good, the state Governments in India spend increased amounts on it. However, the health outcomes vary across the states. This study measures the efficiency of Indian states in raising health outcomes, using the stochastic frontier methodology for panel data for the period 2000-2009. The average efficiency is estimated at 72.7 per cent, implying that there is a scope for improving health performances, without additional resources. In 7 out of 17 states, the efficiency is below the average efficiency. These states can improve their performance significantly by following the best practices. The results also indicate that the states can improve their health performance by increasing their expenditure on health, providing more medical doctors/specialists, educating people and create health awareness. Length: 25 pages Creation-Date: 2012-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-70-Web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-070 Template-Type: ReDIF-Paper 1.0 Title: The Distributional Impacts of Climate Change on Indian Agriculture: A Quantile Regression Approach Author-Name: Chandra Kiran B. Krishnamurthy Author-Workplace-Name: Post-Doctoral Research Scholar, Centre for Environmental and Resource Economics & Deapartment of Economics Umea School of Business and Economics Umea University, Swedent Author-Email: chandra.kiran@econ.umu.ad.se Keywords: Public health expenditure, Indian States, Stochastic frontier, panel data Classification-JEL:I12, I18, O15 Abstract: As health is a state subject and merit good, the state Governments in India spend increased amounts on it. However, the health outcomes vary across the states. This study measures the efficiency of Indian states in raising health outcomes, using the stochastic frontier methodology for panel data for the period 2000-2009. The average efficiency is estimated at 72.7 per cent, implying that there is a scope for improving health performances, without additional resources. In 7 out of 17 states, the efficiency is below the average efficiency. These states can improve their performance significantly by following the best practices. The results also indicate that the states can improve their health performance by increasing their expenditure on health, providing more medical doctors/specialists, educating people and create health awareness. Length: 25 pages Creation-Date: 2012-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-69.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-069 Template-Type: ReDIF-Paper 1.0 Title: Basel I and Basel II Compliance: Issues for Banks in India Author-Name: Sreejata Banerjee Author-Workplace-Name: Madras School of Economics Author-Email: sreejata@mse.ac.in Keywords: Basel-I, Basel-II, Capital Risk Adjusted Ratio, Non-performing assets, Risk Weighted Assets Classification-JEL: G21, F33 Abstract: Random effects panel data analysis is applied to identify financial parameters that influence banks in India in complying with Basel I. The private sector and foreign banks are affected by credit risk weighted assets; they are guided by the risk in their loan portfolio. The public sector banks are influenced by credit deposit ratio, capital and return on asset. Tobit censored regression model for Basel II shows that business per employee and profit per employee influence CRAR of banks belonging to different ownership in India. In Basel II phase, the net non-performing assets influences foreign banks operating in India. Length: 33 pages Creation-Date: 2012-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-68-Web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-068 Template-Type: ReDIF-Paper 1.0 Title: Corporate Governance and Product Market Competition Author-Name: Ekta Selarka Author-Workplace-Name: Madras School of Economics Author-Email: ekta@mse.ac.in Keywords: Corporate Governance Index, Product market competition, Market-to-book value ratio, Tobin’s q, Performance, Profitability, India Classification-JEL: G34 Abstract: On one hand product market competition acts as an ultimate solution to align interests of managers and shareholders, and on the other hand, competition alone may not be sufficient because it may not prevent managers from expropriating the competitive return after the capital is sunk. These hypotheses motivate us to investigate the interaction between corporate governance and product market competition in India where predominance of owner-mangers might cause corporate governance reforms to have a slow impact. Using a cross section of publicly listed firms in India we attempt to capture various attributes of corporate governance by constructing an index of corporate governance based on board structure, ownership structure, audit quality and investor information disclosure. The index is then used along with traditional measures of competition to analyze the question of whether corporate governance and competition are complements or substitutes. In general the empirical analysis suggests that relying on product market competition to improve corporate governance of firms may not be appropriate in the Indian setting and therefore, direct corporate governance reforms seem to be necessary and effective. Length: 3 pages Creation-Date: 2012-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-67-Web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-067 Template-Type: ReDIF-Paper 1.0 Title: Poverty, Human Development and Health Financing in India Author-Name: Brijesh C. Purohit Author-Workplace-Name: Madras School of Economics Author-Email: brijeshpurohit@gmail.com Keywords: Human development, health financing, rich, poor, rural, urban. Classification-JEL: I140 Abstract: Health constitutes one of the important determinants of human development. There are notable differentials across the Indian states in terms of human development, life expectancy and per capita incomes. Generally the HDI indices portray a better picture for better off states relative to their less well off counterparts. This study aims at analyzing the differentials across rich and poor states and across rich and poorer strata and rural urban segments of 19 major Indian states. The study indicates that besides individual health financing policies of the respective state governments, there are significant disparities even between rural and urban strata and rich and poorer sections of the society. These are indicated by high inequality coefficients and an emerging pattern of life style second generation health problems as well as levels of utilization of both preventive and curative care both in public and private sectors. Our results indicate that rather than more reliance on private sector an appropriate fine tuning of health financing strategy may be called for to mitigate partly the inequitable outcomes. Length: 50 pages Creation-Date: 2012-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-66-web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-066 Template-Type: ReDIF-Paper 1.0 Title: Learning and Capability Acquisition: A Case Study of the Indian Automobile Industry Author-Name: Madhuri Saripalle Author-Workplace-Name: Madras School of Economics Author-Email: msaripalle@mse.ac.in Keywords: Growth, Learning, Capabilities, Industrial Policy, Automobile industry, Asia, India. Classification-JEL: L62 Abstract: This study analyzes the impact of government policy regime on the learning and capability acquisition of firms over time. Through a case study analysis of the Indian automotive industry, the study develops three hypotheses relating policy regimes with learning strategies of firms. The study tests these hypotheses through a model of learning using a panel data for the Indian automotive industry. It finds that speed of knowledge assimilation is more important in the liberalized policy regime vis-à-vis protection when knowledge assimilation per se was a more important economic goal. Length: 37 pages Creation-Date: 2012-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-65-Web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-065 Template-Type: ReDIF-Paper 1.0 Title: Arsenic Contamination in Water: A Conceptual Framework of Policy Options Author-Name: Zareena Begum I Author-Workplace-Name: Madras School of Economics Author-Email: zareena@mse.ac.in Keywords: Arsenic; Education policy; Incentives; Self-protection; Taxing and subsidizing policy; Technology; Water Classification-JEL: I18, I28, O31, Q25, Q28, Q52, Q53, Q55, Q58 Abstract: Arsenic contamination in water supplies continues to increase in many countries, especially in developing nations, thereby creating both environmental and health hazard. Its sources and effects are multiple and diffused in nature and it requires detailed assessment and policy. This paper discusses the global extent of the problem, its sources and effects and explores different policy options. Sources and pathways of interaction require comprehensive assessment and policy. Innovation in low cost technologies offers possibilities for reducing abatement cost and for economic efficiency. To reduce arsenic in water resources, incentive policies such as taxing and subsidizing can be used to reduce arsenic levels in point sources through creation of appropriate incentives. The paper also identifies opportunities for enhancing self-protection efforts through education and information sharing. Under a self-protection policy, though the damages decline to a greater extent, there is a possibility of an increase in arsenic emission. Finally, a combination of policies is proposed that involve low cost technology, education and awareness to mitigate the damage from arsenic contamination at a watershed scale. It is also necessary to enforce these policies through appropriate institutional changes that involve coordination and cooperative efforts to mitigate arsenic contamination. Length: 24 pages Creation-Date: 2012-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-pape-64-for-web.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2012-064 Template-Type: ReDIF-Paper 1.0 Title: Determinants of Child Morbidity and Factors Governing Utilisation of Child Health Care: Evidence from Rural India Author-Name: Anindita Chakrabarti Author-Workplace-Name: Madras School of Economics Author-Email: anindita_ch@hotmail.com Keywords: Autonomy, Bivariate Probit, Cough, Diarrhoea, Health Care, India, Nutrition, ORS, Sample Selection, Symptoms. Classification-JEL: J13, I18, I15, I12 Abstract: Acute respiratory infections and diarrhoea globally identified as poising major threats to survival of children under the age of five. This is also true for India, where these two diseases have been the major causes behind infant mortality both in 1997 as well as 1998. Prevention as well as effective treatment of these diseases depend on a host of individual, household and community level behavioural factors. Our objective in this paper is to estimate the role played by such factors in determining the utilisation of formal health care to cure diarrhoea and certain respiratory illnesses plaguing young children. We have also simultaneously tried to explore the factors that explain why a child may be more prone towards contracting either of the above-mentioned two diseases. Our analysis is based on the National Family Health Survey (1998-99) data relating to 14 major Indian states. The major findings are Firstly, a woman with greater educational qualification and also higher decision-making power within the household exhibited greater willingness toward health care usage for her sick child. Secondly, formal health care is more likely to be sought for children whose mother are more aware of existing health care packages and the requisite symptoms of the diseases Thirdly, children who were reported to show signs of being severely ill, for each of the above mentioned diseases, are also the ones who have a significantly higher probability of being taken for treatment. Finally, not only the child’s nutritional intake (after adjusting for age) but also that of the mother has a strong influence on the likelihood of the child contracting these diseases. Length: 51 pages Creation-Date: 2011-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-63.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-063 Template-Type: ReDIF-Paper 1.0 Title: Patterns of Labour Market Insecurity in Rural India: A Multidimensional and Multivariate Analysis Author-Name: Padmini Desikachar Author-Workplace-Name: Independent researcher, formerly with the Asian Development Bank Author-Email: padmini.desikachar@gmail.com Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Autonomy, Labour Market Insecurity, Multiple Correspondence Analysis, Selectivity-corrected Order Probit Model, Rural India Classification-JEL: J13, I18, I15, I12 Abstract: Labour market insecurity, recognised as pervasive in rural India, is multi-faceted. This study attempts to fill a gap in the research on key dimensions of labour market insecurity by using the National Sample Survey data for the year 2004-2005 for rural India to construct a composite index applying multiple correspondence analysis. In constructing the index, information on key dimensions of labour market insecurity are used, including labour force status according to longer and shorter reference period measures, labour time utilization, and behavioural responses to labour market risks. The index is then used to address the question of how the labour market insecure differ in their socioeconomic, household, and individual characteristics from the labour market secure using a selectivity-corrected ordered probit model. Notwithstanding the limitations of the database, the main results that stand out are: insecurity is more pervasive among women than men; insecurity is prevalent among some self-employed but less severe than among casual labourers; and women who are illiterate, agricultural labourers, and belong to the scheduled caste/tribes are at a heightened risk of labour market insecurity. Factoring in selectivity bias shows that for men, self-selection into higher levels of insecurity is at the cost of human capital acquisition while self-selection of women into different levels of insecurity is affected by their socio-cultural and economic status. Length: 94 pages Creation-Date: 2011-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-62.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-062 Template-Type: ReDIF-Paper 1.0 Title: Evidence on Changes in Time Varying Volatility around Bonus and Rights Issue Announcements Author-Name: Madhuri Malhotra Author-Workplace-Name: Madras School of Economics Author-Email: madhurimalhotra@mse.ac.in Author-Name: M. Thenmozhi Author-Workplace-Name: Indian Institute of Technology Author-Email: mtm@iitm.ac.in Author-Name: Arun Kumar Gopalaswamy Author-Workplace-Name: Indian Institute of Technology Author-Email: garun@iitm.ac.in Keywords: Bonus issue, rights Issue, volatility, ARCH, GARCH (1, 1), Indian stock market Classification-JEL: G14, G15, D82 Abstract: The short term and long term stock price volatility changes around bonus and rights issue announcements have been examined using historical volatility estimation and time varying volatility approach. The results show that the historical volatility has increased after bonus and rights issue announcements. Volatility persistence and unconditional volatility have also increased after the bonus and rights issue announcements. The results support the finding of Medeiros and Matsumoto (2006) but are contrary to the results of Li and Engle (1998), Connoly and Stivers (2005), and Boyd et al. (2005), who report decrease in volatility following the event announcements. This evidence, extendable to any other type of issue announcement, is consistent with theories stating that volatility increases after the seasoned capital issue announcements. Length: 37 pages Creation-Date: 2011-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-61.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-061 Template-Type: ReDIF-Paper 1.0 Title: Discount Rate for Health Benefits and the Value of Life in India Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: Expected length of life, value of statistical life, time preference rate Classification-JEL: J17, J28, J31 Abstract: This study contributes to the literature by estimating discount rate for environmental health benefits and value of statistical life of workers in India. The discount rate is imputed from wage-risk trade-offs in which workers decide whether to accept a risky job with higher wages. The estimated real discount rate ranges between 2.7 and 3 percent, which is closer to the financial market rate for the study period and consistent with earlier studies from developed nations. The estimated value of life is Rs. 20 (US $ 1.107) million. The results of the study can aid policymakers, international agencies and other researchers in evaluating health projects in India and other developing countries. Length: 29 pages Creation-Date: 2011-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-60.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-060 Template-Type: ReDIF-Paper 1.0 Title: Dependence of States on Central Transfers: Aggregate and State-wise Analysis Author-Name: D K Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Author-Name: C Bhujanga Rao Author-Workplace-Name: Madras School of Economics Author-Email: cbrao@nipfp.org.in Keywords: Central Transfers, Tax Devolution Classification-JEL: H11, H77 Abstract: This paper examines the dependence of states on central fiscal transfers. It particularly focuses on the role of transfers through tax devolution under the recommendation of the Finance Commissions. The analysis of dependence is then extended to total transfers that are given in the form of share in central taxes, Finance Commission grants, plan grants and other grants. The analysis with respect to states covers the period 1950-51 to 2007-08. In addition, pattern of dependence of states on central transfers is also studied with respect to five groups of states, namely, high, middle and low income general category states and two groups of special category states. The analysis covers the period from 1990-91 to 2007-08. We find that the dependence of the states on their share in central taxes has increased both because of high buoyancy of total central taxes and a progressive increase in their share recommended by successive Finance Commissions. In terms of groups of states, the extent of dependence is relatively quite high for the special category states. Length: 38 pages Creation-Date: 2011-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-59.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-059 Template-Type: ReDIF-Paper 1.0 Title: Household Level Pollution in India: Patterns and Projections Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Brinda Viswanatha Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Cooking Fuels, Air Pollution, Energy Policy, Health Burden Classification-JEL: Q25, Q40, R20, D10 Abstract:Solid fuels are still a major source for cooking in many households in India causing significant disease and global warming burden. This study analyses the pollution-income relationship (for both local and global pollution), separately across rural and urban households in India based on unit record data on fuel consumption obtained through National Sample Survey data for 2004-05. Based on the estimated relationship, the study makes an attempt to project household level pollution for 2026. The study further analyzes the health burden and greenhouse gas emissions under various policy scenarios including deeper penetration of clean fuels and wider utilization of improved cook stoves. Length: 38 pages Creation-Date: 2011-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-58.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-058 Template-Type: ReDIF-Paper 1.0 Title: Shifting Preferences at the Fed: Evidence from Rolling Dynamic Multipliers and Impulse Response Analysis Author-Name: Matthew Greenwood-Nimmo Author-Workplace-Name: Leeds University Business School, Leeds (UK), LS2 9JT Author-Email: mjgn@lubs.leeds.ac.uk Author-Name: Youngcheol Shin Author-Workplace-Name: Leeds University Business School, Leeds (UK), LS2 9JT Author-Email: mjgn@lubs.leeds.ac.uk Keywords: System Estimation with Mixed I(0) and I(1) Variables, Long-Run Structural Modelling, Rolling Estimation, Taylor Rule. Classification-JEL: : C13, C51, E58, N10 Abstract: The existing empirical literature on Taylor-type interest rate rules has failed to achieve a robust consensus. Indeed, the relatively common finding that the Taylor principle does not hold has fueled a degree of controversy in the field. We attribute these mixed estimation results to a raft of empirical issues from which many existing studies suffer, including bias, inconsistency, endogeneity and a failure to adequately account for the combination of persistent and stationary variables. We propose a new method of combining I (0) and I (1) series in a system setting based on the long-run structural approach of Garratt, Lee, Pesaran and Shin (2006). The application of this method to a long sample of US data provides modest support for the operation of a Taylor-type rule, albeit with considerable inertia. We argue that estimation across rolling windows may better reflect shifts in the underlying preferences of the monetary policymakers at the Federal Reserve. Such rolling estimation provides substantial evidence that the inflation and output preferences of the Fed have varied through time, pre- sumably reflecting the prevailing economic and political conditions, its chairmanship, and the composition of the Federal Open Market Committee. Our most significant finding is that the Taylor Principle was robustly upheld under Volcker, often upheld pre-Volcker but rarely observed post-Volcker over any horizon. Length: 59 pages Creation-Date: 2011-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/WORKING-PAPER-57.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2011-057 Template-Type: ReDIF-Paper 1.0 Title: India’s Low Carbon Inclusive Growth Strategy Author-Name: U. Sankar Author-Workplace-Name: Madras School of Economics Author-Email: usankar@mse.ac.in Keywords: Carbon tax, clean energy, climate change, inclusive growth Classification-JEL: Q42, Q54,Q58 Abstract: India’s low carbon inclusive growth strategy is framed in the context of multiple goals and its national circumstances. In many cases, co-benefits such as energy security, universal access to clean energy at affordable prices, decentralized development, employment generation and improvements in local environmental quality are important. Therefore, the weights for GHG emissions reductions and other goals vary from sector to sector and sometimes among schemes within a sector. For this reason India has opted for bottom-up /sectoral / programme-oriented policies rather than economy-wide GHG emissions reduction policies such as carbon taxation or cap and trade system. India has taken initiatives to enhance energy efficiency in thermal power plants, promote nuclear power and renewable energy and tap energy savings potentials in a few sectors. However, there is heavy reliance on technology development, regulation and subsidies than on use of economic instruments. This paper examines the present policies in the light of the inclusive growth objective and financial and environmental sustainability. Length: 39 pages Creation-Date: 2010-12 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-56.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-056 Template-Type: ReDIF-Paper 1.0 Title: Valuing the Environment in Developing Countries: Modeling the Impact of Distrust in Public Authorities’ Ability to Deliver on the Citizens’ Willingness to Pay for Improved Environmental Quality Author-Name: Ekin Birol Author-Workplace-Name: International Food Policy Research Institute, 2033 K Street, NW, Washington, DC 20006-1002, USA Author-Email: sukanya@mse.ac.in Author-Name: Sukanya Das Author-Workplace-Name: Madras School of Economics Author-Email: sukanya@mse.ac.in Keywords: choice experiment method, nested logit model, willingness to pay, sewage treatment plant, distrust in public authorities Classification-JEL: C25, C83,C87,Q5,Q53 Abstract: In this paper we employ the choice experiment method to estimate local citizens’ valuation of a public intervention which proposes to improve the quality of an important environmental resource, namely the river Ganga in India. 150 randomly selected citizens of the municipality of Chandernagore located on the banks of the river Ganga in West Bengal are interviewed to elicit their willingness to pay (WTP) in higher municipality taxes for an intervention that proposes to improve the quantity and quality of wastewater treated by the local sewage treatment plant (STP). The findings reveal that almost all (98%) of the citizens value of the quality of the water and the environment in the river Ganga, though a great majority (90%) protested the intervention, by not choosing the improved STP scenario in at least one of the eight hypothetical markets they were asked to participate. When asked their reasons for not preferring the improved scenarios, 92% of them stated that they do not trust the authorities to manage the funds generated through additional taxes efficiently and effectively. The protest responses were controlled for with the use of the nested logit model. The results reveal that the citizens are willing to pay significant amounts to ensure that the intervention takes place, and an improved STP treats larger amounts of wastewater to a higher quality before discharging it to the Ganga. Therefore in order to improve the wastewater management services and the related environmental quality in the water bodies in which treated wastewater is deposited into, the municipalities could rely – at least to some extent - on their citizens’ WTP higher taxes for provision of improved services. In order to be able to capture this WTP however, municipalities’ performance, trustworthiness and accountability, as well as the citizens’ perceptions of these should be improved. Length: 35 pages Creation-Date: 2010-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-55.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-055 Template-Type: ReDIF-Paper 1.0 Title: Climate Variability and Agricultural Productivity: Case Study of Rice Yields in Northern India Author-Name: Ishwarya Balasubramanian Author-Workplace-Name: Madras School of Economics Author-Email: ishwarya@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Climate Variability; Vulnerability; Agricultural Productivity Classification-JEL: Q10; Q54; R10 Abstract: Agriculture is a climate sensitive sector and provides livelihood for more than 60 percent of Indian population. There have been a large number of studies over the past decade that tried to assess the impacts due to the climate variability and climate change. This study attempts to characterize the vulnerability of a farmer to climate change and climate variability, and tries to identify the regions that are relatively more vulnerable to climate variability and change. Using two different methodologies (one borrowed from the poverty literature which defines vulnerability as expected poor yield, and another from the climate change literature that defines vulnerability as expected value of impact of shock on the yield, normalized with the region’s position with respect to the threshold yield), the study assesses the vulnerability of rice yields to temperature and rainfall fluctuations for the Northern states of Punjab, Haryana, Uttar Pradesh and Uttaranchal in India. Besides comparing the results based on the two methodologies, the paper highlights the differential implications of temperature and rainfall variability on crop yields, and the importance of accounting for exposure under potential climate change scenarios in vulnerability assessments. Length: 35 pages Creation-Date: 2010-11 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-54.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-054 Template-Type: ReDIF-Paper 1.0 Title: Heterogeneous MNC Subsidiaries and Technological Spillovers: Explaining Positive and Negative Effects in India Author-Name: Anabel Marin Author-Workplace-Name: SPRU: Science and Technology Policy Research, University of Sussex, UK Author-Email: a.i.marin@sussex.ac.uk Author-Name: Subash Sasidharan Author-Workplace-Name: Madras School of Economics Author-Email: subash@mse.ac.in Keywords: technological spillovers, MNCs, emerging economies, subsidiaries, heterogeneity Classification-JEL: O1, O3, O5 Abstract: One of the most intriguing aspects of the recent empirical literature on FDI-related spillover effects is the increasing identification of mixed results. A few studies, particularly in advanced countries have found positive effects; however, a more common scenario in recent studies is the prevalence of insignificant or even negative effects. This is despite the fact that theory predicts substantial positive effects in association with a supposed technological superiority of MNCs relative to domestic firms, particularly in the context of less advanced countries. In this paper, by distinguishing subsidiaries according to their orientation to carry out creative vs. exploitation activities in the host economy, we are able to distinguish situations with positive and negative spillover effects, and we explain why they may be emerging. More specifically, we find that only subsidiaries that are oriented to technologically creative activities have significant and positive effects in India. In contrast, subsidiaries oriented mostly to technologically exploitative activities generate negative effects in some circumstances. The implications for theory and policy are discussed. Length:54 pages Creation-Date: 2010-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-53.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-053 Template-Type: ReDIF-Paper 1.0 Title: Measuring Accuracy of Projections of Central Taxes by the Finance Commission Author-Name: D K Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Author-Name: C Bhujanga Rao Author-Workplace-Name: Madras School of Economics Author-Email: cbrao@mse.ac.in Keywords: Central Taxes, Own Tax Revenues, Finance Commission Classification-JEL: H2, H5, H7 Abstract: This paper looks at the quality of forecasts/assessments made by some of the recent Finance Commissions for the shareable central taxes and own tax revenues of selected states. The Commissions covered under this analysis are Ninth to Twelfth Finance Commissions. It is observed that while direct taxes are underestimated in general, revenues from indirect taxes partially Union excise duties and custom duties have been over estimated. In respect of states, four selected states viz., Andhra Pradesh, Gujarat, Orissa and Assam are examined. While there is similarity between the approaches of Ninth, Tenth and Twelfth Finance Commissions in regard to middle and high income states, the Eleventh Finance Commission required that they raise tax revenues higher than what they were able to achieve. Length: 36 pages Creation-Date: 2010-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-52.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-052 Template-Type: ReDIF-Paper 1.0 Title: The Value of Improved Public Services: An Application of the Choice Experiment Method to Estimate the Value of Improved Wastewater Treatment Infrastructure in India Author-Name: Ekin Birol Author-Workplace-Name: International Food Policy Research Institute, 2033 K Street, NW, Washington, DC 20006-1002, USA. Author-Email: E.Birol@cgiar.org Author-Name: Sukanya Das Author-Workplace-Name: Madras School of Economics Author-Email: sukanya@mse.ac.in Keywords: choice experiment method, conditional logit model, River Ganga, sewage treatment plant, water quality, water quantity Classification-JC25, C83,C87,Q5,Q53 Abstract: In this paper we employ a stated preference environmental valuation technique, namely the choice experiment method, to estimate local public’s willingness to pay (WTP) for improvements in the capacity and technology of a sewage treatment plant (STP) in Chandernagore municipality, located on the banks of the River Ganga in India. A pilot choice experiment study is administered to 150 randomly selected Chandernagore residents and the data are analysed using the conditional logit model with interactions. The results reveal that residents of this municipality are willing to pay significant amounts in terms of higher monthly municipality taxes to ensure the full capacity of the STP is used for primary treatment and the technology is upgraded to enable secondary treatment. Overall, the results reported in this paper supports increased investments to improve the capacity and technology of STPs to reduce water pollution, and hence environmental and health risks that are currently threatening the sustainability of the economic, cultural and religious values this sacred river generates. Length: 40 pages Creation-Date: 2010-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-51.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-051 Template-Type: ReDIF-Paper 1.0 Title: Reforming Indirect Taxes in India: Role of Environmental Taxes Author-Name: D K Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Author-Name: C Bhujanga Rao Author-Workplace-Name: Madras School of Economics Author-Email: cbrao@mse.ac.in Keywords: Taxes, environment Classification-JEL: H6, H11, H20, H23 Abstract: Extensive reforms of India’s indirect taxes at the central and the state levels has prepared the necessary ground for the implementation of a comprehensive goods and services tax (GST). The Empowered Committee of the State Finance Ministers in their First Discussion Paper and the Thirteenth Finance Commission in their recently submitted report have suggested GST models which are quite different in many respects. This paper identifies these differences and argues that within the regime of taxation of goods and services in India environmental tax reform should also be incorporated to make the tax regime play a significant role in managing environment. The environment tax reforms will yield both a fiscal double dividend and an economic double dividend making the Indian economy pursue a path of sustainable development. Length: 49 pages Creation-Date: 2010-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-50.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2010-050 Template-Type: ReDIF-Paper 1.0 Title: MNEs and Export Spillovers: An Analysis of Indian Manufacturing Industries Author-Name: Chiara Franco Author-Workplace-Name: Department of Economics, University of Bologna, Italy Author-Email: chiara.franco2@unibo.it Author-Name: Subash Sasidharan Author-Workplace-Name: Madras School of Economics Author-Email: subash@mse.ac.in Keywords: Exports, FDI spillover, MNEs Classification-JEL: F14, F23, O14 Abstract: In the present study, we try to provide some empirical evidence for the export spillover effect examining the case of an emerging economy, namely India using firm level data for the period 1994-2006. We disentangle different spillover channels, namely export spillover, R&D spillover and wage spillover. We also consider the heterogeneous technological behaviour of local firms considering how in-house R&D efforts and disembodied technological imports may affect the overall exporting performance. Our findings mainly confirm that the two most important channels for export spillover are mainly the demonstration effect and the R&D spillover effect The decision to export is influenced mainly by technological activities of local firms, confirming that R&D is a key variable that help firms to overcome fixed costs that are crucial to start exporting. Moreover, the findings of the analysis suggest that local firms’ R&D is highly relevant to internalize the positive spillover effect emanating from MNEs both with regard to decision to export and export propensity Length: 43 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-49.pdf Handle: RePEc:mad:wpaper:2009-049 Template-Type: ReDIF-Paper 1.0 Title: Revenue-Expenditure Nexus for Southern States: Some Policy Oriented Econometric Observations Author-Name: Kausik Chaudhuri Author-Workplace-Name: Madras School of Economics Author-Email: kausik@mse.ac.in Author-Name: Bodhisattva Sengupta Author-Workplace-Name: Madras School of Economics Author-Email: bsengupta@mse.ac.in Keywords: Revenue Expenditure, Indian States, Cointegration Classification-JEL: H7,C22 Abstract: The paper examines the temporal relationship between revenues and expenditures for the four southern states during 1980 to 2005. Using an error-correction model and Granger causality test, it finds that the tax-spend hypothesis is supported by the analsysis. The spend-tax hypothesis is valid for Karnataka; fiscal synchronization hypothesis is supported for Andhra Pradesh and Kerala, while the data for Tamil Nadu failed to show any causality. Length: 34 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-48.pdf Handle: RePEc:mad:wpaper:2009-048 Template-Type: ReDIF-Paper 1.0 Title: Ecology, Environment and Sustainable Development in Indian Fiscal Federalism Author-Name: U.Sankar Author-Workplace-Name: Madras School of Economics Author-Email: usankar@mse.ac.in Keywords: Environment, Sustainable development, Federalism Classification-JEL: H77, Q01, Q53, Q57 Abstract: This paper argues that the incorporation of new references in the Thirteenth Finance Commission mandate relating to ‘ecology, environment and climate change’ and ‘quality of public expenditure’ pose new challenges. The challenges arise because the operationalization of these items require various reforms-legal, administrative, costing, valuation, institutional, and monitoring which require political will as well as reorientation in public expenditure management techniques. In this regard, there is a need for the Commission to look at the issues in a holistic manner, integrate environment considerations in public policy making and initiate ecological fiscal reforms, thereby achieving the sustainable development. The paper also suggests that for sustainable management of shared environmental resources like river basin, forest etc. the regional governance structures need to be established. The Commission should provide financial incentives for regional cooperation. This paper also reviews the UN’s environmental policy and India’s pollution prevention and control policy and discusses various ecotaxes on polluting inputs and outputs and provides rationale for such taxes. Length: 18 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-47.pdf Handle: RePEc:mad:wpaper:2009-047 Template-Type: ReDIF-Paper 1.0 Title: Causality between Foreign Direct Investment and Tourism: Empirical Evidence from India Author-Name: Saroja Selvanathan Author-Workplace-Name: Griffith Business School, Griffith University, Queensland, Australia Author-Email: brinda@mse.ac.in Author-Name: Selvanathan Author-Workplace-Name: Griffith Business School, Griffith University, Queensland, Australia Author-Email: kausik@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: FDI, Tourism, Granger Causality Classification-JEL: F21; L83; C32 Abstract: This paper investigates the causal link between foreign direct investment and tourism in India by employing the Granger causality test under a VAR framework. A one-way causality link is found from foreign direct investment to tourism in India. This evidence once again adds to the need for appropriate policies and plans to further expand and develop tourism given that FDI flow into India is expected to be strong in the coming years, bringing along a demand for tourism as well. Length: 26 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-46.pdf Handle: RePEc:mad:wpaper:2009-046 Template-Type: ReDIF-Paper 1.0 Title: Data Requirements and Statistical Challenges for Designing Climate Friendly Energy Policies in Multilateral Framework Author-Name: U.Sankar Author-Workplace-Name: Madras School of Economics Author-Email: usankar@mse.ac.in Keywords: Climate Change; Indian Agriculture; Environmental Valuation; Spatial Econometrics; Adaptation Classification-JEL: Q54, Q1, R1 Abstract: India needs reliable good quality database and methodologies for designing, implementing and monitoring climate-friendly policies. This paper focuses on the database needs for policies in the context of multilateral frameworks. It provides suggestions to the Central Statistical Organization (CSO for improving the adequacy and quality of environmental statistics relating to climate change in India for designing climate-friendly policies, assessing economic, social and environmental impacts of mitigation and adaptation programmes, and articulating India’s concerns and trade-offs in different multilateral forums. Length: 27 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-45.pdf Handle: RePEc:mad:wpaper:2009-045 Template-Type: ReDIF-Paper 1.0 Title: Finance Commission and the Southern States: Overview of Issues Author-Name: D K Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Keywords: Finance Commission, Horizontal Issues, Vertical Issues, Regional Government Analysis. Classification-JEL: E6, H5, R5 Abstract: This paper examines some of the relevant issues of resource sharing in the Indian federation, particularly in the context of the on-going deliberations of the 13th Finance Commission. While the focus is on the southern states, in matters of fiscal transfers, a segmented view cannot be taken as the design of transfers has to take into account competing claims of different states on a limited pool of sharable resources. The main transfer–related issues discussed here relate to the vertical and horizontal dimensions of fiscal transfers. Length: 37 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-44.pdf Handle: RePEc:mad:wpaper:2009-044 Template-Type: ReDIF-Paper 1.0 Title: Climate Sensitivity of Indian Agriculture Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Keywords: Climate Change; Indian Agriculture; Environmental Valuation; Spatial Econometrics; Adaptation Classification-JEL: Q54, Q1, R1 Abstract: Climate change impact studies on agriculture are broadly based on agronomic-economic approach and Ricardian approach. The Ricardian approach, similar in principle to the Hedonic pricing approach of environmental valuation, has received significant attention due to its elegance and also some strong assumptions it makes. This paper attempts to extend the existing knowledge in this field by specifically addressing two important issues: (a) extent of change in climate sensitivity of Indian agriculture over time; (b) importance of accounting for spatial features in the assessment of climate sensitivity. The analysis based on four decades of data suggests that the climate sensitivity of Indian agriculture is increasing over time, particularly in the period from mid-eighties to late nineties. This finding corroborates the growing evidence of weakening agricultural productivity over the similar period in India. The results also show presence of significant positive spatial autocorrelation, necessitating estimation of climate sensitivity while controlling for the same. While many explanations may exist for the presence of spatial autocorrelation, this paper argued that inter-farmer communication could be one of the primary reasons for the spatial dependence. Field studies carried out in Andhra Pradesh and Tamil Nadu through focus group discussions provided limited evidence in this direction. Length: 33 pages Creation-Date: 2009-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-43.pdf Handle: RePEc:mad:wpaper:2009-043 Template-Type: ReDIF-Paper 1.0 Title: Inter-State Imbalances in Essential Services: Some Perspectives Author-Name: D K Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Author-Name: C Bhujanga Rao Author-Workplace-Name: Madras School of Economics Author-Email: cbrao@mse.ac.in Keywords: Inter-State imbalances, health, education, family welfare Classification-JEL: H51, H52, E61, E66 Abstract: This paper analyzes the inter-state imbalances in three major sectors of the economy, namely, education, health and family welfare, and water supply and sanitation for fifteen major states. It uses two principal indicators namely the per capita GSDP (reflecting the disparity in fiscal capacity in various states) and per capita government expenditures on priority sectors, reflecting how fiscal capacities are translated into differences in government fiscal intervention in providing services. The study shows that the GSDP of six major states - Bihar, Uttar Pradesh, Orissa, Assam, Madhya Pradesh and Rajasthan grew only at below 5 percent during the study period 1993-94 to 2005-06. While Tamil Nadu, Maharashtra, West Bengal and Andhra Pradesh grew at 5-6 percent, the remaining states at 6-7 percent. The ratio of maximum (Punjab) to minimum (Bihar) per capita GSDP rose from 3.17 in 1993-94 to 5.37 in 2000-01 and thereafter fluctuated between 3.64 to 3.90. The ratio of maximum (Kerala) to minimum (Bihar) per capita expenditure on education fell from 2.52 to 2.22. In the case of health, the ratio of maximum (Punjab) and minimum (Bihar) widened from 2.11 to 3.59 and in the case of water and sanitation, the ratio of maximum (Tamil Nadu) and minimum (Bihar) increased dramatically from 5.75 to 15.8 during the study period. Length: 37 pages Creation-Date: 2009-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-42.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2009-042 Template-Type: ReDIF-Paper 1.0 Title: Socio-Economic Characteristics of the Tall and not so Tall Women of India Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Author-Name: Viney Sharma Author-Workplace-Name: Short Term Consultant, South Asia Social Protection Unit,World Bank, New Delhi Author-Email: viney.shar@gmail.com Keywords: Height, anthropometry, gender, education, poverty, India Classification-JEL: J11, J16, I31, R11, R29 Abstract: New studies are increasingly appearing based on historical data across the world that better socio-economic status is associated with taller men and women. This study based on a recent Indian data analyses the variations in height among adult women. The main findings show that regional level differences in mean heights are prominent and contiguous regions show similar mean heights after controlling for socio-economic differences. Women from weaker socio-economic groups are shorter and so are women in rural areas though the rural-urban gap disappears after controlling for socio-economic variations. Women who have had at least one child during teenage have lower average heights but this difference is not statistically significant once differences in education are accounted for. Length: 23 pages Creation-Date: 2009-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-41.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2009-041 Template-Type: ReDIF-Paper 1.0 Title: DETERMINING GENERAL AND SPECIFIC PURPOSE TRANSFERS: AN INTEGRATED APPROACH Author-Name: Richa Saraf Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Author-Name: D K Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Abstract: This study attempts to provide an alternative methodology to calculate the horizontal equalization transfers. This methodology follows the Australian horizontal equalization principle using a panel model methodology where both revenue and expenditure side considerations are involved. First, it applies the Canadian model in calculating the fiscal capacity equalization. Then the expenditure side equalization has been carried out for two services - education and health. Results of the exercise indicate that the transfers suggested by the panel model are more progressive than the TFC recommended transfers. Length: 33 pages Creation-Date: 2009-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-40.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2009-040 Template-Type: ReDIF-Paper 1.0 Title: STOCK RETURNS-INFLATION RELATION IN INDIA Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: Biswa Swarup Misra Author-Workplace-Name: Xavier Institute of Management, Bhubaneswar, Orissa Author-Email: biswa@ximb.ac.in Keywords: Stock Return, Inflation, Fama’s proxy effect hypothesis Classification-JEL: JG14, E 31 Abstract: This study contributes to the stock returns-inflation relation literature in developing countries by revisiting the issue with reference to the emerging economy, India. More specifically, it tests whether the Indian stock market provides an effective hedge against inflation using monthly data on real stock return, inflation and real activity from April 1980 to March 2004 and a two-step estimation procedure. Results of the study indicate that (i) the Indian stock market reflects future real activity; (ii) the negative stock returns-inflation relation emerges from the unexpected component of the inflation and (iii) this negative relation vanishes when we control for the inflation-real activity relation, thereby providing a strong support for Fama’s proxy effect hypothesis. The split sample analyses indicate that the Fama hypothesis is valid only in pre reform period. In the post reform period, real stock returns have been independent of inflation, i.e., the Fisher Hypothesis is valid. Length: 15 pages Creation-Date: 2008-10 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-38.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2008-038 Template-Type: ReDIF-Paper 1.0 Title: The Impact of R&D and Foreign Direct Investment on Firm Growth in Emerging-Developing Countries: Evidence from Indian Manufacturing Industries Author-Name: Adamos Adamou Author-Workplace-Name: Madras School of Economics Author-Email: adamos@ucy.ac.cy Author-Name: Subash S Author-Workplace-Name: Madras School of Economics Author-Email: subash@mse.ac.in Keywords: R&D; foreign direct investment; panel data; firm growth Abstract: This paper examines the impact of R&D and FDI on firm growth for a panel data of Indian manufacturing firms. We argue that besides age and size, FDI and R&D are essential determinants of firm growth. We use GMM estimation for fixed effects panel data models to control for endogenity of R&D and FDI. We find that an increase in current R&D induces higher growth across all industries; where as the effect of increase in FDI is mixed - higher growth in some industries and lower growth in some others. Furthermore, Gibrat’s law is not only rejected by our main model but it is also rejected by a unit root test for unbalanced panel datasets. This provides strong evidence in favor of our model. Finally, firm growth is negatively associated with its size and it is convex with respect to its age. The fact that firm growth is not diminishing convex – but just convex – with respect to age, contradicts the Jovanovic’s argument that younger firms tend to grow faster than their older counterparts. With respect to firm growth, the absence of learning-effects appears to be the main difference between emerging-developing and developed countries. Length: 24 pages Creation-Date: 2008-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-37.pdf File-Format: Application/PDF Handle: RePEc:mad:wpaper:2008-037 Template-Type: ReDIF-Paper 1.0 Title: AN ANALYSIS OF LIFE INSURANCE DEMAND DETERMINANTS FOR SELECTED ASIAN ECONOMIES AND INDIA Author-Name: Subir Sen Author-Workplace-Name: Madras School of Economics Author-Email: sens@mse.acin Keywords: Life Insurance, Insurance Demand, Panel Estimation, Time Series Analysis. Classification-JEL: G22, C33, C32 Abstract: During the post-1990 period, services sector in most of the Asian economies witnessed growth fuelled by substantial changes in the financial sector of these economies. The insurance industry, in most of the Asian economies, ASEAN and SAARC economies in particular, was publicly owned and remained isolated from participation of either domestic private insurers or foreign insurers or participation of both. But, regulatory reforms and policy changes in the ASEAN economies during the post-financial crisis period and the process of economic liberalization in some of the SAARC countries and China led to phenomenal changes in the growth pattern of the insurance industry in these economies. This study is divided into two parts: the first part is focused on four SAARC countries, two countries from Greater China Region and six ASEAN countries for the 11-year period (1994-2004) to understand economic and other socio-political variables, which may play a significant role in explaining the life insurance consumption pattern in these economies. Secondly, an independent exercise is undertaken to re-assess whether or not the variables best explaining life insurance consumption pattern for twelve selected Asian economies in the panel are significant for India for the period 1965 to 2004. Some variables were strongly capable of determining life insurance demand in both the analytical parts. However, we also observed contradictions to earlier studies. Length: 26 pages Creation-Date: 2008-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-36.pdf Handle: RePEc:mad:wpaper:2008-036 Template-Type: ReDIF-Paper 1.0 Title: INNOVATION IN INDIA AND CHINA: CHALLENGES AND PROSPECTS IN PHARMACEUTICALS AND BIOTECHNOLOGY Author-Name: Jayan Jose Thomas Author-Workplace-Name: Madras School of Economics Author-Email: jayan@mse.ac.in Keywords: India, China, innovation, pharmaceuticals, biotechnology Classification-JEL: Abstract: India and China are important players in an evolving process of globalization of research and development (R&D). Focusing on pharmaceuticals and biotechnology industries, this paper analyses the challenges and prospects facing the two countries in global innovation. Large supplies of highly skilled professionals and well-established science and technology infrastructures are important assets for India and China in the era of globalization of R&D. At the same time, however, there is a concern that as globalization of R&D gathers steam, the poor in India, China and other developing countries are likely to be left out of the new innovations. A good example is the case of India’s pharmaceuticals industry. The leading Indian pharmaceutical firms have responded well to the challenge of a strict intellectual property rights (IPR) regime by increasing their R&D spending and, simultaneously, targeting their sales to the generic drugs markets in North America and Europe. But even as India’s top drug firms have been growing in technological capabilities and taking part in the globalization of pharmaceuticals R&D, they have also been shifting their focus away from the market for medicines for poor patients. Length: 28 pages Creation-Date: 2008-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-35.pdf Handle: RePEc:mad:wpaper:2008-035 Template-Type: ReDIF-Paper 1.0 Title: REFORMING INDIA’S FISCAL TRANSFER SYSTEM: RESOLVING VERTICAL AND HORIZONTAL IMBALANCES Author-Name: C. Rangarajan Author-Workplace-Name: Madras School of Economics Author-Email: info@mse.ac.in Author-Name: D. K. Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Keywords: Classification-JEL: Abstract: Two central problems in a fiscal transfer system relate to resolving vertical and horizontal imbalances. In the context of the setting of the 13th Finance Commission, this paper looks at the methodological background of fiscal transfers followed by recent Finance Commissions in India, particularly the Twelfth Finance Commission (TFC). It is noted that in India, there is long - term stability in the share of states after transfers in the combined revenues of the centre and the states. It is argued that this stability depends on linking the share of states in the transfers, particularly tax devolution with the difference in the buoyancies of central and states taxes. In the context of horizontal imbalance, it is argued that some of the recent Finance Commissions have implicitly followed an axiomatic approach to tax devolution and brought in some normative elements in determining grants. In spite of large difference in fiscal capacities, a high degree of equalization has been achieved. It is shown, for example, that in the case of TFC recommended transfers, nearly 88 percent of needed equalization was achieved while devoting 50 percent of transfers to resolving vertical imbalance. A methodology is also developed to determine weights of vertical and equalizing components of transfers through devolution. In the case of the Twelfth Finance Commission, the horizontal component of tax devolution is strengthened by a scheme of equalizing health and education grants. Length: 34 pages Creation-Date: 2008-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-paper-31.pdf Handle: RePEc:mad:wpaper:2008-031 Template-Type: ReDIF-Paper 1.0 Title: GLOBAL PUBLIC GOODS Author-Name: U.Sankar Author-Workplace-Name: Madras School of Economics Author-Email: usankar@mse.ac.in Keywords: public economics, goods Classification-JEL: Abstract: Global Public Goods for the Core Group on Sustainable Development. Length: 12 pages Creation-Date: 2008-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-28.pdf Handle: RePEc:mad:wpaper:2008-028 Template-Type: ReDIF-Paper 1.0 Title: Unit Root Tests for Time Series in the Presence of an Explosive Root Author-Name: K.Suresh Chandra Author-Workplace-Name: Madras School of Economics Author-Email: vijsur2002@yahoo.com Author-Name: J.V.Janhavi Author-Workplace-Name: Professor of Statistics, Bangalore University Author-Email: vijsur2002@yahoo.com Keywords: time series Classification-JEL: Abstract: This paper describes a modification for the practical relevance of unit root tests for time series generated by linear stochastic difference equations with an explosive root. Length: 9 pages Creation-Date: 2008-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-27.pdf Handle: RePEc:mad:wpaper:2008-027 Template-Type: ReDIF-Paper 1.0 Title: MACROECONOMIC UNCERTAINTY AND CORPORATE LIQUIDITY: THE INDIAN CASE Author-Name: Mrinal Kanti Author-Workplace-Name: Madras School of Economics Author-Email: kanti@mse.ac.in Author-Name: Saumitra N Bhaduri Author-Workplace-Name: Madras School of Economics Author-Email: saumitra@mse.ac.in Abstract: Interest in the uncertainties prevailing at the macroeconomic level has always been well known in economic literature. This paper analyses the effect of firm level and macroeconomic uncertainty on the decisions of Indian firms with regard to their optimal cash holdings. Using a dynamic panel data model, the study finds strong support for the hypothesis that Indian firms increase their cash holdings with an increase in either form of uncertainty. Also, results for the sub-samples show that middle-aged and middle-sized firms are most affected by variations in macroeconomic uncertainty. Length: 13 pages Creation-Date: 2008-01 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-25.pdf Handle: RePEc:mad:wpaper:2008-025 Template-Type: ReDIF-Paper 1.0 Title: SOURCES OF OUTPUT GROWTH IN INDIAN AGRICULTURE DURING THE POST-REFORM PERIOD Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: Vidhya Soundararajan Author-Workplace-Name: Madras School of Economics Author-Email: vidhyas@mse.ac.in Keywords: Agriculture Classification-JEL: Abstract: Economic growth has failed to be sufficiently inclusive, particularly after the mid-nineties. Although agriculture is still a single major sector providing livelihood to more than 60 percent of the population, it has lost its growth momentum and the share has been declining continuously for a variety of reasons like low income due to inadequate output growth, low productivity, low prices of output, lack of credit at reasonable rates, natural calamities and unavailability of proper extension services. Realizing the importance of this sector and its current crisis, the eleventh plan aims to reverse this trend. Output growth could be possible by increasing input growth, technical progress and improvement in technical efficiency. In order to identify the source of the problem, this paper attempts to decompose the agricultural output growth obtained in 15 major states for the period 1994-95 to 2003-04 into the above three components using the random coefficients model. Results of the study indicate that the efficiency has declined over time for all the states and the average technical efficiency is only 72 percent. This means that there is a potential to increase the existing output by 28 percent without increasing inputs. We found that in most of the states, growth was only due to higher inputs. Investment in extension services along with sustained investment in agricultural research and development, and infrastructure is the need of the hour. West Bengal is the most efficient state in applying labor and fertilizer inputs and also has a very high over all efficiency. This can be linked to the successful decentralization and the land reform policies of the state. Length: 13 pages Creation-Date: 2008-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-26.pdf Handle: RePEc:mad:wpaper:2008-026 Template-Type: ReDIF-Paper 1.0 Title: Strategy of Growth for Substantial Reduction of Poverty and Reversal of Trend towards Increasing Regional Divide Author-Name: Raja J. Chelliah Author-Workplace-Name: Madras School of Economics Author-Email: rajachelliah@mse.ac.in Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: poverty, substantial, strategy Classification-JEL: Abstract: While “Development as Freedom” is considered to be one of the objectives of our national economic endeavors, and poverty reduction and fairly balanced regional development are high on the economic agenda, it is well known that our planning and economic policies have failed to produce inclusive growth to enable substantial parts of country get the benefits of developments. The Approach Paper to 11th Five Year Plan declares its objective to be faster and more inclusive growth, but the Planning Commission or the Central Government do not put forward any significant change in the plan principles or strategies. In this paper we are suggesting a set of new innovative policies as additions to the policies already being implemented. Length: 13 pages Creation-Date: 2007-09 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-21.pdf Handle: RePEc:mad:wpaper:2007-021 Template-Type: ReDIF-Paper 1.0 Title: VULNERABILITY TO POVERTY AND VULNERABILITY TO CLIMATE CHANGE: CONCEPTUAL FRAMEWORK, MEASUREMENT AND SYNERGIES IN POLICY Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Richard J.T. Klein Author-Workplace-Name: Stockholm Environment Institute , Kräftriket 2B, 106 91 Stockholm, Sweden Author-Email: kavi@mse.ac.in Author-Name: Cezar Ionescu Author-Workplace-Name: Potsdam Institute for Climate Impact Research, P.O. Box 601203, 14412 Potsdam, Germany Author-Email: kavi@mse.ac.in Author-Name: Jochen Hinkel Author-Workplace-Name: Potsdam Institute for Climate Impact Research, P.O. Box 601203, 14412 Potsdam, Germany Author-Email: kavi@mse.ac.in Author-Name: Rupert Klein Author-Workplace-Name: Potsdam Institute for Climate Impact Research, P.O. Box 601203, 14412 Potsdam, Germany Author-Email: kavi@mse.ac.in Keywords: Vulnerability; Poverty; Climate Change; Adaptation Classification-JEL: I3, O1, Q25 Abstract: This paper attempts to compare the concepts and metrics related to vulnerability notion as used in the poverty literature with those in the filed of climate change. Such comparison could shed light on the understanding of the perceived and real differences between the two fields and also help to identify possible policy synergies between the climate change and poverty communities. The analysis shows that while vulnerability concepts in both the disciplines are defendable, broader policy relevant statements about vulnerability could be made if the analysis clearly identifies three primitives introduced in Ionescu et al. (2006) – namely, the entity that is vulnerable, the stimulus due to which the entity is vulnerable, and the preference criteria on the outcome of concern. The analysis shows significant similarities between the two fields in terms of vulnerability measurement. The link between the vulnerability metrics in the two fields can be established through the introduction of sensitivity notion. The analysis also shows that the vulnerability metrics in both fields demand a stricter restriction (namely, complete preorder) on preference criteria on the outcome(s) of concern. The analysis identifies two issues that, if addressed, could create synergies between vulner¬ability assessments in the climate change and the poverty communities. First, the climate change community could benefit from exploring a notion analogous to that of “poverty”. In development policy, the notion of poverty enables one to recognise that there is a need to focus not only on peo¬ple who are likely to become poor due to some exogenous input, but also on those who already are poor (and may become even poorer). Second, it would be interesting to explore the analogous concepts of “mitigation” and “adaptive capacity” in poverty research. Simi¬lar to their use in climate research and policy, the analysis of these concepts could lead to the more explicit consideration of the multidimensional nature of both causes and outcomes of poverty, as well as of the multiple time scales on which these occur. Length: 20 pages Creation-Date: 2007-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-19.pdf Handle: RePEc:mad:wpaper:2007-019 Template-Type: ReDIF-Paper 1.0 Title: INDUSTRIAL GROWTH AND ENVIRONMENTAL DEGRADATION: A CASE STUDY OF TIRUPPUR TEXTILE CLUSTER Author-Name: Prakash Nelliyat Author-Workplace-Name: Madras School of Economics Author-Email: nelliyatp@yahoo.co.uk Abstract: The rapid economic growth achieved after globalization by most of the developing countries, has imposed considerable social costs and has become a major threat to sustainable development. However it is also extremely important for developing countries to achieve a high level of economic growth to mitigate their socio-economic problems. But the major challenge here is to ensure development in a sustainable manner by achieving a proper trade-off between environment and development. This paper attempts to operationalize sustainable development strategies using a case study of Tiruppur, a major textile cluster in India. The textile industrial growth in Tiruppur is discussed in the context of global diversification of textile manufacturing and trade with emphasis on employment, income and foreign exchange in regional economy perspective. Since the environmental issues of textile industries are associated with bleaching and dyeing, an inventory of all processing units was prepared for analysis include water consumption and effluent discharge. The existing pollution management efforts through IETPs and CETPs and economics of production and pollution control costs were estimated for different size of units for understanding the burden of pollution abatement. Environmental impacts of pollution were analyzed with the help of physical data on ground water, surface water and soil quality. The economic value of the damage (social cost) was estimated for different sectors like agriculture, fisheries, domestic and industrial water supply. Different economic and environmental indicators of Tiruppur industry over the period 1980-2000 and the reasons for the environmentally unsustainable industrial growth of Tiruppur are provided. The paper concludes with some policy recommendations and recent development in Tiruppur. Length: 22 pages Creation-Date: 2007-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-17-PDF.pdf Handle: RePEc:mad:wpaper:2007-017 Template-Type: ReDIF-Paper 1.0 Title: Environment, Human Development and Economic Growth after Liberalisation: An Analysis of Indian States Author-Name: Sacchidananda Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: sachs.mse@gmail.com Author-Name: Debashis Chakraborty Author-Workplace-Name: Madras School of Economics Author-Email: debchakra@gmail.com Keywords: Environmental Quality; Economic Liberalisation; Economic Growth; Human Development; India. Abstract: Economic growth does not necessarily ensure environmental sustainability for a country. The relationship between the two is far more complicated for developing countries like India, given the dependence of a large section of the population on natural resources for livelihood. Under this backdrop, the current study attempts to analyze the relationships among Environmental Quality (EQ), Human Development (HD) and Economic Growth (EG) for 14 major Indian States during post liberalisation period (1991-2004). Further, for understanding the changes in EQ with the advancement of economic liberalisation, the analysis is carried out by dividing the sample period into two: Period A (1990–1996) and Period B (1997–2004). For both the sub-periods, 63 environmental indicators have been clustered under eight broad environmental groups and an overall index of EQ using the HDI methodology. The EQ ranks of the States exhibit variation over time, implying that environment has both spatial and temporal dimensions. Ranking of the States across different environmental criteria (groups) show that different States possess different strengths and weaknesses in managing various aspects of EQ. The HDI rankings of the States for the two periods are constructed by the HDI technique following the National Human Development Report 2001 methodology. We attempt to test for the Environmental Kuznets Curve hypothesis through multivariate OLS regression models, which indicate presence of non-linear relationship between several individual environmental groups and per capita net state domestic product (PCNSDP). The relationship between EQ and economic growth however does not become clear from the current study. The regression results involving individual environment groups and HDI score indicate a slanting N-shaped relationship. The paper concludes that individual States should adopt environmental management practices based on their local (at the most disaggregated level) environmental information. Moreover, since environmental sustainability and human well-being are complementary to each other, individual States should attempt to translate the economic growth to human well-being. Length: 35 pages Creation-Date: 2007-07 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-16-PDF.pdf Handle: RePEc:mad:wpaper:2007-016 Template-Type: ReDIF-Paper 1.0 Title: EXPORT COMPETITIVENESS IN THE INDIAN AUTO-COMPONENT INDUSTRY:DOES LOW WAGE COST MATTER? Author-Name: Madhuri Saripalle Author-Workplace-Name: PhD, University of Connecticut, U.S.A Author-Email: msaripalle@yahoo.com Keywords: Export intensity, labor costs, productivity, competitiveness, import intensity, auto component industry, India Classification-JEL: L 62 Abstract: This paper analyzes the differences in the export behavior of domestic and multinational firms in the Indian auto component industry. Three types of firms are identified according to ownership: purely domestic and licensees, domestic joint ventures and joint ventures with majority stakes by the multinationals. Although all the types of firms face the same labor costs, any difference in export performances could arise because of higher productivity of labor. The paper tests whether this is true for the domestic firms and the multinational firms in the Industry. It finds that only in the case of the multinational firms, it is not just cheap labor in terms of low wage rate per worker, but low wage in relation to productivity of that labor which leads to comparative cost advantage in exports. The domestic firms are competing based on low wage cost more than the productivity of the labor. Among other factors discussed, of the reasons is the low value added nature of the components that are being exported. The role of other factors like, size, import- intensity and distribution expenses is also examined, followed by an analysis of the scope for domestic firms to become a part of the global supply chain. Length: 19 pages Creation-Date: 2007-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-15-PDF.pdf Handle: RePEc:mad:wpaper:2007-015 Template-Type: ReDIF-Paper 1.0 Title: COMPENSATING THE LOSS OF ECOSYSTEM SERVICES DUE TO POLLUTION IN NOYYAL RIVER BASIN, TAMIL NADU Author-Name: Paul P. Appasamy Author-Workplace-Name: Madras School of Economics Author-Email: ppasamy@hotmail.com Author-Name: Prakash Nelliyat Author-Workplace-Name: Madras School of Economics Author-Email: nelliyatp@yahoo.co.uk Keywords: ecosystem, water pollution Classification-JEL: Abstract: The loss of ecosystem services due to industrial pollution in the Noyyal River Basin was estimated through physical research studies of water and soil quality and bio-mapping followed by economic valuation. Estimates of the loss to the agriculture, drinking water, and fisheries sectors were made on an annual basis and also capitalized. Compensation was awarded by the Loss of Ecology Authority to the affected farmers to be paid by industry. Length: 28 pages Creation-Date: 2007-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-14-PDF.pdf Handle: RePEc:mad:wpaper:2007-014 Template-Type: ReDIF-Paper 1.0 Title: Estimation of Marginal Abatement Cost of Air Pollution in Durgapur City of West Bengal Author-Name: Kakali Mukhopadhyay Author-Workplace-Name: Madras School of Economics Author-Email: kakali_mukhopadhyay@yahoo.co.in Author-Name: Souvik Bhattacharya Author-Workplace-Name: Tata Energy Research Institute, New Delhi Author-Email: kakali_mukhopadhyay@yahoo.co.in Keywords: Output Distance Function, Shadow Prices, Distance Values Classification-JEL: Abstract: Air pollution in industrial cities with emissions from firms is a growing problem in India. Durgapur, one of the growing industrial cities in eastern India, covering a host of industries, suffers from similar problems. The paper estimates the marginal abatement cost of air pollution of industries in Durgapur, West Bengal. We model the technology of a firm with output-distance function. Here the linear programming approach is adopted to estimate the shadow prices and distance values. Results reveal that there is a wide variation in shadow prices of Suspended Particulate Matter and distance values between firms under particular category of industries thus indicating the variability in the degree of compliance, use of resources and the vintages of capital. In this context the paper suggests policies for air quality management in urban industrial areas of West Bengal which will help to achieve sustainable industrial development. Length: 28 pages Creation-Date: 2006-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-13-PDF.pdf Handle: RePEc:mad:wpaper:2006-013 Template-Type: ReDIF-Paper 1.0 Title: Vulnerability to Chronic Energy Deficiency: An Empirical Analysis of Women in Uttar Pradesh, India Author-Name: Maithili Ramachandran Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: K.S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Body Mass Index and Chronic Energy Deficiency; Women; Vulnerability; Uttar Pradesh. Classification-JEL: I12, I31, R1 Abstract: Prevalence rate of chronic energy deficiency (CED) is used as a measure of (adult) nutrition and health status for any region or country. That these rates in India have been rather high particularly for women is a matter of concern. As Floud (1992) and Fogel (1997) have shown, among several anthropometric measures weight-for-height or Body Mass Index (BMI) is an effective predictor of morbidity and mortality rates. BMI is shown to indicate the current nutritional status thereby reflecting the difference between food intake and the demand for these intakes. The present study uses this indicator as a measure of health status. Due to limited information base on BMI very few studies in India have analysed the determinants of CED (which is the current health status) and even far fewer studies estimating the persons vulnerable to it (that is future health status). This paper attempts to do so based on a sample of ever-married women in the age group of 15-49 years in the North Indian state of Uttar Pradesh (UP) for the year 1998-99. The results indicate that education, social infrastructure and quality of diet influence those who are likely to be CED in future, with significant rural urban differences. Apart from these well-known indicators, presence of drinking water source within the residence (whether piped or otherwise), women in the age group of 15-19 years, and education status of the husband seems important. More importantly, the results clearly highlight that the CED rates and vulnerability rates can be very different across two sub-groups of population. Hence, the results from this study would be more useful in targeting policy most effectively as the emphasis would now be on ‘potential’ deficient persons rather than on current ones, which is the convention in policy intervention. Length: 23 pages Creation-Date: 2006-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-12-PDF.pdf Handle: RePEc:mad:wpaper:2006-012 Template-Type: ReDIF-Paper 1.0 Title: Health, Technical Efficiency and Agricultural Production in Indian Districts Author-Name: Atheendar S. Venkataramani Author-Workplace-Name: Yale University School of Public Health, New Haven, CT 06520 (USA) Author-Email: atheendar.venkataramani@yale.edu Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: Jennifer Prah Ruger Author-Workplace-Name: Madras School of Economics Author-Email: jennifer.ruger@yale.edu Keywords: Technical efficiency, Random coefficients model, the frontier production function. Classification-JEL: C33, D20 Abstract: In this study, we attempt to quantify the effect of improved population health on technical efficiency in agricultural production. Using data for over 260 districts in 15 Indian states, we employ the random-coefficients technique to estimate a Cobb-Douglas production function, computing overall and input specific technical efficiencies for each district. We then model health (the district infant mortality rate) as a determinant of (in) efficiency in a second stage, controlling for a range of other socioeconomic variables. We find that decreases in the infant mortality rate, as well as increases in the literacy rate and level of irrigation, are associated with significant increases in overall technical efficiency, and that a good portion of health’s effect is probably due to improvements in the efficiency of labor use. While efficiency increases from improvements in irrigation and literacy are larger, the potential gains from health are still fairly substantial. Length: 21 pages Creation-Date: 2006-08 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-11-PDF.pdf Handle: RePEc:mad:wpaper:2006-011 Template-Type: ReDIF-Paper 1.0 Title: Technical Efficiency in Agricultural Production and Its Determinants: An Exploratory Study at the District Level Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Author-Name: Atheendar S. Venkataramani Author-Workplace-Name: Yale University School of Public Health, New Haven, CT 06520 (USA) Author-Email: atheendar.venkataramani@yale.edu Keywords: Agricultural Production Classification-JEL: C33, D20 Abstract: Given the importance of agriculture to the well being of a large percentage of India’s population, it becomes important to study how improvements can be made in the productivity of this sector. This study attempts to estimate the technical efficiency – a measure of how well inputs are being used towards producing output – of about 250 Indian districts in 1990-91. It employs the stochastic frontier function methodology. The results indicate that (i) the land elasticity is the highest followed by fertilizer; (ii) the mean efficiency of raising agricultural output is 79 per cent and therefore there is a scope for increasing output by 21 per cent without additional resources; (iii) states such as Madhya Pradesh, Uttar Pradesh, and Rajasthan have the largest number of districts with below average TE and they stand to gain the most from policy interventions towards improving technical efficiency. The results further indicate that health, education, and infrastructure are powerful drivers of efficiency at the district level and the relative importance of the determinants of efficiency across districts depends greatly on environmental factors, such as agro-climatic zones, technological factors, and crop mix. The results highlight the need for developing policy strategies at a more localized level. Length: 17 pages Creation-Date: 2006-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/wp-10.pdf Handle: RePEc:mad:wpaper:2006-010 Template-Type: ReDIF-Paper 1.0 Title: Fuel Demand Elasticities for Energy and Environmental Policies: Indian Sample Survey Evidence Author-Name: Haripriya Gundimeda Author-Workplace-Name: Madras School of Economics Author-Email: hpriyags@yahoo.com Author-Name: Atheendar Gunnar Köhlin Author-Workplace-Name: Environmental Economics Unit, Department of Economics,Göteborg University. Author-Email: gunnar.kohlin@economics.gu.se Keywords: LA-AIDS, fuel, India, income, price, elasticities, NSSO data Classification-JEL: C2, Q2, Q4 Abstract: India has been running large-scale interventions in the energy sector over the last decades. Still, there is a dearth of reliable and readily available price and income elasticities of demand to base these on, especially for domestic use of traditional fuels. This study uses the linear approximate almost ideal demand system (LA-AIDS) using micro data of more than 100,000 households sampled across India. The LA-AIDS model is expanded by specifying the intercept as a linear function of household characteristics. Marshallian and Hicksian price and expenditure elasticities of demand for four main fuels are estimated for both urban and rural areas by different income groups. These can be used to evaluate recent and current energy policies. The results can also be used for energy projections and carbon dioxide simulations given different growth rates for different segments of the Indian population. Length: 25 pages Creation-Date: 2006-06 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/wp-9.pdf Handle: RePEc:mad:wpaper:2006-09 Template-Type: ReDIF-Paper 1.0 Title: Equalizing Health and Education: Approach of the Twelfth Finance Commission Author-Name: D. K. Srivastava Author-Workplace-Name: Madras School of Economics Author-Email: srivastava@mse.ac.in Keywords: Health, Education, Finance commission Classification-JEL: H5 Abstract: Service standards in the provision of health and education in the states in India are low on average and also characterized by large inter-state disparities. These disparities are due to differences in fiscal capacity, differences in revenue effort and differences in priority accorded to the concerned sectors. The transfers from the central to state governments in many federations are guided by the equalization principle. Two important examples are Canada and Australia. When unconditional transfers are made, equalization transfers aim to neutralize deficiency in fiscal capacity but not that in revenue effort. Sometimes adjustment affecting cost and need factors may also be accommodated. Both in Canada and Australia, apart from general purpose and unconditional transfers, there are also specific purpose transfers. Considering the fact that it is important not only to improve the average levels of provisions of health and education services, but also to reduce disparities across states, the Twelfth Finance Commission has recommended special grants for health and education to selected states. In determining these grants, the TFC had kept the equalization principle in perspective and has not underwritten deficiency in expenditure if it arises because states accord less than average priority to the concerned sector. Recommended grants however only partially meet the requirement of resources for these sectors. For meeting the needs fully, much larger amounts would be involved. TFC’s initiative should be taken only as a beginning that requires supplementation by plan grants. After gaining experience in implementing these grants, larger grants and a more comprehensive approach can be developed. Length: 45 pages Creation-Date: 2006-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/sriva.pdf Handle: RePEc:mad:wpaper:2006-08 Template-Type: ReDIF-Paper 1.0 Title: Ground Water Pollution and Emerging Environmental Challenges of Industrial Effluent Irrigation: A Case Study of Mettupalayam Taluk, Tamilnadu Author-Name: Sacchidananda Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: sachs.mse@gmail.com Author-Name: Prakash Nelliyat Author-Workplace-Name: Madras School of Economics Author-Email: nelliyatp@yahoo.co.uk Keywords: water pollution, environmental, industrial effluent irrigation Classification-JEL: Abstract: Industrial disposal of effluents on land and subsequent pollution of groundwater and soil of surrounding farmlands – is a relatively new area of research. Environmental and socio-economic aspects of industrial effluent irrigation have not been studied as extensively as domestic sewage based irrigation practices, at least for developing countries like India. Disposal of treated and untreated industrial effluents on land has become a regular practice for some industries. Industries located in Mettupalayam taluk, Tamilnadu dispose their effluents on land, and the farmers of the adjacent farmlands have complained that their shallow open wells get polluted and also the salt content of soil has started building up slowly. This study attempts to capture the environmental and socio-economic impacts of industrial effluent irrigation in different industrial locations at Mettupalayam taluk through primary surveys and secondary information. This study found that continuous disposal of industrial effluents on land, which has limited capacity to assimilate the pollution load, has led to groundwater pollution. Ground water quality of shallow open wells surrounding the industrial locations has deteriorated, and the application of polluted groundwater for irrigation has resulted in increased salt content of soils. In some locations drinking water wells (deep bore wells) also have high concentration of salts. Since the farmers had already shifted their cropping pattern to salt tolerant crops (like jasmine, curry leaf, tobacco etc.) and substituted their irrigation source from shallow open wells to deep bore wells and/or river water, the impact of pollution on livelihood was minimised. It is observed that with the rise in concentration of electrical conductivity of groundwater samples, revenue from banana cultivation (in Rs. per acre) has gone down. However blending open well water with the river water and/or water from deep bore wells has arrested the fall in revenue. For salt tolerant crop like jasmine, the rise in EC did not seem to have significant impact on productivity. Since the local administration is supplying drinking water to households the impact in the domestic sector has been minimised. It has also been noticed that in some locations industries are supplying drinking water to the affected households. However, if the pollution continues unabated it could pose serious problems in the future. Length: 59 pages Creation-Date: 2006-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/mukpra1.pdf Handle: RePEc:mad:wpaper:2006-07 Template-Type: ReDIF-Paper 1.0 Title: IS ECONOMIC GROWTH SUSTAINABLE? ENVIRONMENTAL QUALITY OF INDIAN STATES AFTER 1991 Author-Name: Sacchidananda Mukherjee Author-Workplace-Name: Madras School of Economics Author-Email: sachs.mse@gmail.com Author-Name: Vinish Kathuria Author-Workplace-Name: Madras School of Economics Author-Email: sachs.mse@gmail.com Keywords: environmental, economic growth Classification-JEL: Abstract:This study is an attempt to investigate the relationship between environmental quality and per capita NSDP (i.e., Environment Kuznets Curve, EKC) of 14 major Indian States in the light of their very high economic growth in the post-liberalisation period. The analysis involves first ranking the States on the basis of their environmental quality, and then checking the relationship. The analysis captures both temporal and spatial aspects of environmental quality by ranking the States in two time periods – (i) early 1990s (1990 - 1996) and (ii) late 1990s (1997 - 2001). The results indicate that the relationship between environmental quality and per capita NSDP is slanting S-shaped. Except Bihar all other States are on the upward sloping curve of the EKC. The results suggest that the economic growth is mostly at the cost of environmental quality. Length: 38 pages Creation-Date: 2006-03 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/murvin.pdf Handle: RePEc:mad:wpaper:2006-06 Template-Type: ReDIF-Paper 1.0 Title: Accounting for India’s Forest Wealth Author-Name: Giles Atkinson Author-Workplace-Name: Department of Geography and Environment, London School of Economics and Political Science, Houghton Street, London, UK, WC2A 2AE Author-Email: g.atkinson@lse.ac.uk Author-Name: Haripriya Gundimeda Author-Workplace-Name: Madras School of Economics Author-Email: hpriyags@yahoo.com Keywords: wealth, forest, India Classification-JEL: Abstract: In this paper, we account for forest wealth in India. Changes in the timber and carbon wealth embodied in these forests are related to important green national accounting aggregates such as genuine saving and the change in wealth per capita. Important accounting issues include the timing of carbon releases, which occur when forests are disturbed, as well as the valuation of these releases. Our empirical findings suggest that while India’s forest wealth is substantial, net changes in this wealth are arguably not so large at least in relation to GNP. However, when viewed in the context of the wealth-diluting effects of population growth this implies a far larger additional savings effort is required to cover the (net) loss in forest values than otherwise appears to be the case. Finally, we examine ways in which the accounting approach that we adopt can be reconciled with approaches which stress conserving forest wealth. Length: 48 pages Creation-Date: 2006-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/HP_WP.pdf Handle: RePEc:mad:wpaper:2006-05 Template-Type: ReDIF-Paper 1.0 Title: Female Labour Migration in India : Insights From NSSO Data Author-Name: K.Shanthi Author-Workplace-Name: ICSSR Senior Research Visiting Fellow, Madras School of Economics Author-Email: santi49@yahoo.com Keywords: Labour, Migration, NSSO Classification-JEL: Abstract: The objective of this working paper is to examine the extent of employment oriented migration of females in India and the inter –state variations in its magnitude using NSSO 55th Round Household level data on Migration . It is found that though the percentage is very small for ‘employment oriented migration’ an analysis of work force participation of female migrants in the age group 15-60 , irrespective of the reasons for migration reveals that in the post migration period work participation of these migrants increases steeply in all the states. Though marriage is identified as the reason for migration they work prior to and after migration which is not brought to limelight. In the recent past ‘independent migration’ of females is on the increase in response to the employment opportunities in export industries, electronic assembling and garment units. The extent of this independent migration is arrived at indirectly using proxy variables such as the ‘never married’ category among the migrants and those who identified themselves as ‘heads’. In all the states in South India this percentage is high .In the north at the disaggregated level the percentage of ‘never married’ and “heads” is high in rural urban and urban –urban migration . The issues and challenges to be faced are highlighted and this paper concludes that gender dimensions should adequately be captured in the official data system for purposes of effective policy interventions. Length: 53 pages Creation-Date: 2006-02 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/santhi_wp.pdf Handle: RePEc:mad:wpaper:2006-04 Template-Type: ReDIF-Paper 1.0 Title: DOES ENVIRONMENTAL KUZNET’S CURVE EXIST FOR INDOOR AIR POLLUTION? EVIDENCE FROM INDIAN HOUSEHOLD LEVEL DATA Author-Name: K. S. Kavi Kumar Author-Workplace-Name: Madras School of Economics Author-Email: kavi@mse.ac.in Author-Name: Brinda Viswanathan Author-Workplace-Name: Madras School of Economics Author-Email: brinda@mse.ac.in Keywords: Indoor Air Pollution, Environmental Kuznets Curve, Energy Policy. Classification-JEL: Abstract: Existence of Environmental Kuznet’s Curve (EKC) is an empirical issue to analyze as evidence from the literature has been mixed. This study focuses on indoor air pollution generated from the use of fuels for cooking services to check for validity of EKC. Using household level data from three rounds of National Sample Survey over the period from 1983 to 2000, the study estimates aggregate ‘dirty’ and ‘clean’ fuel Engle curves. The study also estimates pollution-income relationship and uses the predicted indoor pollution to simulate EKC. The results show validation of EKC hypothesis, especially for the data corresponding to rural households. In contrast, indoor pollution shows declining trend in 1990s for the urban households. The spatial and temporal representations of pollution-income relationship presented in this study highlight stark difference between the rural and urban households along with their rate of progress towards ‘clean’ fuels and provide insights on potential policy responses that could enable faster transition of rural households towards ‘cleaner’ fuels. Length: 36 pages Creation-Date: 2004-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/wp_kavi.pdf Handle: RePEc:mad:wpaper:2004-03 Template-Type: ReDIF-Paper 1.0 Title: INFORMAL REGULATION OF POLLUTION IN A DEVELOPING COUNTRY ; Empirical Evidence from Gujarat, India A Author-Name:Vinish Kathuria Author-Workplace-Name: Madras School of Economics Author-Email: vinish67@yahoo.com Keywords: Pollution, developing country, epririal evidence, gujarat Classification-JEL: Abstract: Recent literature has not only recognized the implementation limitations of formal regulation, but also appreciated the significance of informal regulation for achieving environmental goals for developing countries. Since most units in developing world fall under unorganized sector, even utility of some of the informal channels like public-disclosures is limited. Under the scenario, a localized channel like vernacular press has greater utility. Present study attempts to see whether this channel has any role to play in pollution control. To test, monthly water pollution data from four hotspots of Gujarat, India for the period Jan-96 to Dec-2000 is used. Analysis shows that informal regulation has worked partly as only sustained pressure leads to fall in pollution. However, not all stations are affected equally. It is mainly the station receiving water from industrial estate and housing somewhat large units respond to the informal pressure. Length: 63 pages Creation-Date: 2004-04 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/wp_vinish.pdf Handle: RePEc:mad:wpaper:2004-02 Template-Type: ReDIF-Paper 1.0 Title: SOME ASPECTS OF INTER DISTRICT DISPARITIES IN TAMIL NADU Author-Name: R. J. Chelliah Author-Workplace-Name: Madras School of Economics Author-Email: info@mse.ac.in Author-Name: K.R. Shanmugam Author-Workplace-Name: Madras School of Economics Author-Email: shanmugam@mse.ac.in Keywords: regional inequality, human development index, Tamil Nadu Districts. Classification-JEL: O5, R5 Abstract: The study analyzes the inter-district variations in levels of income and human development in Tamal Nadu in recent years. It also tries to analyze the causes of the relatively low levels of income of some districts. For that purpose, it uses the district level data on per capita income and other indicators and constructs the human development index. The results indicate that the benefits of growth have not been spread evenly. There is a group of districts on the eastern part of the state below Kanchipuram, which has lagged behind economically and socially. However, the income inequality is much higher than the inequality in human development. The low-income districts are associated with low industrial development, low agricultural productivity, low human development, and larger proportion of SC/ST population and high infant mortality rate. We hope that the study could help policymakers and others to formulate appropriate policies to reduce the disparities. Length: 30 pages Creation-Date: 2001-05 File-URL: http://www.mse.ac.in/wp-content/uploads/2016/09/wp_shanmugam.pdf Handle: RePEc:mad:wpaper:2004-01