14 December 2012: Reducing Choice Overload without Reducing Choices

Sudipto Sarangi
Louisiana State University

Abstract:
Previous studies have demonstrated that a multitude of options can lead to choice overload, reducing decision quality. Through controlled experiments, we examine sequential choice architectures that enable the choice set to remain large while potentially reducing the effect of choice overload. A specific tournament-style architecture achieves this goal. An alternate architecture in which subjects compare each subset of options to the most preferred option encountered thus far fails to improve performance due to the status quo bias. Subject preferences over different choice architectures are negatively correlated with performance, suggesting that providing choice over architectures might reduce the quality of decisions.

Date: December 14, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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7 December 2012: Does female leadership impact on governance and corruption? Evidence from a public poverty alleviation program in Andhra Pradesh, India

Farzana Afridi
Indian Statistical Institute

Abstract:
We exploit the* *nation-wide* *policy of randomly allocating village
council headships to women to identify the impact of female political
leadership on the governance of projects implemented under the
National Rural Employment Guarantee Act (NREGA) in Andhra Pradesh,
India. Using unique data from a primary survey and from a panel of
audit reports on the implementation of projects under the scheme, we
find that the likelihood of inefficiencies and leakages are higher in
village councils reserved for women. These results are explained by
political and administrative inexperience making female headed
councils more vulnerable to bureaucratic capture of power. Our
findings highlight the importance of capacity building and
institutional support to improve the effectiveness of affirmative
action policies and bolster women’s political participation in
developing countries.

Date: December 7, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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1 December 2012: National Seminar on Financial Law & Policy: An Inter-Disciplinary Approach

Organised by:
National Law University, Delhi

In collaboration with
National Institute of Public Finance and Policy, New Delhi
[Link]

Date: December 1, 2012
Time: 10:00 A.M.

Venue:
Conference Room,
5th Floor, Academic Block,
National Law University,
Sector 14, Dwarka,
New Delhi- 110078 (INDIA)

Location:

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4 December 2012: Covered Bonds: An Alternative Source of Financing Mortgage Lending in India

Mira Tamboli

Abstract:
This paper examines the potential of building and promoting a Covered Bond market in India and puts forth guidelines and considerations for the development of best practices and legislation. It gives an overview of the instrument and examines merits of Covered Bonds through comparison with Mortgage Backed Securities. A brief discussion on benefits to the issuers, investors and the government follows. In the absence of legislation, consideration for a suitable structure for Covered Bond issuance as an interim solution is presented. By making a case for adopting legislation with broad policy considerations on key issues, this paper provides a starting point for discussion on the issuance of Covered Bonds in India.

Date: December 4, 2012
Time: 03:30 P.M.

Venue:
ICRIER Conference Room,
Core 6A, 4th Floor,
India Habitat Centre, Lodi Road,
New Delhi – 110 003(INDIA)

Location:

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29 November 2012: The Merits of Money and “Muscle”: Criminality, Elections and Democracy in India

Milan Vaishnav
Carnegie Endowment for International Peace

Abstract:
This presentation will review the author’s recent research which tries to understand how democratic elections can coexist with a significant number of politicians implicated in criminal wrongdoing. Specifically, it explores three questions. Why do parties nominate candidates with criminal backgrounds? Why do voters vote for them? And what does their proliferation mean for democratic accountability? To address these questions, the author draws on a wide body of quantitative and qualitative evidence from India.

Date: November 29, 2012
Time: 12:30 P.M.

Venue:
Conference Hall-II
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)

Location:

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27 November 2012: Growth and Citizenship in Indian Cities: A Comparative Perspective

Patrick Heller
Brown University

Abstract:
Are growth and inclusion compatible in the mega-cities of the Global South? Can democratic urban governance make the difference? Under what conditions can cities be effectively coordinated? This talk develops a preliminary view of growth and citizenship in India by exploring Indian cities through Brazilian and South African lenses. Extending insights from urban regime theory, Prof. Heller argues that the South African city has become a quintessential “growth machine”; that the Brazilian city can be usefully categorized as a “social city” in which participatory structures have secured a basic “right to the city”; and that viewed through these lenses the Indian city appears as a “growth cabal”. The difference, he argues, can only be understood by examining the relationship between political power and civil society in each country.

Date: November 27, 2012
Time: 03:45 P.M.

Venue:
Conference Hall
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)

Location:

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12 November 2012: NIPFP Macro-DSGE Workshop

Organised by:
Macro/Finance Group

Conference Program

Date: November 12, 2012
Time: 09:30 A.M.

Venue:
Conference Hall, Ground Floor, New Building
National Institute of Public Finance and Policy,
18/2 Satsang Vihar Marg, Special Institutional Area,
New Delhi-110067(INDIA)

Location:

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8 November 2012: Household Entrepreneurship and Social Networks: Panel Data Evidence from Vietnam

Christophe Jalil Nordman
DIAL, University Paris-Dauphine and IRD

Abstract:
Using a panel of non-farm household businesses for Vietnam, this paper sheds light on the links between households’ and entrepreneurs’ social networks and household business performance. We address three related questions. One first question is whether we can find evidence of a differentiated effect of employment of members of the extended family versus hired workers on the business performance. Then we examine the extent, intensity and determinants of potential redistributive pressure exerted by the extended family, and borne by households running household businesses, notably under the form of inter-household transfers received and given. Finally, we identify the potential effects of redistributive pressure (from family and kinship ties, the social network capital, and the community) on the household businesses’ technical efficiency. A cross-cutting issue is that all these analyses are performed separately for formal and informal businesses so as to ask whether social network support is more critical in the informal economy. We find evidence of a productivity differential between family and hired labour in the informal sector. In addition, the data do not support the hypothesis of substitutability between family and hired labour, which seems consistent with the idea that managerial and supervisory tasks may be mainly performed by family members. The results of transfer equations confirm the high propensity of households to transfer given their available resources and are consistent with the idea that family, kinship but also community level features exert an effect on the size and type of transfers to and from households. Finally, using information on the entrepreneurs’ social capital and looking at firm efficiency, we confirm the importance of unlocking financial constraints and improving access to professional support for successful household entrepreneurship.

Date: November 8, 2012
Time: 03:00 P.M.

Venue:
AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)

Location:

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6 November 2012: Improving Health Through Decentralization

Jeffrey Hammer
Princeton University

Date: November 6, 2012
Time: 04:00 P.M.

Venue:
Conference Hall - 2
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)

Location:

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8 November 2012: Health policy in India: It’s Broken

Jeffrey S. Hammer
NCAER and Princeton University

Abstract:
Why is good quality health care so hard to deliver? While universal primary medical care has been a stated priority of government since before independence, the track record of the public system is not one of great success. Public sector medical care is free yet a large majority of people prefer to use the private sector, even though they know that it, too, is of questionable quality. This preview of a forthcoming book presents data on the quality of medical care in both public and private sectors and asks what can be done to improve performance. It also raises the question: “if the goal of government is to improve the health and well-being of the Indian people, is the expansion of public medical care and the underlying expenditures really the most important step government can take?"

Date: November 8, 2012
Time: 03:30 P.M.

Venue:
NCAER Auditorium
National Council of Applied Economic Research
Parisila Bhawan, 11, Indraprastha Estate
New Delhi-110002(INDIA)

Location:

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Note:
Please join us for high tea after the lecture. For queries, please contact Ms Sudesh Bala at sbala@ncaer.org or on 011-2345-2669.

12 November 2012: The Differential Effects of Financial Development on India's Industrial Performance

Nitin Gupta
The Australian National University

Abstract:
The paper aims to investigate the differential impact of increased financial development on industrial output, across state and industry categories. Using an unbalanced panel of 15 Indian states, 22 industries at the 2-digit level, and an 11-year period spanning 1992-2002, the paper’s most novel contribution comes from hypothesising and testing for operating channels though which increased financial development benefits output. It is concluded that financial depth facilitates increased use of contract labour by industries, which in turn mitigates the effects of industrial disputes and increases output. This beneficial impact is uniformly felt across the country, regardless of state-level labour regulations. However, financial depth has failed to directly benefit industries with the greatest need for external financing, i.e. those with moderate and high dependence on external sources of finance. Overall, increased financial depth alleviated the working capital constraints of firms, but not their investment constraints. The negative effects of the latter outweigh the positive effects of the former, and help explain the sharp deceleration of growth across industries categories. Finally, the paper makes the dual case for comprehensive labour reforms and for policies to improve quality of intermediation in Indian financial markets. 

Date: November 12, 2012
Time: 03:00 P.M.

Venue:
ICRIER Conference Room,
Core 6A, 4th Floor,
India Habitat Centre, Lodi Road,
New Delhi – 110 003(INDIA)

Location:

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19 October 2012: On the colonial origins of agricultural development in India: A re-examination of Banerjee and Iyer,'History, institutions and economic performance'

Vegard Iversen
Jindal School of Public Policy and University
of Manchester

Abstract:
Banerjee and Iyer (henceforth, BI) (American Economic Review, 2005)
find that districts which the British assigned to landlord revenue
systems systematically underperform districts with non-landlord based
revenue systems, especially in agricultural investment and
productivity and mainly after the onset of the Green Revolution in the
mid-1960s. On this basis, BI claim there were long-lasting effects of
the institutions established in British India on a variety of
development outcomes after independence. We correct a miscoding of the
land revenue system in Central Provinces, which BI characterise as
mostly landlord based, when reliable historical evidence suggest that
this region should have been attributed to a mixed
landlord/non-landlord based revenue system. Using a more appropriate
classification of the land revenue system of the Central Provinces
constructed from documented archival research, we find no evidence
that agricultural performance of Indian districts in the
post-independence period was adversely affected by the colonial
landlord land revenue system. Our results demonstrate that the key BI
argument that the more ‘oppressive’ landlord-based colonial land
revenue systems mattered for post-independent agricultural development
in India rests on fragile historical and statistical foundations.

Date: October 19, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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18 October 2012: Randomized Controlled Trials and Economic Development

Angus Deaton
Princeton University

Date: October 18, 2012
Time: 03:00 P.M.

Venue:
Lecture Theatre
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)

Location:

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15 October 2012: The Future of International Development

Mark Lowcock
DFID

Date: October 15, 2012
Time: 06:30 P.M.

Venue:
British Council Auditorium,
British High Commission
17, Kasturba Gandhi Marg,
Connaught Place
New Delhi-110001(INDIA)

Location:

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3 October 2012: Systemic Outflow of Capital from Emerging Economies and Enabled International Credit Lines

Gurbachan Singh
Independent Economist

Abstract:
Commercial banks in developed countries routinely extend credit lines to firms. However, they hardly extend any credit lines to banks in emerging economies to take care of possible sudden outflow of funds from their economies. This is puzzling as the reserve-backing of credit lines in the latter case is small, given that an outflow from emerging economies is an inflow into developed economies. This paper explores the role of ‘international agency costs’ to resolve the puzzle. The paper suggests that the first-best policy solution is an enabling international government. The second-best solution is international mediators (like the IMF and central banks). The third-best solution is a Pigouvian subsidy on credit lines, if the externality is large enough. The paper also discusses possible extensions of the model.

Date: October 3, 2012
Time: 03:30 P.M.

Venue:
NCAER Conference Room
National Council of Applied Economic Research
Parisila Bhawan, 11, Indraprastha Estate
New Delhi-110002(INDIA)

Location:

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Note:
Please join us for tea and snacks after the seminar. For queries, please contact Ms Sudesh Bala at sbala@ncaer.org or on 011-2345-2669.

10 October 2012: Brazil as a Rising Economic Power

Marcos Troyjo
Columbia University

Abstract:
Up until very recently, it was believed Brazil had devised an economic model assembling high growth and social inclusion.

In the past 10 years, Brazil has based its economic expansion on both the appetite of the domestic market for higher consumption levels and income distribution mechanisms that lifted the lives of millions. Low productivity, poor infrastructure and outdated labour and fiscal laws have however cooled off much of the enthusiasm for Brazil as growth stalled in recent months.

Is Brazil really adopting a set of policies that amount to a “development model” to lead the country toward global economic stardom? Or is Brazil just experiencing a cyclical “growth pattern” that now loses momentum? What does the road ahead look like for Latin America´s largest economy?

Marcos Troyjo will discuss whether Brazil`s rise as an economic power can be sustained over time or if the country is destined to fall short of its vast potential.

Date: October 10, 2012
Time: 03:O0 P.M.

Venue:
ICRIER Conference Room,
Core 6A, 4th Floor,
India Habitat Centre, Lodi Road,
New Delhi – 110 003(INDIA)

Location:

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10 October 2012: Shocks – What do SVAR Models Tell us About the Postwar Business Cycle?

David Kim
University of Sydney

Abstract:
Which shock is the most dominant driver of the postwar business cycle fluctuations? Does SVAR-based evidence justify discarding the technology shock driven real business cycle (RBC) hypothesis, as in Gali (1999), Francis and Ramey (2005), and Gali and Rabanal (2004)? To further investigate the plausibility of technology shocks as a driving force of US business cycle fluctuations, we re-visit some of the most commonly understood structural vector autoregressive (SVAR) models. They are the SVAR models of Cochrane (1994a), Gali (1999), Shapiro and Watson (1988) and King, Plosser, Stock and Watson (1991). Across all versions of these models, technology shocks are as important in explaining economic fluctuations as aggregate demand shocks combined. We also show that technology shocks retain sizable conditional correlations with output in the postwar US data. Our SVAR evidence suggests that the technology shock driven models should not be discarded as a positive theory of the business cycle. Recent theoretical advances with investment specific technology or varying factor shares may help justify the empirical importance of technology shocks.

Date: October 10, 2012
Time: 03:O0 P.M.

Venue:
ICRIER Conference Room,
Core 6A, 4th Floor,
India Habitat Centre, Lodi Road,
New Delhi – 110 003(INDIA)

Location:

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25 September 2012: Subaltern Urbanisation

Partha Mukhopadhyay
Centre for Policy Research

Abstract:
India’s urbanisation is following at least two concomitant paths; first, a traditional metro-centric agglomeration process driven partly by the movement of people and second a process involving, inter alia, the transformation of places, which are dispersed across the country, a process that can be usefully compared with in-situ urbanization in China. Subaltern urbanisation refers to the growth of such settlements that are independent of the metropolis and autonomous in their interactions with other settlements, local and global. Analyzing conventional and new data sources “against the grain”, it is claimed that there are many such economically vital smaller settlements in India, contrary to perceptions that India’s urbanisation is slow, that its smaller settlements are stagnant and its cities are not productive. Instead of basing policy on illusions of control, it is necessary to try and understand how agents construct this world, if we are to comprehend the ongoing Indian transformation. This work is part of a larger eponymous project, entitled “SUBURBIN” and entails joint work with many other researchers.

Date: September 25, 2012
Time: 03:45 P.M.

Venue:
Conference Hall
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)

Location:

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17 September 2012: Does marginal cost pricing of electricity affect groundwater pumping behaviour of farmers? Evidence from West Bengal, India

Aditi Mukherji
International Water Management Institute, New Delhi

Abstract:
As part of the power sector reforms in India, West Bengal began electric metering of agricultural consumers in 2007. Following this, tube well owners were charged on the basis of power usage instead of the prevalent flat tariff rate. An impact evaluation was undertaken to quantify the implications of the policy change. Surveys conducted in 2004 and 2007 served as a baseline. A 3ie-supported follow-up survey was undertaken in 2010, to create a panel data set for analysis.

The study found that a groundwater market had flourished where tube well owners were selling water to marginal farmers. Post-metering, tube well owners increased the price of water even though they had to pay a lower electricity cost. Metering, in effect, had disempowered small and marginal farmers and increased the leverage of tube well owners. Besides, it did not influence either cropping patterns, or the paddy output.

The researchers of this impact evaluation - A Mukherji, JV Meenakshi, A Banerji and A Gupta identified existing legislation that needed to be amended in order to empower small and marginal farmers. The evidence from the study was presented to the new state government that assumed office in 2011 which carried out the necessary policy change.

Date: September 17, 2012
Time: 03:30 P.M.

Venue:
Seminar Room
ISID Complex, Plot No. 4
Vasant Kunj Institutional Area
New Delhi- 110 070(INDIA)

Location:

View ISID Complex in a larger map

7 September 2012: Does Heterogenity affect the Group Cost Of Living Index?

Sutirtha Bandyopadhyay
Indian Statistical Institute

Abstract:
A Cost Of Living Index is a measure Of change in welfare when price
changes. It is usually defined for an individual/household. But almost
all the real world policies are concerned with the Cost Of Living
Index for a group. There are methods in literature that show the way
to construct Group Cost Of Living Index. The importance of Group Cost
Of Living Index is to tackle the heterogenity in household cost of
living indices and come up with an unique figure. I consider a very
simple set up where heterogenity in budget shares is the only source
of variation in the cost of living indices across households. The
question is whether the heterogenity in budget shares matter to the
change in Group Cost of Living Index. I show that it does for several
important cases.

Date: September 7, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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31 August 2012: Killing the Golden Goose or Just Chasing it Around the Farmyard?: Rising Generic Entry and the Incentives for Early-Stage Pharmaceutical Innovation

Chirantan Chatterjee
Indian Institute of Management, Bangalore

Abstract:
Over the last decade, generic penetration in the US pharmaceutical
market has increased substantially, providing significant consumer
surplus gains. But is generic entry reducing the flow of early stage
pharmaceutical innovation and therefore future availability of new
medicines? We explore this question using novel data sources and an
empirical framework that models the flow of early-stage pharmaceutical
innovations as a function of generic penetration, scientific
opportunity and challenges, firm innovative capability, and additional
controls. Our estimates suggest a sizable, robust, negative
relationship between generic entry and early-stage pharmaceutical
research activity. A 10% increase in generic penetration decreases
early-stage innovations in the same market by 7.3%. This effect is
weaker in top therapeutic markets where an increase in generic
penetration by 10% decreases the flow of early-stage innovations by
2.2%. However, in those top markets, a 10% increase in the stock of
Paragraph IV challenges decreases the flow of early-stage innovation
by 3.9%. Our estimated effects appear to vary across therapeutic
classes in sensible ways, reflecting the differing degrees of
substitution between generics and branded drugs in treating different
diseases. Finally, we are able to document that with increasing
generic penetration, firms in our sample are shifting their R&D
activity to more biologic-based (largemolecule) products rather than
chemicals-based (small-molecule) products as evidenced in their
early-stage pipelines. We conclude by discussing the potential
implications of our results for long-run consumer welfare, policy, and
innovation.

Date: August 31, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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24 August 2012: India's Total Sanitation Campaign: Two Randomized Experiments and Some Observations

Dean Spears
Princeton University

Abstract:
Open defecation in India presents a profound threat to health and human capital accumulation. Recent analyses of observational data suggest that, on average, India’s Total Sanitation Campaign has had a positive effect on infant mortality and human capital. What do randomized experimental data show? This talk will review earlier evidence and present new preliminary results from two randomized studies. The first is a trial of a TSC-like intervention in Maharashtra: the sanitation intervention caused children under five to grow taller, an outcome that is consistent with what is known about the lasting effects of early life disease. The second studies randomized reservation of village chair positions in Rajasthan: villages assigned to a Scheduled Caste sarpanch are less likely to win a prize for being open defecation free, even though they build as many latrines as other villages, on average. The talk will conclude with some observations from recent qualitative fieldwork and suggestions for policy.

Date: August 24, 2012
Time: 01:00 P.M.

Venue:
Second Floor Conference Room
The World Bank,
70 Lodi Estate,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by email to Jyoti Sriram at
jsriram@worldbank.org by Thursday, August 23rd.

24 August 2012: Public finance of tuberculosis treatment in India: an extended cost-effectiveness analysis

Ramanan Laxminarayan
Princeton University

Abstract:
Cost-effectiveness evaluations of health interventions assess the cost
per unit of health gained from the intervention. A typical finding
would be that it costs about $1,000 to avert a death from tuberculosis
(TB) using modern drug treatments. A separate question, much less
frequently addressed, is the economic attractiveness of different
instruments for implementing an intervention in a population. Such
instruments can include mass campaigns or conditional cash transfers
to encourage treatment seeking, and partial to total public finance
for a specific intervention. Our purpose here is to develop methods
for the economic evaluation of alternative implementation instruments
through the example of universal public finance (UPF) as an
instrument. We label this approach, extended cost-effectiveness
analysis or ECEA, and illustrate our methods while taking the example
of TB treatment in India to assess three dimensions of consequences:
the level and distribution (across wealth quintiles) of the burden of
disease averted, of the net consequences of taxation and private
expenditures averted, and of the value of insurance provided. Using
plausible values for key parameters we find health gains to be
substantial and concentrated among the poor; the insurance value and
the net consequences of taxation and private expenditures averted to
vary with key assumptions.

Date: August 24, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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17 August 2012: Should the Right to Property Return?

Namita Wahi
Harvard Law School and Center for Policy Research

Abstract:
The Indian Constitution adopted in 1950 guaranteed to all
citizens the fundamental right to “acquire, hold and dispose of
property” subject to reasonable restrictions in the public interest.
Moreover, Article 31 of the Constitution provided that any state
acquisition of property must only be upon enactment of a valid law,
for a public purpose and upon payment of compensation with exceptions
for certain zamindari abolition laws. The following decades saw
conflict between the legislature and the courts in cases of
acquisition of property (movable and immovable) with the Supreme Court
striking down acquisition laws (including but not limited to land
acquisition laws) on constitutional grounds and Parliament responding
with amendments to the Constitution which redefined property rights.
This culminated in the 44th amendment in 1978 which abolished the
fundamental right to property. However, a legal right to property was
retained in Article 300A of the Constitution.

Prior to 1978, the Supreme Court was vilified in political rhetoric
and scholarly discourse as being reactionary and anti poor. The
Court’s enforcement of property rights was criticised for defending
the rights of rich property owners and impeding the Parliament’s land
reform agenda. Recently however, widespread state acquisition of land
has received public attention due to dispossession of poor peasants
and traditional communities like forest dwellers, cattle grazers,
fishermen and indigenous tribal groups. Consequently, scholars have
renewed focus on property rights. It is now argued that the “weakening
of property rights” by Parliament in response to the Court’s
pro-property rights decisions in the first phase has “dispossessed the
poor” rather than the rich. In accordance with this view, in February
2009, a public interest petition was filed in the Supreme Court
seeking invalidation of the 44th amendment and restoration of the
fundamental right to property.

In my presentation, I will examine the chequered history of the
constitutional property rights provision in order to provide a revised
narrative of how state institutions in India, the Parliament and the
Supreme Court have, over the last sixty years, managed tensions
between the right to property and the state’s power to acquire
property for the purposes of redistribution and economic development.
I hope my presentation will contain useful insights for evaluating the
current discourses surrounding the new Land Acquisition,
Rehabilitation and Resettlement bill and the reinstatement of the
fundamental right to property in the Constitution.

Date: August 17, 2012
Time: 12:30 P.M.

Venue:
Second Floor Conference Room
The World Bank,
70 Lodi Estate,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by email to Jyoti Sriram at
jsriram@worldbank.org by Thursday, August 16th.

17 August 2012: Macroeconomic Effects of International Remittances: The Case of Developing Economies

Puja Guha
ISI Bangalore

Abstract:
Over the past few decades International workers' Remittances have
significantly contributed to the foreign exchange reserves of the
developing countries. While these household level remittance flows
have often been associated with poverty alleviation, positive welfare
gains and even as an alternate source of development finance, a
detailed study of the effects of these flows on a remittance dependent
, small developing economy, however shows counterintuitive results.
The paper applies the Dutch Disease theory to explain the effects of
remittances on the economy and introduces a micro-macro framework to
establish channels of transmission of remittances through the economy.
The paper shows that international remittances, by altering the
household budget constraint, have a direct impact on the micro level
household decision making, primarily with respect to the consumption
and labor supply decisions. These when aggregated give rise to
significant adjustments in the macro level production functions and
consumption behaviors, leading to a decline in the output,
particularly of the trading sector and an adverse impact on the
external sector of the economy.

Date: August 17, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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14 August 2012: The Ability and Willingness-to-Pay for a Comprehensive Social Security Scheme – Results from a recent study

Shahid Vaziralli
Institute of Financial Management & Research, Chennai

Abstract:
The focus of the 11th Social Security Seminar will be on the topic “The Ability and Willingness-to-Pay for a Comprehensive Social Security Scheme – Results from a recent study”. In view of the growing concern in India on the need to provide comprehensive social security cover to its unorganized sector workers, the Ministry of Finance, Government of India had commissioned a study entitled, “Ability and Willingness-to-Pay for a Comprehensive Social Security Scheme”. The study was conducted by the Indo-German Social Security Programme, GIZ in collaboration with IFMR. This study which has been concluded recently will provide some interesting insights on the poor households’ ability and willingness to pay for a contributory Comprehensive Social Insurance Scheme (CSIS).

Date: August 14, 2012
Time: 04:30 P.M.

Venue:
GIZ Conference Room,
21, Jor Bagh,
New Delhi 110 003(INDIA)

Note:
Please confirm your participation until the 13th of August 2012 at Sanjib.Pradhan@giz.de

21 August 2012: Understanding India's Equity Trading Behaviour

Tarun Ramadorai
University of Oxford

Date: August 21, 2012
Time: 04:00 P.M.

Venue:
Conference Hall, Ground Floor, New Building
National Institute of Public Finance and Policy,
18/2 Satsang Vihar Marg, Special Institutional Area,
New Delhi-110067(INDIA)

Location:

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7 August 2012: Policy Lessons from Implementing India’s Total Sanitation Campaign

Dean Spears
Princeton University and NCAER

Abstract:
Open defecation (OD) is a large global problem, but it is substantially and importantly an Indian problem: about 60 percent of the approximately 1 billion people who defecate in the open live in India. Widespread OD has major consequences for health and human capital in India. Ending OD and pursuing feasible methods of safe excreta disposal are therefore important policy priorities. This paper draws policy lessons from the first ten years of latrine construction under a flagship program of the Indian government, the Total Sanitation Campaign (TSC). So far, the TSC has been able to improve average health and human capital among Indian children where it has been implemented, even though sanitation coverage remains substantially incomplete. The first ten years of the TSC will have, on average, prevented an infant death for a few thousand dollars, a comparatively very inexpensive average cost. This initial success is in part due to the Nirmal Gram Puraskar (NGP), an incentive for village governments. Heterogeneity in the intensity and effectiveness of TSC implementation suggests that the additional benefits of extending effective TSC implementation to the many remaining Indian children would probably substantially exceed the additional costs. Therefore, as the TSC becomes the Nirmal Bharat Abhiyan, India should not miss the opportunity to invest in successful principles of total sanitation: quality data, effective monitoring, and motivational ex post incentives.

Date: August 7, 2012
Time: 04:00 P.M.

Venue:
NCAER Conference Room
National Council of Applied Economic Research
Parisila Bhawan, 11, Indraprastha Estate
New Delhi-110002(INDIA)

Location:

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Note:
Please join us for tea and snacks at 3:45pm before the seminar. For queries, please contact Ms Sudesh Bala at sbala@ncaer.org or on 011-2345-2669.

8 August 2012: An Introduction to the Proposed Law on Land Acquisition

Muhammad A. Khan
Officer on Special Duty to the Minister of Rural Development, Government of India

Abstract:
The Government of India, through the Ministry of Rural
Development, has undertaken a legislative revisit of the century old
law on land acquisition. This new law, the draft Land Acquisition,
Resettlement and Rehabilitation Bill 2011, seeks to provide a better,
more comprehensive and humane vehicle for the exercise of eminent
domain while simultaneously seeking to address the inevitable
displacement that accompanies such acquisition. This talk analyses the
various contributing factors that led to the emergence of a consensus
for a new law. It then outlines the authorities established and also
discusses the broad objectives sought to be achieved by the Bill.

The talk is meant to serve as an introduction to the provisions of
the Bill and how it seeks to avoid and remedy the shortfalls of its
predecessor the Land Acquisition Act 1894.

Date: August 8, 2012
Time: 12:30 P.M.

Venue:
Second Floor Conference Room
The World Bank,
70 Lodi Estate,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by mail to Jyoti Sriram at
jsriram@worldbank.org by tuesday, August 7th.

31 July 2012: Urbanization and Emerging Infectious Disease: The case of Dengue in Delhi

Olivier Telle
Institut Pasteur, Paris

Abstract:
Dengue, a viral infection transmitted by *Aedes *mosquitoes, is a rapidly growing public health problem in tropical and sub-tropical countries, which appeared in Delhi during the 1990s. The Indian capital is now the most affected area in India with epidemics registered every three to four years. The objective of this research is to understand the link between environmental fragmentation and the geography of dengue in Delhi and examine the role of the combination of factors is responsible for the endemisation of dengue such as lack of infrastructure, governance of the city and the disease, new population behaviour, etc. Urbanisation has always been a factor influencing the emergence of a disease and many studies in health geography have indeed demonstrated that population living in the poor areas of cities were the most affected by classical diseases such as tuberculosis, leprosy, malaria, etc. This paper examines if the model described in classical medical geography for infectious diseases can be extended to an emerging disease like dengue or if new tools and models need to be created to understand emerging epidemics in urban areas.

Date: July 31, 2012
Time: 03:45 P.M.

Venue:
Conference Hall
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)

Location:

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30 July 2012: The Price of Land: Acquisition, Conflict, Consequence

Sanjoy Chakravorty
Temple University

Abstract:
Land acquisition for industry and infrastructure has become a source of major conflict in the last half decade in India. Sites like Singur, Nandigram, Niyamgiri, and Maha Mumbai, and phenomena like the Maoist insurgency are well-known. Some believe that land acquisition is the “biggest problem” in India’s growth path. It is a central political issue in several states. A new land acquisition bill with serious long-term consequences is making its way through parliament. This book asks: What are the facts about land acquisition and the related conflicts? How did the situation reach the current impasse? What are the ways forward?

The explanations are organized around three core themes: the price of land, the role of the state, and changes in land and information markets. The first section is an extensive survey of reality—of land acquisition conflicts (emphasizing selected notorious conflicts), land prices, and agents in the land acquisition process (emphasizing the role of civil society and political parties). The second section explains the origins of the conflicts and the role of the state, especially through the contradictions between the “giving” state (which does land reforms) and the “taking” state (which acquires land). The final section is an analysis of the reality of land markets in contemporary India, especially the rapid rise in the price of urban and rural land, and a critique of the emerging legal and policy approaches to resolving the crisis.

Date: July 30, 2012
Time: 01:00 P.M.

Venue:
Second Floor Conference Room
The World Bank,
70 Lodi Estate,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by mail to Jyoti Sriram at jsriram@worldbank.org by Friday, July 27th.

25 July 2012: Release of a special issue of Margin: The Journal of Applied Economic Research - Informality—Concepts, Facts and Models

Guest Editors:
Dr. Anushree Sinha, Senior Fellow, NCAER and
Prof. Ravi Kanbur, Professor of Economics, Cornell University

Chief Guest:
Dr. Narendra Jadhav, Member, Planning Commission, Government of India

Panellists:
Dr. Pronab Sen, Principal Adviser, Planning Commission, Government of India
Ms. Ratna M Sudarshan, Former Director, ISST, New Delhi

Abstract:
This special issue of the Journal of Applied Economic Research (JAER) introduces a symposium that pushes the frontiers of research on informality by presenting new facts and a range of ways of conceptualising and modelling informality. There are a number of studies in the literature that show how trade opening and greater globalisation can affect informal employment and informal wages. Most empirical studies, however, do not address the informal sector directly. This special issue of JAER begins with three papers that provide a much-needed exploration of the facts of informality. In particular, more worker-based conceptualisation is introduced in contrast to an enterprise-based one. One of the striking emerging facts is that informality is not declining and may even be increasing—in India and elsewhere in the world. The last four papers in the special issue describe empirical models that trace the interactions of the informal sector with the rest of the national and international economy. In their insightful overview, the editors pose no fewer than ten open research questions that are motivated by analytical and policy concerns. These include: What should be the consensus on how to conceptualise informality? Does greater competition encourage informality or shrink it? Why has informality persisted despite strong growth performance? They conclude that informality remains a vibrant and dynamic area of research and policy analysis. This special issue of Margin is a major contribution to the evolution of the literature on informality.

Date: July 25, 2012
Time: 03:30 P.M.

Venue:
NCAER Auditorium
National Council of Applied Economic Research
Parisila Bhawan, 11, Indraprastha Estate
New Delhi-110002(INDIA)

Location:

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Note:
RSVP - Sudesh Bala on 011-2345-2669 or at sbala@ncaer.org. Please join for tea and refreshments after the event.

6 August 2012: Income Inequality and Fiscal Policy

Sanjeev Gupta
International Monetary Fund (IMF)

Date: August 6, 2012
Time: 03:30 P.M.

Venue:
NIPFP Conference Room, Ground Floor, New Building
National Institute of Public Finance and Policy,
18/2 Satsang Vihar Marg, Special Institutional Area,
New Delhi-110067(INDIA)

Location:

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17 July 2012: Indian Policy Forum 2012 Lecture - India: New Strategies for Economic Development

Dr Y.V. Reddy
Emeritus Professor, University of Hyderabad

Abstract:
The Indian Policy Forum is a partnership between NCAER, The National Council of Applied Economic Research, in New Delhi and the Brookings Institution in Washington D.C. The objective of the IPF is to promote economic research with important issues in Indian economic policy, with commissioned papers, a special lecture and an annual conference leading to a published volume. Started in 1994, it’s now entering its ninth year.

Date: July 17, 2012
Time: 06:30 P.M.

Venue:
Multipurpose Hall, New Wing
Indian International Centre
40, Max Mueller Marg,
New Delhi-110003(INDIA)

Location:

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By Invitation:
RSVP: Geetu Makhija - gmakhija@ncaer.org

18 July 2012: Sovereign Default Fears and Banking Induced Recessions

Alok Johri
McMaster University

Abstract:
I will develop a small open economy model to discuss some issues
pertinent to the recent events in the Euro area. In addition I will
use the model to discuss other sources of aggregate fluctuations
facing open economies that have recently been discussed in the
emerging market business cycle literature.

Date: July 18, 2012
Time: 03:30 P.M.

Venue:
ICRIER Conference Room,
Core 6A, 4th Floor,
India Habitat Centre, Lodi Road,
New Delhi – 110 003(INDIA)

Location:

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26 June 2012: Health Insurance and its Effect on Utilization of Health Services, especially by Women

Sapna Desai
London School of Hygiene & Tropical Medicine

Date: June 26, 2012
Time: 06:00 P.M.

Venue:
GIZ Conference Room,
21, Jor Bagh,
New Delhi 110 003(INDIA)

21 June 2012: The Euro crisis and its implications for the rest of the world

Uri Dadush
Carnegie Endowment for International Peace

Abstract:
The debt crisis that began in Greece quickly engulfed Europe and now threatens the global recovery and the future of the euro. While ballooning public debt may be the clearest manifestation of the Euro crisis, its roots go much deeper—to the secular loss of competitiveness that has been associated with euro adoption in countries including Greece, Ireland, Italy, Portugal, and Spain.

Date: June 21, 2012
Time: 06:00 P.M.

Venue:
Lecture Room no. 1, Ground Floor
India International Center Annex,
40, Max Mueller Marg,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by mail to Ms Neelam Chowdhry at nchowdhry@worldbank.org or on 011-41479286 by Wednesday, June 20.

5 June 2012: Gains from Offshoring: Evidence from New US Microdata

Jagadeesh Sivadasan
University of Michigan

Abstract:
We exploit a unique dataset on offshoring-induced employment layoff
events, which we link to rich establishment-level US Census Bureau
micro-data, to analyze the impact of offshoring on a number of
outcomes including employment, wages, sales, capital and productivity,
at two distinct levels: (i) on the affected plant, and (ii) on the
affected firm, and in particular, other establishments owned by
multi-unit firms, relative to control groups of industry peers. We
find significant difference-in-differences declines in employment,
output and (to a lesser extent in) capital at both the plant and
firm-level. Contrary to some theoretical models, we find very little
evidence for increases in productivity or wages at the firm-level.

Date: June 5, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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11 May 2012: Food Prices, Nutrition, and the Millennium Development Goals Insights from the Global Monitoring Report 2012

Jos Verbeek
World Bank

Abstract:
What has been the impact of yet another food price spike on
developing countries' ability to make progress toward the Millennium
Development Goals (MDGs)? How many poor people were prevented from
lifting themselves out of poverty? How many people, and how many
children, saw their personal growth and development permanently harmed
because their families could not afford to buy food? How did countries
react to the last two food price spikes of 2007/08 and 2011, and how
did it affect their progress toward the MDGs? And, what can countries
do to respond to higher and more volatile food prices? The Global
Monitoring Report 2012 (www.worldbank.org/gmr2012) examines these
questions, summarizes the impacts of food prices on several MDGs,
reviews policy responses, and outlines future prospects.

Date: May 11, 2012
Time: 12:30 P.M.

Venue:
Ground Floor Conference Room
The World Bank,
70 Lodi Estate,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by mail to Margaret D'Costa at
mdcosta@worldbank.org by Thursday, May 10th.

9 May 2012: Social and Economic Impact of SEZs in India

Aradhna Aggarwal
NCAER

Abstract:
Social and Economic Impact of SEZs in India provides a comprehensive analysis of the Special Economic Zone programme in India since its inception in 1965. It presents quantitative evidence of the performance of SEZs in India; investigates their actual and potential role in diversifying the structure of the Indian economy and expanding economic and social development opportunities; and assesses the challenges associated with them (labour rights, human capital, environment, budgetary deficits, inequities, and most importantly land acquisition). It also explores the origin and changing role and configuration of SEZs from a global perspective; traces the evolution of SEZ programmes in selected developing countries around the world; and summarizes the theoretical arguments pertaining to the development dimensions of SEZs. The analysis is based on detailed field surveys and interviews conducted during 2004-2009, secondary data sources and an extensive review of the literature. An important contribution of the study is that it challenges the traditional view that SEZs are a second-best policy choice aimed at promoting trade and foreign direct investment. It argues that SEZs have tremendous development potential if they are strategically designed and implemented to promote industrial clusters and agglomeration economies. Designed for policymakers, academics and researchers, the book offers a rich mosaic of data, analysis, and policy recommendations.

Date: 9 May, 2012
Time: 04:00 P.M.

Venue:
NCAER Auditorium
National Council of Applied Economic Research
Parisila Bhawan, 11, Indraprastha Estate
New Delhi-110002(INDIA)

Location:

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26 April 2012: Breaking the Caste Barrier: Intergenerational Mobility in India

Sourabh Bikas Paul
National Council of Applied Economic Research

Abstract:
Amongst the various inequities typically associated with the caste system in India, probably one of the most debilitating is the perception that one is doomed by birth, i.e., social and economic mobility across generations is difficult. We study the extent and evolution of this lack of mobility by contrasting the intergenerational mobility rates of the historically disadvantaged scheduled castes and tribes (SC/ST) in India with the rest of the workforce in terms of their education attainment, occupation choices and wages. Using household survey data from successive rounds of the National Sample Survey between 1983 and 2005, we find that inter-generational education and income mobility rates of SC/STs have converged to non-SC/ST levels during this period. Moreover, SC/STs have been switching occupations relative to their parents at increasing rates, matching the corresponding switch rates of non-SC/STs in the process. Interestingly, we have found that a common feature for both SC/STs and non-SC/STs is that the sharpest change in intergenerational income mobility has been for middle income households. This is consistent with the effects of easing credit constraints, a phenomenon that did characterize this period. We conclude that the last twenty years of major structural changes in India have also coincided with a breaking down of caste-based historical barriers to socio-economic mobility.

Date: April 26, 2012
Time: 03:00 P.M.

Venue:
AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)

Location:

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19 April 2012: Spillovers, Absorptive Capacity and Agglomeration

Sergey Lychagin
Central European University

Abstract:
I study knowledge spillovers in an industry where rms are mobile and heterogeneous in their ability to adopt outside knowledge (absorptive capacity). I develop a static model of industry agglomeration where, in equilibrium, the force of attraction induced by spillovers is counteracted by the force of repulsion created by local competition. The model is applied to a sample of the US software firms. I estimate the structural parameters of the model and obtain the following results: (a) The data are consistent with highly localized knowledge spillovers; (b) The attraction force induced by spillovers creates a signifi cant sorting pattern placing rms with higher absorptive capacity in more agglomerated counties; (c) Ignoring rm heterogeneity in absorptive capacity leads to substantially biased estimates of gains from spillovers in policy experiments.

Date: April 19, 2012
Time: 03:00 P.M.

Venue:
AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)

Location:

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20 April 2012: Religion, Political Identity and Public Goods in India

Sonia Bhalotra
University of Bristol

Abstract:
(1) Politician Identity and Religious Conflict in India This paper investigates the impact of Muslim political representation on religious conflict in India during 1980-2007. We code religion from name and construct updated conflict data from Times of India archives. The analysis is currently conducted at the district level. We instrument the share of Muslims elected to state assemblies from the index district with the share of Muslims who won against non-Muslims in close elections in that district. Preliminary results suggest that raising the share of Muslim politicians in state assemblies results in a sizeable decline in the incidence of Hindu- Muslim riots, consistent with evidence that Muslims are more often the victims of such incidents. A significant but small part of the total effect appears to arise from positive selection of minority leaders. Our results are consistent with parochial politics and with theories that indicate the relevance of political identity for policy outcomes (Besley and Coate, 1997). They also suggests a cause of conflict, and hence a solution for the control of conflict, that has not been previously considered in the conflict literature.

(2) Religion, Political Identity and Public Health Delivery This paper analyzes whether the religious identity of political leaders in India influences policy-determined variation in health outcomes, both for citizens of their religious group and for the population as a whole. In order to analyze the causal effect of the religious identity of politicians, we take advantage of the fact that some Muslim politicians contested in close elections against non-Muslim politicians. Results show that the presence of Muslim politicians significantly reduces infant and neonatal mortality, consistent with positive selection of Muslim candidates in constituencies in which Muslims have a population minority (Banerjee and Pande 2007). We do not find evidence of religious favoritism: Muslims and non-Muslims benefit equally from the presence of Muslim politicians.

Date: April 20, 2012
Time: 11:30 A.M.

Venue:
Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)

Location:

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20 April 2012: Rural Cooperative Banking System in Andhra Pradesh and Orissa: Insights from an Impact Evaluation of the Vaidyanathan Committee Task Force Recommendations

Xavier Gine and Tara Vishwanath
World Bank

Abstract:
In recent years, primary agricultural credit societies
(PACS) have been subject to a massive recapitalization under the
Vaidyanathan Committee Task Force recommendations and the loan waiver
of 2008. As a result, they may end up playing a larger role in the
provision of financial services for the poor. Using survey data
collected in 2007 and 2009 from six districts in Andhra Pradesh and
Orissa, this paper assesses the performance of 140 primary
agricultural credit cooperatives on management practices, personnel,
client performance and growth.

Date: April 20, 2012
Time: 12:30 P.M.

Venue:
Second Floor Conference Room
The World Bank,
70 Lodi Estate,
New Delhi-110003(INDIA)

Location:

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Note:
Please confirm your attendance by mail to Jyoti Sriram at
jsriram@worldbank.org by thursday, April 19th.

13 April 2012: Migration and Poverty: Evidence from a 30-Year Longitudinal Study Using the ICRISAT Village Level Studies (VLS)

Stefan Dercon
Department for International Development (DFID)

Abstract:
This research is based on newly available survey rounds of the ICRISAT VLS from 2005–06, and a tracking survey of all individuals who used to be in the original sample from the six core ICRISAT VLS in 1975–84 and have now migrated. The resulting 30-year longitudinal dataset has been used to assess how migration has affected the living standards of these individuals, compared to those that stay behind from the same families. Using a comprehensive consumption measure and adjusted for differential cost of living, the study finds considerable increases in the standard of living for most in the sample. The results also indicate a considerable premium for those who have migrated permanently, compared to their relatives who stayed behind. However, no differences are found when focusing on subjective welfare indicators. The study offers a theoretical risk-sharing framework to interpret these findings.

Date: 13 April, 2012
Time: 11:00 A.M.

Venue:
NCAER Conference Room
National Council of Applied Economic Research
Parisila Bhawan, 11, Indraprastha Estate
New Delhi-110002(INDIA)

Location:

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Note:
For queries, please contact Ms Sudesh Bala at sbala@ncaer.org or on 011-2345-2669.

12 April 2012: What Do Cartel Ringleaders Do? EC Cartels 1990-2008

Oindrila De
Indian Institute of Management, Indore

Abstract:
The concept of the ringleader within a cartel has specific legal relevance, especially concerning fines and leniency. While the economic theory of cartels rarely attributes any well defined meaning to the term ringleader, it does imply the sorts of roles that the ringleader might assume – facilitating information sharing and coordination, and helping to reconcile the potentially asymmetric incentives of cartel members by accommodating and/or enforcing. This paper uses a sample of 89 EC cartels to establish how far the roles of ringleaders identified by the competition authority can be interpreted as the means by which the cartels attempt to solve the ‘cartel problem(s). It employs two approaches. The first is based on close readings of the European Commission’s decision documents; the second is more indirect, entailing logit analysis which predicts whether there is a ringleader in any particular case in terms of the internal structure of the cartel. The main findings are that: only 1 in 5 cartels involves a ringleader; they only occur in cartels which fix price; and they are most likely in cartels which have more firms, who display larger size asymmetries. The latter result is consistent with collusion theory, in that problems of coordination and the necessity for potential enforcement are likely to be greatest where more firms are involved, especially where they are asymmetric.

One other interesting finding is that there appears to be two broad types of ringleader. In most cases, the ringleader has a potentially aggressive function – leading on price and/or punishing (or threatening to punish) deviation. But in some cases, its functions seem to be restricted to just the facilitating activities of organisation and managing information exchange. On the latter functions, there are sometimes alternative mechanisms used – rather than having a ringleader, the cartel is able to employ a trade association for this purpose.

Date: April 12, 2012
Time: 03:00 P.M.

Venue:
AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)

Location:

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4 April 2012: Does Central Bank Reserve Accumulation Lead to Higher Currency-Risk Taking in the Corporate Sector? Micro Evidence for Latin America

Rajeswari Sengupta
Institute for Financial Management & Research (IFMR)

Abstract:
In recent years, central banks in emerging markets have accumulated large amounts of foreign exchange reserves. For many countries, a key intent has been to increase the resilience of their economies to a possible sudden stop in capital inflows. Yet such policies may have the undesired effect of increasing corporate sector vulnerability: foreign exchange hoarding can be perceived as a free insurance against short term movements of the exchange rate, leading firms to borrow excessively in foreign currency. We investigate this possibility by using a novel firm-level balance sheet database for close to 1500 firms between 1995 and 2007 in six Latin American economies, Argentina, Brazil, Chile, Colombia, Mexico and Peru. Results suggest that over the sample period, an increase in the level of reserves is statistically and economically associated with an increase in the dollar borrowing of non-financial sector firms of these economies. We investigate several potential explanations for this result, and find evidence that at least part of this positive correlation reflects greater corporate risk taking as a causal response to an improvement in a country's reserve buffers against external shocks. These findings suggest that central banks, while formulating their foreign exchange intervention policies, may need to take into consideration the impact of reserve accumulation on firms incentive to hedge exchange rate risk.

Date: April 4, 2012
Time: 03:00 P.M.

Venue:
AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)

Location:

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