The Effects of Prior Spending on Future Spending Decisions: The Role of Acquisition Liabilities and Payments

Research in mental accounting shows that prior spending influences a consumer's decision to make a new spending decision (Heath and Soll 1996, Soman 2001). In particular, greater spending in a particular category reduces the likelihood of further spending in that category. In the present research, we decompose spending into two distinct episodes—the acquisition liability episode during which a purchase is made accompanied by a commitment to pay (e.g., using a credit card) and the payment episode during which the consumer's wealth actually gets depleted (e.g., paying the credit card bill). Using a controlled laboratory experiment and real world data from a group of consumers, we replicate earlier findings that prior spending influences a pending spending decision, but also show that the location of both the acquisition liability episode and the payment episode play a role. Our results contribute to an understanding of the dynamic mental accounting of acquisition liability and actual outflows.     

Globalization and the anti‐globalization lobby: A deficit of thoughtfulness and clairvoyance

As the current wave of globalization strengthened, so did the fury of the anti‐globalization lobby against it. The author believes that the members of this lobby failed to take a thoughtful and balanced perspective of the on‐going integration of the global economy. Indubitably, globalization has its winners and losers. The author establishes that if the members of this group take a good look at the two sides of the coin in an objective and unprejudiced manner, they are sure to see the folly of their ways. Evidence is available to show that on balance, globalization has had enormous beneficial effect and has improved the plight of the poor in the global economy.     

Demand for World Bank lending

This paper attempts to quantify the relevance of crisis lending in IBRD and IDA lending commitments. It finds that IBRD and IDA lending commitments are positively related to an increase in debt service payments and inversely related to the level of reserves of the borrowing country. These two variables explain a large part of the variation in IBRD and IDA lending commitments – adjustment lending as well as project lending – not only since the Asian crisis, but also during tranquil times over the last two decades. This finding implies that bridging the financing gap has been an important factor affecting developing countries’ decision to seek financial help from the Bank. While borrowing for servicing debt during a crisis is consistent with the World Bank's goal of poverty reduction and assisting countries without access to financial markets, such borrowing during tranquil times may conflict with these goals.     

The S‐curve Dynamics of US Bilateral Trade*

A few studies in dynamic general‐equilibrium setting have argued that the trade balance is negatively correlated with current and future movements in the terms of trade but positively correlated with past movements, hence the S‐curve phenomenon. Using aggregate trade data and the terms of trade has not provided strong empirical counterpart. However, in this paper, when we disaggregate the trade data between the US and her trading partners we find stronger results in support of the S‐curve.     

South Asia's Integration with the Rest of Asia: a survey

While there can be unforeseen difficulties, developments of the recent past point to the gradual integration of South Asia with the dynamic economies of East and Southeast Asia. Two modes of integration have been taking place: the expansion of existing subregional free trade agreements and ASEAN's initiatives as a bridge between the regional groups of Asian economies. While the present endeavours of these economies are resulting in a shallow form of integration—which may not suddenly turn towards deep integration—onward movement along the same path is certainly possible.     

GLOBALISATION AND AN EMERGING GLOBAL MIDDLE CLASS

Globalisation has expanded the size of the global middle class. This expansion will change consumption patterns and shift the balance of spending power to middle-income economies. Rapid growth rates of the middle class in China and India have played a decisive role in creating the middle-income bulge. By 2030 the global middle class has been projected to grow to two billion. It is of note that a large middle class was also created during the first era of globalisation.     

State-led or market-led green revolution? Role of private irrigation investment vis-a-vis local government programs in West Bengal's farm productivity growth

We estimate the role of private investments in irrigation in farm productivity growth in West Bengal, India between 1982 and 95. Using a state-wide farm panel, we find that falling groundwater costs generated significant growth in value added per acre for farms. These resulted from investments in minor irrigation which was stimulated by tenancy registration programs implemented by local governments. This helps account for substantial spillover effects of the tenancy reform on non-tenant farms noted in an earlier study. Hence the West Bengal Green Revolution of the 1980s benefited from complementarity between private investment incentives and state-led institutional reforms.     

Bargaining and efficiency in networks

We study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus. Players who reach agreement are removed from the network without replacement. The global logic of efficient matchings and the local nature of bargaining, in combination with the irreversible exit of player pairs following agreements, create severe hurdles to the attainment of efficiency in equilibrium. For many networks all Markov perfect equilibria of the bargaining game are inefficient, even as players become patient. We investigate how incentives need to be structured in order to achieve efficiency via subgame perfect, but non-Markovian, equilibria. The analysis extends to an alternative model in which individual players are selected according to some probability distribution, and a chosen player can select a neighbor with whom to bargain.