Dangerous knowledge: Can nuclear weapons be abolished?

The end of the Cold War spurred significant and encouraging steps towards the abolition and eradication of nuclear weapons. After the breakthrough discussions between Gorbachev and Reagan at Reykjavik in 1986, the substantial cut-backs in Russian and American nuclear warheads agreed to under the Strategic Arms Reduction Treaty (START) negotiations, successive initiatives at the United Nations (UN) and the review conferences of the Non-Proliferation Treaty, the Canberra Commission's report in 1995, the 1996 advisory opinion of the World Court, the New Agenda Coalition, Middle Powers Initiative and other efforts by governments and non-governmental organizations (NGOs) raised hope that the world may soon be rid of this menace. After 1997 the momentum of progress slowed and then turned from optimism to increasing frustration, pessimism and despair. The possession of nuclear weapons serves not only military and political but economic and social functions, elevating the prestige of the select nuclear group to a special status in world affairs that none will be anxious to relinquish voluntarily. Yet in spite of the setbacks and the obstacles, there is ample scope for constructive action. Most promising is a renewed effort to establish international law prohibiting the use, threat of use or possession of nuclear weapons, along the lines of the Chemical Weapons Convention that has very effectively stopped the use of these weapons in all but one instance since 1925. At the root of the nuclear problem, a Cartesian dualism in our thinking about ourselves and the world fosters a sense of detachment, complacency and inactivity regarding an issue that holds our very lives in the balance. The finite zero-sum game of competitive international security needs to be replaced by an infinite win-win game of global cooperative security like that now unfolding on a model scale in Europe.     

New sociopolitical forces: the globalization of conflict.

Not only must multinational corporations deal with governments of their home countries and various host countries, they must now contend with the pressures of change exerted through international organizations such as U.N.-based agencies and public interest groups. The Nestle infant formula controversy, more so than any other event, has crystallized the growing internationalization of conflicts.     

Seeking greener pastures: a theoretical and empirical investigation into the changing trend of foreign direct investment flows in response to institutional and strategic factors

A generic theoretical model is proposed that provides a holistic conceptualization of the phenomenon of changing trend of FDI flows. Integrating both institutional and strategic factors, a rationale for such a change is provided, and the circumstances under which future shifts might take place are identified. A collection of criteria and incentives that various host governments and their agencies must provide to attract FDI are outlined. Several propositions that lead to empirically testable hypotheses are developed from this model. Statistical evidence is then provided of a shift in FDI flows, and the change in their determinants, by empirically analyzing investment by US multinational enterprises into Western Europe and Asia over the 20-year period, 1981–2000.     

Reciprocity in evolving social networks

We study the viability of conditional cooperation in a dynamically evolving social network. The network possesses the small world property, with high clustering coefficient but low characteristic path length. The interaction among linked individuals takes the form of a multiperson prisoners’ dilemma, and actions can be conditioned on the past behavior of one’s neighbors. Individuals adjust their strategies based on performance within their neighborhood, and both strategies and the network itself are subject to random perturbation. We find that the long-run frequency of cooperation is higher under the following conditions: (i) the interaction radius is neither too small nor too large, (ii) clustering is high and characteristic path length low, (iii) the mutation rate of strategies is small, and (iv) the rate of adjustment in strategies is neither too fast nor too slow.

THE EVOLUTIONARY DYNAMICS OF FINANCIAL PRACTICES

This paper presents a model in which financial practices are chosen by decentralized units on the basis of expectations regarding financial market conditions, while the probability distribution governing market conditions itself depends on the choices made. If all agents are unboundedly rational, there is a unique equilibrium in which expectations are self-fulfilling. The assumption of universal unbounded rationality is relaxed by introducing an optimization cost, which leads to the possibility that optimizers may not have a sufficiently great evolutionary advantage to eliminate nonoptimizers entirely. In this case behavioral heterogeneity can persist even in the long run. For certain classes of probability distributions governing financial conditions, the evolutionary dynamics of population composition can help explain a number of stylized facts regarding the dynamics of financial practices which have hitherto been explained on the basis of learning dynamics or systematic cognitive biases.     

Uneven Development and Bilateral Conflict

We consider the dynamics of bilateral conflict within the framework of a standard two‐country, two‐sector model of international trade with increasing returns in one sector. Free trade leads to asymmetric equilibria among otherwise identical countries and, in some circumstances, to uneven development in the sense of persistent disparities in wages, income and welfare. In the latter case, distortionary industrial policy by the less developed country may be welfare enhancing. When the dynamics of policy change are endogenized, the model gives rise to periodic changes in industrial leadership or leapfrogging. Implications of this phenomenon for the empirical literature on convergence are discussed.     

Monetary Policy and Financial Stability: The Role of Inflation Targeting

This article examines the relationship between Inflation targeting (IT) and financial instability from 1990 to 2015 for Asian economies. To measure financial instability, a multidimensional financial conditioning index is calculated following the ECB's approach. Using a fixed effects panel data model the study finds that adoption of IT policy in Asian economies has an adverse impact on financial stability, thus rejecting the ‘conventional wisdom’ hypothesis. Further, the Vector Autoregression (VAR) result shows that an IT regime increases housing returns and encourages investors to take higher risks.     

Central Transfer a Curse or Blessing? Evidence from the Relative Revenue Effort of Indian States

This paper evaluates the revenue effort of Indian states during the 13th and 14th Finance Commission periods and estimates the impact of central transfers recommended by the Finance Commission on the relative revenue effort of states. Using panel data the study finds that Bihar, Uttar Pradesh, Madhya Pradesh, Assam and Kerala are the top five states with the greatest relative revenue effort. Further, the impact of central transfers on revenue effort was found to be negative, suggesting that greater devolution encourages laxity in the state's tax collection efficiency by providing perverse incentives.