Is Devaluation Working? Evidence from India in Phase of Economic Liberalization

Using the data from a developing country like India, we offer an empirical analysis to examine the relationship between devaluation of the Rupee and the real trade balance with her major trading partners since the liberalization process that began in July 1991. Exploiting the recent advances in panel-data time-series econometrics, we document that devaluation may not be effective in improving trade balance in the long run. Success may follow only if the policymakers view devaluation as a short run tool to improve the trade balance. Nominal devaluation is unable to alter real exchange rates substantially and hence, the inflationary impact of devaluation is large in India.

     

An experimental study of strategic information transmission

Summary We examine strategic information transmission in an experiment. Senders are privately informed about a state. They send messages to Receivers, who choose actions resulting in payoffs to Senders and Receivers. The payoffs depend on the action and the state. We vary the degree to which the Receivers' and the Senders' preferences diverge. We examine the relationship between the Senders' messages and the true state as well as that between actions and the true state and contrast the ability of different equilibrium message sets to explain the data.When preferences are closely aligned Senders disclose more. We assess two comparative statics: (i) as preferences diverge, state and action are less frequently matched, and (ii) messages tend to become less informative as preferences diverge. The first result is weakly confirmed for adjacent treatments but is considerably stronger when non-adjacent treatments are compared. We find that as preferences diverge messages become less informative. While the ex-ante Pareto-optimal Bayesian Nash Equilibrium does not explain our conditions, the equilibrium message sets supported by the data are similar to the ex-ante Pareto Optimal message sets.We would like to thank seminar participants at the Economic Science Association meetings, the University of Iowa, the University of Minnesota, Northwestern University and the Society for the Advancement of Economic Theory meetings for their comments. We would like to thank Beth Allen, Joyce Berg, Robert Forsythe, Yong-Gwan Kim, Antonio Merlo, Leonard Mirman, In-Uck Park, Charles Plott, Jennifer Reinganum and an anonymous referee for their suggestions. Financial support from the Accounting Research Center at the University of Minnesota is also acknowledge.     

Does technology licensing matter for privatization?

In mixed oligopolies, technology licensing from a cost‐efficient firm to a cost‐inefficient firm has been widely observed. This paper examines the relationship between privatization and licensing (by public or private firms) with the consideration of either a domestic or a foreign private firm. We find that (a) in the case of a domestic private firm, public licensing facilitates privatization, but private licensing hinders privatization; (b) in the case of a foreign private firm, both public and private licensing facilitate privatization. Our results yield important policy implications on privatization.     

A multi-echelon supply chain model for reworkable items in multiple-markets with supply disruption

The objective of this paper is to develop a multi-echelon supply chain model for multiple-markets with different selling seasons. Here, two suppliers are involved to supply the raw materials to the manufacturer where the main supplier may face supply disruption after a random time and the secondary supplier is perfectly reliable but more expensive than the main supplier. In this article, the manufacturer produces a random proportion of defective items which are reworked after regular production and are sold in a lot to another market just after completion of rework. The retailer sells the finished products in different markets according to seasons. Finally, an integrated expected cost per unit product of the chain is minimized analytically by considering the lot-size ordered as a decision variable. An appropriate numerical example is also provided to justify the proposed model.     

The size and development of the shadow economy: An empirical investigation from states of India

Using the state level data from India, this paper investigates the size of the hidden economy in Indian states over the period 1974/75 to 1995/96. Our analysis has shown that after liberalization of the Indian economy in 1991/92, the growth in the size of the hidden economy has decreased on an average. Our results show that the growth in the size of the hidden economy is approximately 4% less in scheduled election years than in all other years. We also demonstrate that the growth is significantly lower in those states where the coalition government is in power. An increased growth of newspapers and the literacy rates translate to cleaner governance, e.g. to fewer amounts of shadow economy activities in the economy.     

A three layer multi-item production–inventory model for multiple suppliers and retailers

The paper deals with a production inventory model for various types of items where multiple suppliers, a manufacturer and the multiple non-competing retailers are the members of the supply chain. In this model, each supplier supplies only one type of raw material to the manufacturer. The manufacturer produces a finished item by the combination of certain percentage of the various types of raw materials. The manufacturer produces also multi-items and delivers them according to the demand of the different retailers. Finally, an integrated profit of the supply chain is optimized by optimal ordering lot sizes of the raw materials. A numerical example is provided to justify the proposed model.     

中国和印度不平衡发展的比较研究

本文考察了中国和印度近年来经济增长不平衡的情况,并分析了不平衡增长对不均等和贫困的影响。通过对家庭调查数据和官方加总数据的分析,本文发现增长存在不平衡——区域间、产业间和家庭层面上,这表明减贫工作进展不平衡,若增长更平衡,减贫效果可能更好;另外,收入不均等程度也在提高。本文探讨了增长不平衡及其应引起重视的原因。具体讨论围绕"有利的"和"不利的"不均等两个概念展开——不均等与不平衡增长对公平性以及长期增长与发展的有利或不利影响。我们认为,需要制定相关政策,保持有利的不均等——继续鼓励创新和投资,同时降低不利的不均等的程度,尤其是通过人力资本和农村基础设施投资,帮助贫困人口参与市场。