Wavelet Analysis of the Bombay Stock Exchange Index

The fluctuations in the rate of returns of the Bombay stock exchange are analyzed through wavelet transform. The fluctuations, in various time scales, naturally separated by the wavelets, are subjected to statistical analysis. The localization and multiresolution properties of the wavelets enable one to identify collective behaviour in the stock market and the extent of their influence at various time scales. The Gaussian nature of the rate of returns at certain scales and the periodic nature of the same, at other scales, are clearly brought out by this analysis. The utility of this approach for modeling purpose is also elucidated.

     

THE RELATIONSHIP BETWEEN THE BLACK MARKET AND OFFICIAL EXCHANGE RATES: AN EXAMINATION OF LONG-RUN DYNAMICS IN INDIA

This study is the first to use Johansen's cointegration approach for India in the analysis of the long‐term dynamics between the black and official exchange rates for the period 1953–1993. The study also estimates the long‐run elasticity of the official rate with respect to the black market rate. As monthly data over 40 years are used, and a more robust methodology is employed, the results are likely to be more reliable as compared with the earlier work on India. The results of our study suggest that while there is a long‐term relationship between the two rates, the direction of causality is from the black rate to the official exchange rate. This is plausible in the Indian context where policy has generally lagged behind events in the black market. The hypothesis of a constant black market premium is rejected, implying that there is a mismatch between the percentage change in the official exchange rate and the percentage change in the black market rate.     

Farmers' Preference for Farming: Evidence From a Nationally Representative Farm Survey in India

Using data from a nationally representative farm survey in India, we have analyzed Indian farmers' stated preference for farming as a profession. Findings show that more than 40% of farmers dislike farming as a profession because of low profits, high risk, and lack of social status, yet they continue with it owing to a lack of opportunities outside agriculture. Farmers who express a preference for moving out of agriculture are mostly those with small landholdings, poor irrigation facilities, fewer productive assets including livestock, and follow a cereal‐centric cropping pattern. They also have relatively lower access to credit, insurance, and information, and are weakly integrated with social networks such as self‐help groups and farmers' organizations. Importantly, the disinclination for farming, conditional on other covariates, is not significantly differentiated by caste, an important indicator of social status in rural India. Yet, within a caste group, the dislike for farming moderates with larger landholdings.     

Accommodating spatial correlation across choice alternatives in discrete choice models: an application to modeling residential location choice behavior

This paper presents a modeling methodology capable of accounting for spatial correlation across choice alternatives in discrete choice modeling applications. Many location choice (e.g., residential location, workplace location, destination location) modeling contexts involve choice sets where alternatives are spatially correlated with one another due to unobserved factors. In the presence of such spatial correlation, traditional discrete choice modeling methods that are often based on the assumption of independence among choice alternatives are not appropriate. In this paper, a Generalized Spatially Correlated Logit (GSCL) model that allows one to represent the degree of spatial correlation as a function of a multi-dimensional vector of attributes characterizing each pair of location choice alternatives is formulated and presented. The formulation of the GSCL model allows one to accommodate alternative correlation mechanisms rather than pre-imposing restrictive correlation assumptions on the location choice alternatives. The model is applied to the analysis of residential location choice behavior using a sample of households drawn from the 2000 San Francisco Bay Area Travel Survey (BATS) data set. Model estimation results obtained from the GSCL are compared against those obtained using the standard multinomial logit (MNL) model and the spatially correlated logit (SCL) model where only correlations across neighboring (or adjacent) alternatives are accommodated. Model findings suggest that there is significant spatial correlation across alternatives that do not share a common boundary, and that the GSCL offers the ability to more accurately capture spatial location choice behavior.     

The implications of private tutoring on the school education in LDCs

In many LDCs, we observe that the public school teachers receive low wages, expend less than their full effort at school, and provide private tutoring to the students for a fee. To capture this institutional arrangement, we develop a theoretical model which shows that in comparison with ‘no-tutoring’, ‘tutoring’ is welfare reducing for all students in the economy. However, if the government considers only the students in the public system, then ‘tutoring’ can be welfare improving. In that case, the government would set a lower tax rate to pay wages to the teachers and let them provide tutoring to the students for a fee.     

Mexico's development strategy for the 1980s

In examining the problems and prospects of the Mexican economy in the 1980s. the main concern of this paper is whether Mexico will use its new found wealth to correct some of the major deficiences of past policies or whether the development of the energy sector will further increase the dualism between the modern and traditional sectors. This paper surveys the major problems now facing the economy (poverty and unemployment, declining agricultural production, a weak industrial base, inflation) and then discusses the framework in which Mexico proposes to deal with these problems, in particular the priority allocated to development of oil and gas. The policies are then compared briefly with the experience of Japan and Iran. The conclusion takes a critical view of current Mexican policies and suggests that a more equity-oriented and efficient growth strategy is required.     

Business Incubators in China: A Financial Services Perspective

The business incubation industry in China has been booming since the mid-1990s. However, the lack of a well-developed financial services sector has become a major bottleneck to the growth of the industry. Based on our visits to 12 Chinese business incubators around the country and interviews with their executives, we present our perspective on the state of the incubator industry in China with special emphasis on incubators' financial services for their incubatees.     

Positive versus negative comparative advertising

Two studies examined cognitive responses to comparative advertising that was valenced, i.e., was either negative or positive. Negative comparative advertising featured the advertised brand derogating the comparison brand (I'm OK, you're not OK). Positive comparative advertising claimed superiority over the comparison brand in a nonderogatory manner (You're OK, I'm more OK). Subjects were exposed to either a negative comparative ad or a positive comparative ad. In study 1, the ad featured either a high or low share advertised brand and either a high or low share comparison brand while in study 2, the ad featured advertised and comparison brands with either a strong or a weak reputation. Across both studies, it was found that negative comparative advertising evoked significantly higher counterargumentation and lower claim acceptance than its positive counterpart. Also, when the advertised brand had a high share relative to the comparison brand, counterargumentation was lower and claim acceptance was higher vis-a-vis when the advertised brand had a low share relative to the comparison brand. Findings pertaining to brand reputation were mixed. Managerial and future research implications of the findings are discussed.