Past seminars

From June 2020 till further notice, all our seminars will be online (webinars). If you have not done so already, please register for these webinars in order to receive invitations, by filling out the form here: click. For questions, please contact our seminar coordinator Kaniskha Kacker at kkacker [at]
Some of our seminars are recorded. The links are provided below. You can also check our youtube channel: Click here.
Title: Expanding Financial Access Via Credit Cards: Evidence from Mexico
Speaker: Aprajit Mahajan, University of California, Berkeley
Date: Friday, 26th February, 2021

Title: Female labor supply and jobless recovery
Speaker: Pubali Chakraborty, Ashoka University
Date: Friday, 19th February, 2021

Abstract:Female labor force participation rose steadily over the U.S. post-war era until the late 1980s. Since then, the upward trend has largely subsided. Concurrent with this leveling off, starting in 1990, recessions in the U.S. have featured jobless recoveries. This paper considers the connection between these two recent patterns, examining both empirically and through the lens of a general equilibrium macroeconomic model, the extent to which the weakened trend contributes to slower recoveries. My empirical analysis shows that young, married women with children were the primary drivers of aggregate employment recoveries prior to 1990. These findings inform the development of a theoretical model that I use to study the interaction between female and male labor supply at the household and aggregate level. My model predicts that post-1990 aggregate employment recoveries were significantly slower than pre-1990 recoveries due to the weakened trend for young married women with children and is thus consistent with my empirical evidence both in the aggregate and in which individual groups show these changes. Decomposing the relative contributions of several underlying factors responsible for this pre-1990s rise, the model predicts that the narrowing of the gender wage gap is the most important factor in the overall increase. However, till the mid-1980s, when the upward trend in female labor supply was the strongest, a reduction in the number of young children for married women is the most crucial factor. With this insight, I use my framework to examine the relative effectiveness of a countercyclical child-care subsidy and a countercyclical income tax break for married women with children towards mitigating jobless recoveries. Preliminary results suggest that per-unit government expenditure, a countercyclical child-care subsidy is more effective.
Title: Gender and leadership in organizations: Promotions, demotions and angry workers
Speaker: Danila Serra, Texas A&M
Date: Friday, 12th February, 2021

Paper: Click here
Abstract: Managerial decisions, such as promotions and demotions, please some employees and upset others. We examine whether having to communicate such decisions to employees, and knowing that employees may react badly, have a differential impact on men’s and women’s self-selection into leadership roles and their performance if they become leaders. In a novel laboratory experiment that simulates corporate decision-making, we find that women are significantly less likely to self-select into a managerial position when employees can send them angry messages. Once in the manager role, there is some evidence of gender differences in decision-making, but no difference in final outcomes, ie, overall profits. Male and female managers use different language to motivate their employees, yet differences in communication styles emerge only when workers can send angry messages to managers. Finally, low-rank employees send more angry messages to female managers, and are more likely to question their decisions.
Title: Effects of productivity growth on domestic savings across countries
Speaker: Abhishek Kumar, Indira Gandhi Institute of Development Research
Date: Friday, 5th February, 2021
Abstract: Resource mobilisation continues to be an important policy challenge for developing economies, raising questions as to what determines differences in savings behaviour across countries. Using a panel of 47 economies with at least 40 years of continuous time series data, we causally identify using a range of approaches that higher productivity growth leads to greater savings, thereby contributing to higher investment. The dynamics of such productivity shocks have been disentangled into trend and cyclical shocks to uncover that the cyclical productivity shocks tend to have a strong positive effect on savings rates. Comparing two countries with different levels of productivity (high and low) in a counter-factual analysis, this result also remains robust and we reconfirm that large declines in productivity shocks were associated with large decline in savings rates. Therefore, countries should focus on promoting policies to boost productivity growth and thereby achieve higher savings instead of focusing on savings-induced policies alone.
Title: Attack and Interdiction on Networks
Speaker: Bhaskar Dutta, Ashoka University,
Date: Friday, 29th January, 2021

Abstract: We model a game between an attacker A and n target nodes. Each target has a different value for the attacker. Each target node i is a distinct player, and can invest in a technology to intercept the object with some probability at a quadratic cost. The attacker is interpreted as a terrorist or criminal, whose objective is to transport an object (a bomb, biological agent, contraband goods, or a packet of drugs) from his location (labeled 0) to one of the defenders' locations. The defenders and attacker are connected by an undirected network G which is interpreted as a transportation network (e.g. airline or road network) that can be used by the attacker to transport the object. In our baseline model, we assume that the detection technology involves a fixed cost. All players choose their strategies simultaneously, so that the appropriate solution concept is Nash equilibrium. In an extension, we assume that the detection technology involves a variable cost. In this case, the targets can decide whether to inspect a "suspicious" package when it arrives at its destination taking into account all available information. This then involves sequential decision-making and we use sequential equilibrium as a solution concept. Our main result shows that there is a unique Nash equilibrium. We then go on to describe two kinds of comparative statics results. In one, we discuss how the equilibrium outcomes change when an additional link is added to the network. In the second type, we describe how the equilibrium outcomes change when there is a small increase in the value of a target node. It turns out that in both cases, the changes in equilibrium payoff to the attacker can be counterintuitive. In particular, an additional link should increase the payoff of the attacker since this gives the attacker more options of attack. We show that an analogue of Braes Paradox can occur in our model - the attacker's equilibrium payoff can be strictly lower! A similar counterintuitive result can occur even in the second case - the attacker's equilibrium payoff may be strictly lower when the value of a node increases. We go on to study sequential equilibria in our model. We show that under relatively weak genericity assumptions, there cannot be a mixed strategy sequential equilibrium when G is a tree. We then go on to construct pure strategy sequential equilibria when the network is either a line or a star. We also construct an example to show that sequential equilibria need to be unique. Finally, we look at an alternative formulation where a single centralised agency coordinates defence. We focus on the line and show that equilibrium is unique. We also identify conditions under which all nodes in the line will be attacked in equilibrium and compare the equilibrium outcomes under the cooperative and non-cooperative formulations. Not surprisingly, the attacker is worse off in the case of centralised defence.
Title: Fair Cake Division Under Monotone Likelihood Ratios
Speaker: Siddharth Barman, Indian Institute of Science, Bangalore
Date: Friday, 22nd January, 2021

Paper: Click here
Abstract: This work develops algorithmic results for the classic cake-cutting problem in which a divisible, heterogeneous resource (modeled as a cake) needs to be partitioned among agents with distinct preferences. We focus on a standard formulation of cake cutting wherein each agent must receive a contiguous piece of the cake. While multiple hardness results exist in this setup for finding fair/efficient cake divisions, we show that, if the value densities of the agents satisfy the monotone likelihood ratio property (MLRP), then strong algorithmic results hold for various notions of fairness and economic efficiency. Addressing cake-cutting instances with MLRP, first we develop an algorithm that finds cake divisions (with connected pieces) that are envy-free, up to an arbitrary precision. The time complexity of our algorithm is polynomial in the number of agents and the bit complexity of an underlying Lipschitz constant. We obtain similar positive results for maximizing social (utilitarian) and egalitarian welfare. In addition, we show that, under MLRP, the problem of maximizing Nash social welfare admits a fully polynomial-time approximation scheme (FPTAS). Many distribution families bear MLRP. In particular, this property holds if all the value densities belong to any one of the following families: Gaussian (with the same variance), linear, binomial, Poisson, and exponential distributions. Furthermore, it is known that linear translations of any log-concave function satisfy MLRP. Therefore, our results also hold when the value densities of the agents are linear translations of the following (log-concave) distributions: Laplace, gamma, beta, Subbotin, chi-square, Dirichlet, and logistic. Hence, through MLRP, the current work obtains novel cake-cutting algorithms for multiple distribution families.
Title: Demographic Transitions across Time and Space
Speaker: Nezih Guner, Center for Monetary and Financial Studies, Spain
Date: Friday, 18th December, 2020
Abstract:The demographic transition, i.e., the move from a regime of high fertility/high mortality into a regime of low fertility/low mortality, is a process that almost every country on Earth has undergone or is undergoing. Are all demographic transitions equal? Have they changed in speed and shape over time? And, how do they relate to economic development? To answer these questions, we put together a data set of birth and death rates for 186 countries that spans more than 250 years. Then, we use a novel econometric method to identify start and end dates for transitions in birth and death rates. We find, first, that the average speed of transitions has increased steadily over time. Second, we document that income per capita at the start of these transitions is more or less constant over time. Third, we uncover evidence of demographic contagion: the entry of a country into the demographic transition is strongly associated with its neighbors having already entered into the transition, even after controlling for other observables. Next, we build a model of demographic transitions that can account for these facts. The model economy is populated by different locations. In each location, parents decide how many children to have and how much to invest in their human capital. There is skill-biased technological change that diffuses slowly from the frontier country, Britain, to the rest of the world.
Title: COVID19 vaccines: An update on progress and the challenges ahead
Speaker: Harish Iyer, Bill & Melinda Gates Foundation
Date: Tuesday, 15th December, 2020
Abstract: In this talk, I provide an update on the tremendous progress that has taken place in combating COVID with a vaccines based prevention approach. These efforts have now resulted in the emergency approval of the first ever COVID19 vaccine on Dec 2, less than 1 year since the virus made its appearance on the global stage. Notwithstanding these gains, I will also attempt to highlight the unknowns and challenges that lie ahead in ensuring that the poorer parts of the world also benefit from all the global work done in tackling this unprecedented crisis.
Title: Implementation by vote-buying mechanisms
Speaker: Jon Eguia, Michigan State University
Date: Thursday, 10th December, 2020
Abstract: Vote-buying mechanisms allow agents to express any level of support for their preferred alternative at an increasing cost. Focusing on large societies with wealth inequality, we prove that the class of binary social choice rules implemented by well-behaved vote-buying mechanisms is indexed by a single parameter, which determines the importance assigned to the agents' willingness to pay to affect outcomes and to the number of supporters for each alternative. This parameter depends solely on the elasticity of the cost function near its origin: as this elasticity decreases, the intensities of support matter relatively more for outcomes than the supporters’ count.
Title: Bombs, Broadcasts and Resistance: Allied Intervention and Domestic Opposition to the Nazi Regime during World War II
Speaker: Joachim Voth, University of Zurich
Date: Friday, 4th December, 2020

Abstract: Can bombs and broadcasts instigate resistance against a foreign regime? In this paper, we examine the canonical case of bombing designed to undermine enemy morale—the Allied bomber offensive against Germany during World War II. Our evidence shows that air power and the airwaves indeed undermined regime support. We collect data on treason trials and combine it with information on the bombing of over 900 German towns and cities. Using plausibly exogenous variation in weather, we show that places that suffered more bombardment saw noticeably more opposition. Bombing also reduced the combat motivation of soldiers: fighter pilots from bombed-out cities performed markedly less well after raids. We also provide evidence that exposure to BBC radio, especially together with bombing, increased the number of resistance cases. We corroborate these findings with the evidence on people’s opinions and behavior using unique survey data collected in 1945.
Title: The effect of climate policy on productivity and cost pass-through in the German manufacturing sector
Speaker: Beat Hintermann, University of Basel
Date: Friday, 20th November, 2020

Abstract: We investigate productivity and cost pass-through of German manufacturing firms using administrative data from 2003 to 2014. Our framework allows for the estimation of quantity-based production functions for multi-product firms while controlling for unobserved productivity shocks and unobserved input quality. Using our parameter estimates, we can compute total factor productivity, markups and marginal costs. We find no evidence that firm productivity or profits were affected by the EU's flagship policy, the EU Emissions Trading System (EU ETS). We find high pass-through for materials costs that exceed unity, but much lower pass-through for energy costs on the order of 40-60%. Our results add to the recent literature concerning the causal effects of climate policy on firms and are relevant for policy makers when defining the level of free allowance allocation to industry.
Title: Did Railways affect Literacy? Evidence from India
Speaker: James Fenske, University of Warwick
Date: Friday, 6th November, 2020

Abstract: We study the effect of railroads, the single largest public investment in colonial India, on human capital. Using district-level data on literacy, we find railroads had positive effects on literacy, in particular on male and English literacy. We employ two identification strategies. First, we exploit synthetic panel variation contained in cohort-specific literacy rates due to differences in the timing of railroad exposure of different cohorts within the same district and census year. We find a one standard deviation increase in railroad exposure raises literacy by 0.29 standard deviations. Second, we use distance from an early railway plan as an instrument for district railway exposure in the cross section and find results of similar magnitude. We show that railroads increased literacy by raising secondary, rather than primary, schooling. Our mediation analysis suggests that non-agricultural income and opportunities for skilled employment are important mechanisms, while agricultural income is not.
Title: A Structural Framework For Regional Macroeconomic Analysis
Speaker: Jordan Norris, New York University Abu Dhabi
Date: Friday, 30th October, 2020

Abstract: We augment a New-Keynesian model by incorporating arbitrary trade linkages among regions. A key feature of our model is that agents in our model can optimally share their risks conditional on trade frictions. We provide an empirical evidence supporting this assumption. We use our model to study fiscal multipliers and examine the identification assumptions used in recent cross-sectional regression designs in macroeconomics.
Title: Are Simple Mechanisms Optimal when Agents are Unsophisticated?
Speaker: Jiangtao Li, Singapore Management University
Date: Friday, 23rd October, 2020
Paper: [Download]
Abstract: We study the design of mechanisms involving agents that have limited strategic sophistication. The literature has identified several notions of simple mechanisms in which agents can determine their optimal strategy even if they lack cognitive skills such as predicting other agents' strategies (strategy-proof mechanisms), contingent reasoning (obviously strategy-proof mechanisms), or foresight (strongly obviously strategy-proof mechanisms). We examine whether it is optimal for the mechanism designer who faces strategically unsophisticated agents to offer a mechanism from the corresponding class of simple mechanisms. We show that when the designer uses a mechanism that is not simple, while she loses the ability to predict play, she may nevertheless be better off no matter how agents resolve their strategic confusion.
Title: Contributions of Paul Milgrom and Robert Wilson to Auction Theory
Speaker: Sushil BikhchandaniUniversity of California, Los Angeles
Date: Thursday, 22nd October, 2020
Slides: Click here

Abstract: The 2020 Nobel prize in economic sciences was awarded to Paul Milgrom and Robert Wilson of Stanford University "for improvements to auction theory and inventions of new auction formats". This talk will explain their significant contributions to auction theory.
Note. The talk is directed towards Masters and PhD students of economics.
Title: A Subsidy Inversely Related to the Product Price
Speaker: Takahiko Kiso, University of Aberdeen
Date: Friday, 16th October, 2020
Paper: [Download]
Abstract: This paper considers a new subsidy scheme for supporting the purchase of target products, in which the subsidy payment is inversely related to the product price. The scheme makes the demand faced by producers more elastic, thereby reducing their power to raise prices and increasing subsidy pass-through to consumers. Relative to the commonly-used specific or ad valorem subsidy, it induces larger sales with the same government budget (up to 50% more sales than the specific subsidy according to simulations based on the U.S. electric vehicle market) and allows the policymaker to flexibly adjust the incidence on producers.
Title: Monopolistic Screening with Single-Peaked Preferences
Speaker: Rene Saran, University of Cincinnati, Friday, 2nd October, 2020

Paper: [Download]
Abstract: We examine the monopolistic-screening model in which a principal contracts with an agent who has single-peaked preferences over a unidimensional action space. Departing from previous literature, we consider situations where the principal cannot endogenously design transfer payments. Thus, the principal is restricted to use a single instrument, viz., the agent’s action in order to screen different types of the agent. Examples of such situations include a charity soliciting volunteers or donors, regulating a monopolist without subsidies, and quantity discrimination by a price-regulated monopolist. We first characterize incentive compatible (IC) and individually rational (IR) mechanisms. We then identify a discrete-time finite-horizon dynamic optimization problem as a dual to the principal’s primal problem of finding an optimal IC and IR mechanism. Applying the duality theorem, we solve for the optimal mechanism in our leading example of a charity soliciting volunteers.
Title: The Future in Mind: Long-Run Impact of an Aspirations Intervention in Rural Ethiopia
Speaker: Stefan Dercon, University of Oxford, 25th September, 2020

Abstract: Poor people often do not make investments, even when returns are high. One possible explanation is that they have low aspirations and form mental models of their future opportunities which ignore some options for investment. This paper reports on a five-year evaluation of a field experiment to test this hypothesis in rural Ethiopia. Individuals were randomly invited to watch documentaries about people from similar communities who had succeeded in agriculture or business, without help from government or NGOs. A placebo group watched an Ethiopian entertainment programme and a control group from the same village were simply surveyed. Additionally, we survey individuals from pure control villages, where no treatment took place, after five years. Six months after screening, aspirations bad improved among treated individuals and did not change in the placebo or control groups. We also find treatment effects (of the treatment compared to the placebo) on savings, use of credit, children's school enrolment and spending on children's schooling. Five years later, we find some of our main short-run results persist. Aspirations, expectations, enrolment among both the cohort in school at baseline and children too young to be enrolled at baseline, and expenditure on children's schooling remain significantly higher in the treatment group compared to both placebo or within-village control groups, and households in previously unsurveyed control villages. In addition, we find changes in forward-looking behaviour in productive activity: treated households have a higher stock of assets (both in livestock holdings and durable) and spend more on durables and crop inputs, in particular chemical fertiliser, feed and veterinary supplies. There is also evidence of spillovers: treatment, placebo, and within-village control groups all have higher children's school enrolment, investment in crops and livestock, and consumption than the otherwise identical households in the control villages. These long-run results are robust to a range of different specifications and mostly to multiple test corrections. The result that a one-hour documentary induces psychological and actual behavioural change not only six months after the screening, but even after a five-year follow-up suggests a challenging, promising avenue for further research and poverty-related interventions.
Title: Maternal Mortality and Women's Political Participation
Speaker: Joseph Flavian Gomes, Economics of School of Louvain, 18th September, 2020

Abstract: We show that large declines in maternal mortality can be achieved by raising women's political participation. We estimate that the recent wave of quotas for women in parliament in low income countries has resulted in a 9 to 12% decline in maternal mortality. Among mechanisms are that gender quotas lead to an 8 to 10% increase in skilled birth attendance, a 6 to 12% increase in prenatal care utilization and a 4 to 11% decrease in birth rates.
Title: The Political Competition over Life and Death - Evidence from Infant Mortality in India
Speaker: Lore Vandewalle, Graduate Institute Geneva, 11th September, 2020

Abstract: We argue that economic inequality harms social provisions for the poor, but that higher political competition can mitigate this effect. We test this hypothesis using a large redistricting of electoral boundaries in India and find that higher inequality causes more post-neonatal infant deaths, but only when there is weak political competition. We further show that government health centers located in constituencies with low political competition and high inequality are disfavored, indicating that the effect on mortality operates via changes in public provision. Finally, we show that the same mechanisms are at play in the implementation of the MGNREGA employment program.
Title: Blood allocation with replacement donors
Speaker: Utku Unver, Boston College, 4th September, 2020

Abstract: In several developing countries including China and India, blood donations through altruistic voluntary donors remain insufficient to meet the demand for blood products. Blood banks in these places heavily rely on family/replacement donors due to the lack of adequate supply of voluntary donations. A donor replacement program provides blood to patients in return for donations through their friends or close relatives. In the currently existing donor replacement programs, in which blood is "traded" at a fixed exchange rate regardless of type, appear to be highly disorganized and non-transparent. We develop a class of "sequential targeting mechanisms" that can lexicographically accommodate various policy objectives of a blood bank while ensuring efficiency. Furthermore, these mechanisms are donor monotonic in the sense that bringing more donors rewards patients with weakly more blood. This class also includes most deterministic strategy-proof mechanisms in the literature on single-unit and multi-unit exchange with compatibility-based preferences as special cases.
Title: Why Do People Stay Poor? Evidence from an Asset Transfer Programme in Rural Bangladesh
Speaker: Maitreesh Ghatak, London School of Economics, 28th August, 2020

Abstract: There are two broad views as to why people stay poor. One emphasizes the role of economic fundamentals - for example, differences in individual traits like talent or motivation make the poor choose low productivity jobs. The other, the poverty traps view, emphasizes that access to opportunities depends on initial wealth and hence poor people have no choice but to work in low productivity jobs. We test the two views using the random allocation of an asset transfer program that gave some of the poorest women in Bangladesh access to the same job opportunities as their wealthier counterparts in the same villages. The data rejects the null of equal opportunities. Exploiting small variation in initial endowments, we estimate the transition equation and find that, if the program pushes individuals above a threshold level of initial assets, then they escape poverty, but, if it does not, they slide back into poverty. Structural estimation of an occupational choice model reveals that almost all beneficiaries are misallocated at baseline and that the gains arising from eliminating misallocation would far exceed the costs. Our findings imply that large one-off transfers that enable people to take on more productive occupations can help alleviate persistent poverty.
Title: Imperfect Information, Learning and Endogenous Persistence
Speaker: Bo Yang, Swansea University, 21th August, 2020

Abstract: We construct and estimate a New Keynesian heterogeneous expectations behavioural model with bounded-rationality (BR) and rational agents. The model is inhabited by fully rational (RE) and BR agents where the latter use simple heuristic rules to forecast aggregate variables exogenous to their micro-environment. The main novelty of the paper lies in the way we treat the former. Whereas the standard approach of heterogeneous expectations agents relax one extreme assumption - RE for all agents - in favour of learning, it retains the extreme information assumption that the rational agents have perfect information of the state vector. In our comparisons of different composites including the pure RE and BR cases, we impose what we term informational consistency where RE and BR agents in the model share the same imperfect information as the econometrician estimating the model. Moreover, instead of the traditional Euler learning approach, we assume that agents are anticipated utility learners given their beliefs of aggregate states. We conduct a Bayesian estimation with fixed proportions of RE and BR agents and a general heuristic forecasting rule. We find that a pure BR model fits the data better than the pure RE case with the standard perfect information (PI) assumption. But with imperfect information (II), consistent with the informational assumptions for the BR agents, we find that RE outperforms BR (easily) and RE-BR composites (slightly), but second moment comparisons suggest that the RE-BR composite can match data better. Our findings suggest that retaining RE with Kalman- filtering learning can outperform BR in matching persistence seen in the data.
Title: An Economic Model of the Last-Mile Internet
Speaker: Rakesh Chaturvedi, Indraprastha Institute of Information Technology, Delhi, 14th August, 2020

Paper: [Download].
Abstract: Investment and pricing decisions of a monopoly internet service provider are studied in a demand-supply model for the internet that is based on complementarity between broadband connection and content, congestion externalities on the consumer side and oligopolistic externalities on the content provider side. When consumers face two-part tariffs from the monopoly, the equilibrium is sensitive to the usage price level on the network but is invariant to its structure on the two sides. With nonlinear pricing however, the margin of the content providers affects prices on consumer side while congestion externalities shape the price on the provider side. For the zero-price rule, a neutrality-of-policy result holds with two-part tariffs but not with nonlinear pricing.
Title: The Vigilant Eating Rule: A general approach for probabilistic economic design with constraints
Speaker: Haris Aziz, University of New South Wales, 7th August, 2020

Abstract: We consider the problem of probabilistic allocation of objects under ordinal preferences. Our main contribution is an allocation mechanism, called the vigilant eating rule (VER), that applies to nearly arbitrary distributional constraints. It is constrained ordinally efficient, can be computed efficiently for a large class of constraints, and treats agents equally if they have the same preferences and are subject to the same constraints. When the set feasible allocations is convex, we also present a characterization of our rule based on ordinal egalitarianism. Our general results concerning VER do not just apply to allocation problems but to any collective choice problem in which agents have ordinal preferences over discrete outcomes. As a case study, we assume objects have priorities for agents and apply VER to sets of probabilistic allocations that are constrained by stability. VER coincides with the (extended) probabilistic serial rule when priorities are flat and the agent proposing deterministic deferred acceptance algorithm when preferences and priorities are strict. While VER always returns a stable and constrained efficient allocation, it fails to be strategyproof, unconstrained efficient, and envy-free. We show however, that each of these three properties is incompatible with stability and constrained efficiency.
Title: A theory of simplicity in games and mechanism design
Speaker: Marek Pycia, University of Zurich, 31st July, 2020
Paper: [Download]
Abstract: We introduce a general class of simplicity standards that vary the foresight abilities required of agents in extensive-form games. Rather than planning for the entire future of a game, agents are presumed to be able to plan only for those histories they view as simple from their current perspective. Agents may update their so-called strategic plan as the game progresses, and, at any point, for the called-for action to be simply dominant, it must lead to unambiguously better outcomes, no matter what occurs at non-simple histories. We use our approach to simplicity to provide characterizations of simple mechanisms in general social choice environments both with and without transfers, including canonical mechanisms such as ascending auctions, posted prices, and serial dictatorship-style mechanisms. As a final application, we explain the widespread popularity of the well-known Random Priority mechanism by characterizing it as the unique mechanism that is efficient, fair, and simple to play.
Title: When Is Debt Odious? A Theory of Repression and Growth Traps
Speaker: Viral Acharya, New York University, 24th July, 2020

Abstract: How is a developing country affected by its odious government’s ability to borrow in international markets? We examine the dynamics of a country’s growth, consumption, and sovereign debt, assuming that the government is myopic and wants to maximize short-term, socially unproductive, spending. Interestingly, access to external borrowing can extend the government’s effective horizon; the government’s ability to borrow hinges on its convincing investors they will be repaid, which gives it a stake in the future. The lengthening of the government’s effective horizon can incentivize it to tax less, resulting in higher steady-state household consumption than if it could not borrow. However, in a developing country that saves little, the government may engage in more repressive policies to enhance its debt capacity, which only ensures that successor governments repress as well. This leads to a “growth trap” where household steady-state consumption is lower than if the government had no access to debt. We characterize circumstances in which odious government leads to odious debt and those in which it does not, and discuss policies that might ameliorate the welfare of the citizenry.
Title: Matching platforms
Speaker: Seung Han Yoo, Korea University, 17th July, 2020
Paper: Download
Abstract: A platform matches agents from two sides of a market to create a trading opportunity between them. The agents subscribe to the platform by paying subscription fees which are contingent on their reported private types, and then engage in strategic interactions with their matched partner(s). We characterize optimal matching mechanisms which induce truthful reporting from the agents and maximize the subscription revenue. We show that the optimal mechanisms for a one-to-one trading platform do not necessarily entail assortative matching, and may employ an alternative matching rule that maximizes the extraction of informational rents of the higher type. We then study an auction platform that matches each seller to two agents, and show that the optimal mechanism is first-best efficient but entails the combination of negative and positive assortative matching.
Title: The Glasses are Tinted: Self-Confidence and Poverty Trap
Speaker: Anuradha Saha, Ashoka University, Friday, 10th July, 2020
Abstract: In a heterogeneous agent overlapping generations model, we look at the differential effects of the poverty trap, behavioral trap, and behavioral bias on human capital investments and skill distributions. There are three types of adults -- uneducated-unskilled, educated-unskilled, and educated-skilled. We assume education is necessary but not sufficient to get skilled jobs. Each adult form beliefs about their children's ability to get skilled jobs after education. We compare the deviation in parental decisions when they know the true probability of success and when they form beliefs about this probability from their education and work network. The investment decisions depend crucially on the degree of child affinity and current skilled incomes. In the behavioral model, there exists a behavioral trap whereby uneducated-unskilled adults believe that their child will never get a skilled job. In addition, the educated parents suffer from a colored perspective -- skilled ones overestimate the chances of success for their children while unskilled ones underestimate. We find that when there exists a poverty trap, the behavioral trap has no effect on parents' investment decisions, only the behavioral bias influences skilled parents to over or under invest. When there is no poverty trap, the behavioral trap may box in some adults to not educate their children thereby constraining their future generations into a life with unskilled jobs. Behavioral bias may lead to multiple equilibria and even inspire educated-unskillled adults to invest with higher probability than skilled persons.
Title: Parental Absence in Childhood and Adult Criminal Behaviour: Evidence from Survey and Experimental Data from Prison Inmates in China
Speaker: Xin Meng, Australian National University, Friday, 3rd July, 2020
Abstract: Large scale rural-to-urban migration has led to dramatic changes in Chinese family structure over the past three decades. The barriers to bringing the children of migrants to the cities due to China's household registration (hukou) system has resulted in an estimated 61 million children in China being left-behind in rural villages when their parents migrate to the cities. This lack of parental care and guidance has given rise to concerns about potential social consequences. This paper uses unique survey and experimental data from male prison inmates and their comparable non-inmates to examine whether parental absence in childhood is associated with increased criminality in adulthood. We use control function and sibling fixed effects estimation to identify causal impacts. We find that parental absence in childhood increases the propensity of adult males to commit crimes. Our experimental data show that being left-behind increases risk-loving behaviour and decreases educational attainment. The effect of being left behind on educational attainment is dependent on personality type with less conscientious individuals experiencing a large educational decline when left--behind. Both lower educational attainment and more risk-loving behaviour increase the propensity to commit crimes. Lower educational attainment accounts for a quarter of the impact of being left-behind on criminality, with risk preferences accounting for only a small portion.
Title: Fiscal and monetary policy coordination
Speaker: Arjun Jayadev, Azim Premji University, 26th June, 2020
Abstract: The interest rate and the fiscal balance can be thought of as two independent instruments to be assigned to two targets, the path of output and the path of public debt. Under what we term a ‘sound finance rule’ the interest rate targets output while the fiscal balance targets public debt; under a ‘functional finance rule’ the budget balance targets the output gap and the interest rate targets the debt ratio. The same unique combination of interest rate and fiscal balance will be c onsistent with output at potential and a constant debt-GDP ratio regardless of which instrument is assigned to which target. I explore these characteristics in a theoretical frame. I then use this same framework to examine how public debt has evolved (i.e. its determinants) in the Indian context and some implications for macroeconomic policy going forward.
Title: Irrigation and culture: gender roles and rights
Speaker: Satyendra Kumar Gupta, O. P. Jindal Global University, 12th June, 2020
Abstract: This paper proposes and tests the hypothesis that the historical profitability of irrigation in agriculture has reduced female labor force participation and the level of female property rights, and has had multiple other adverse effects on women. We provide using several data sets: (i) pre-modern societies (Ethnographic Atlas; Standard Cross Cultural Sample), (ii) cross-country data, (iii) individual level survey data on the children of European immigrants (European Social Survey), (iv) individual level survey data on children of US immigrants (American Community Survey), and (v) individual level data from rural India (India Demographic and Household Survey). Our irrigation measure reflects the potential yield increase due to irrigation, which has the advantage of being highly exogenous and strongly correlated with actual irrigation. We establish that already in pre-modern societies, greater irrigation potential was associated with increased male participation in agricultural production, while females performed lighter and more domestic tasks. Next, we find a negative association between irrigation potential and recent female labor force participation across countries, among female children of US immigrants, and in rural India. Moreover, 2nd generation European immigrants with an ancestry connected to greater irrigation potential are more averse to female labor market participation. In cross-country data, irrigation potential is also negatively associated with female property rights, female political participation and freedoms, and female life expectancy at birth relative to male. Finally, irrigation is associated with greater female and male acceptance of domestic violence in rural India. Our estimates are robust to a host of control variables, including ancestral plow use. We propose two possible mechanisms. First, in premodern societies irrigation raised the relative labor productivity of males compared to females in agriculture. It increased the amount of cereal processing, raised fertility and associated demand for child care, and overall domestic chores. Female tasks gravitated towards the home. Over time this has produced a cultural preference against female participation in the formal labor market outside the home. Second, irrigation historically concentrated power in the hands of the elite which produced autocratic regimes. In turn, autocracy is associated with weaker property rights, in particular for women.
Title: Can waste management policies stimulate the economy? The South African case
Speaker: Reza C. Daniels, University of Cape Town, 4th June, 2020
Abstract: Waste management policies have the potential to stimulate domestic industrial capacity if those policies are designed in such a way that they promote commercially viable waste re-use, resource recovery and beneficiation technologies. Done successfully, substantial progress towards building the market for the demand and supply of waste can be made, a finding now often interpreted as building a “circular economy” for commodities. This paper addresses two questions: firstly, what is the economic potential of waste if we could recover all the resources in that waste? Secondly, how do we establish whether the benefits of waste cleanup, storage, transportation and beneficiation exceed the costs of doing so at a given point in time? For the second question, we obtain actual data from an extended producer responsibility initiative (EPRI) for waste tyres in South Africa that was in operation from 2012-2017. We utilise a computable general equilibrium model that takes into account both the costs of waste management policies and their benefits in order to quantify the net impacts. We find that, firstly, if 13 major waste streams are able to be fully substituted for virgin commodities, economic growth in South Africa can be increased by 0.5 percentage points. Importantly, the majority of this growth is in low and medium-skilled occupations. For waste tyres, findings suggest that a major impetus is provided to waste collection and beneficiation industries that create net positive economic benefits within three years, depending on the efficacy of the EPRI and its ability to help create a market for the supply and demand of waste tyres. However, political and legal contestation abounds in the waste industry, which has the potential to derail the medium-term viability of institutions set up to promote the waste sector. These results suggest that considerable care needs to be exercised when designing policies to activate new waste streams.