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] isid.ac.in.
Some of our seminars are recorded. The links are provided below. You can also check our youtube channel:
Title: Labor migration, capital accumulation, and the structure of rural labor markets
Speaker: Taryn Dinkelman, University of Notre Dame
Date and time: 10 September, 2021 Abstract: Can migrant capital contribute to long-run structural change in sending community labor markets? We study how rural labor markets in Malawi changed after exogenous shocks to international labor migration opportunities. Merging archival data on sub-national remittance flows with census data on employment, we track how work shifted across sectors in places receiving different amounts of migrant earnings as a result of the shocks. In labor markets receiving more migrant capital, workers - particularly women - moved out of farming and into more capital-intensive non-farm service sectors over the next thirty years. High migrant capital areas accumulated more non-farm physical capital and human capital, and were wealthier fifteen years after the migration episode. Our results demonstrate that temporary international migration and the associated remittances have the potential to change rural labor markets in the long run.
Title: The Unholy Trinity: Regulatory Forbearance, Government-Owned Banks and Zombie Firms
Speaker: Nirupama Kulkarni, CAFRAL
Date and time: 27 August, 2021 Abstract:During the global financial crisis, the Reserve Bank of India enacted forbearance measures that lowered capital provisioning rates for loans under temporary liquidity stress. Matched bank-firm data reveal that troubled banks, which were predominantly government-owned, took advantage of the policy to also shield firms facing serious solvency issues. Perversely, in industries and bank-portfolios with high proportions of failing firms, credit to healthy firms declined and was reallocated to the weakest firms. By incentivizing banks to hide true asset quality, the forbearance policy provided a license for regulatory arbitrage. The build-up of stressed assets in India's predominantly state-owned banking system is consistent with accounting subterfuge.
Title: Indecisiveness in Collective Choice
Speaker: Sean Horan, University of Montreal
Date and time: 6 PM, 20 August, 2021 Abstract:While collective decision-making does not always lead to decisive outcomes in practice, models of collective choice almost invariably rule out the possibility of indecisiveness. Taking a step to address this disconnect, I extend three of the most prominent collective choice procedures (the top cycle, uncovered set, and Banks set) to a general setting where social comparisons may be incomplete. I provide axiomatic characterizations of the three choice procedures in this setting—to show that introducing the possibility of indecisiveness does not undermine their fundamental appeal.
Title: A model of online click behavior
Speaker: Levent Ulku, ITAM, Mexico
Date and time: 6:30 PM, 13 August, 2021
Paper: [Download] Abstract: We gather under the term “approval” a host of online acts, such as Liking, Favouriting,
Sharing orWishlisting, which express a positive attitude towards an item, but
do not quite amount to choice meant as a final selection. With items presented as
a list, we propose a general model of approval and we completely characterise it
in terms of simple properties of observed approval data. We also show that the
psychological primitives leading to approval are substantially identifiable from
observed behaviour. Finally, we introduce and explore the notion of “list design”
to capture situations where an interested party can manipulate the approver’s behaviour
by choosing the list with the aim of maximising an objective.
Title: Culture, Economic Shocks and Conflict: Does trust moderate the effect of price shocks on conflict?
Speaker: Hasin Yousaf, UNSW
Date and time: 6 August, 2021 11.30 AM Abstract: This paper documents an important channel through which
culture may affect conflict. We examine a panel of developing countries
over fifty years and use price shocks to extractive commodities as an
exogenous variation in the country's economic outlook. We find that
these price shocks are less likely to result in the onset of civil war
and conflict in countries that have higher levels of trust. However, we
also find that trust does not moderate price shocks' effect on the
cessation of conflict. Our study provides new empirical evidence on the
interdependence of economic shocks and culture on conflict.
Title: Til Dowry Do Us Part: Bargaining and Violence in Indian Families
Speaker: Rossella Calvi, Rice University
Date and time: 9 AM, 23 July, 2021
Abstract: We develop a non-cooperative bargaining model with incomplete
information linking dowry payments, domestic violence, resource
allocation between a husband and a wife, and separation. Our model
generates several predictions, which we test empirically using
amendments to the Indian anti-dowry law as a natural experiment. We
document a decline in women’s decision-making power and separations, and
a surge in domestic violence following the amendments. These unintended
effects are attenuated when social stigma against separation is low and,
in some circumstances, when gains from marriage are high. Whenever
possible, parents increase investment in their daughters’ human capital
to compensate for lower dowries. Recording
Title: How to De-reserve Reserves
Speaker: Bertan Turhan, Iowa State University
Date and time: 6 PM, 16 July, 2021
Abstract: Reserve systems have been designed and implemented for numerous real-world resource
allocation problems. Often, de-reservation policies accompany reserve systems to prevent waste
in instances of low demand for exclusive reserve categories. De-reservation policies must be executed
carefully so that allocation mechanisms have desired properties. We evaluate the de-reservation policy
that has been implemented in admissions to technical universities in India and reveal its drawbacks.
We introduce two choice procedures—backward and forward transfers choice rules—and deferred acceptance
(DA) mechanisms with respect to these choice rules to retrieve these shortcomings. We introduce a framework
to compare choice rules based on merit and show that forward transfers choice rules select more meritorious
sets than backward transfers choice rules. We further compare the DA mechanisms under backward and forward
transfers choice rules based on merit and individuals' welfare. Recording
Title: Does Traffic Congestion pose Health Hazards? Evidence from a Highly Congested and Polluted City
Speaker: Kanishka Kacker, Indian Statistical Institute
Date: 2 July, 2021
Time: 9:30 AM
Venue: Webinar Abstract:
Will reducing traffic congestion bring health benefits? We study the city of Delhi, India which experiences extremely high levels of air pollution and traffic congestion. Our analysis relies on high frequency data from Uber which has information by time of day for every day of 2018 at the neighborhood level that covers over 16000 possible trips during each of these time periods. We identify the relationship between congestion and pollution with an instrumental variables strategy that uses unanticipated temporary shocks to commutes as an instrument for congestion; these shocks are defined using hierarchical clustering of traffic related tweets from the Delhi Traffic Police’s Twitter account. Day, month, time-of-day and trip fixed effects remove additional sources of unobserved heterogeneity. Our estimates imply congestion raises pollution and worsens health outcomes, but this effect is small relative to existing levels of pollution. Further vehicular regulation in terms of easing congestion is unlikely to bring substantial improvements in air quality and health.
Title: Incentives and Efficiency in Matching with Transfers: Towards Nonquasilinear Package Auctions
Speaker: Ryan Tierney, University of Southern Denmark
Date: 25 June, 2021
Venue: Webinar Abstract:
We study the package assignment model and its consequences for the model of matching with transfers.
We show that on rich domains including non-quasilinear preferences, strategy-proofness, joint monotonicity of
Barberà, Berga and Moreno [American Economic Review, 106 (2016)], anonymity in welfare and continuity in welfare
imply conditional efficiency: given a problem, the set of packages distributed should be allocated optimally.
The difference between this and full efficiency is that the set of distributed packages need not be optimal given
all the possible packages that could be distributed. This set need not be fixed ex ante but may be a function
of the agents preferences. For matching with transfers, anonymity becomes no-discrimination and
conditional efficiency is equivalent to no blocking, one component of the standard solution concept of stability.
This latter result is perhaps more obviously significant, given the importance of stability in the literature,
and the obvious, if somewhat opaque, connection between stability and incentives; we make this connection less opaque.
These results are derived from the following result, also demonstrated here, on the quasilinear domain:
weak pairwise-strategy-proofness, anonymity in welfare, and continuity in welfare imply anonymous pricing.
Title: Import Competition, Formalization, and the Role of Contract Labor
Speaker: Vidhya Soundarajan, Indian Institute of Management - Bangalore
Date: Friday, 16th April, 2021
Time: 3 PM
Abstract: The debate on the effects of import competition on sectoral composition of employment remains unsettled. Using the case of the Indian manufacturing sector and exploiting plausibly exogenous variation from Chinese imports, we provide the first causal evidence that higher import competition increases the share of the formal sector employment. We find an increase in the level of formal sector employment, driven by firms in the top 50% of the productivity distribution, and in contrast, a fall in the informal sector employment. This labor reallocation from informal to formal enterprises is enabled by the usage of contract workers, who do not carry stringent firing costs and are usually not covered by trade unions. Our estimates imply that Chinese import competition led to an increase in the share of formal sector employment by 3.9 percentage points between 2000-2001 and 2005-2006, which suggests an increase in aggregate labor productivity by 2.67%. Our results are robust to an instrumental variables estimation, and controlling for a host of other potential trade channels and worker characteristics. Recording
Title: Social Media and Xenophobia: Evidence from Russia
Speaker: Maria Petrova, Pompeu Fabra University
Date: Friday, 9th April, 2021
Time: 3 PM
Abstract: We study the causal effect of social media on ethnic hate crimes and xenophobic attitudes in Russia using quasi-exogenous variation in social media penetration across cities. Higher penetration of social media led to more ethnic hate crimes, but only in cities with a high pre-existing level of nationalist sentiment. Consistent with a mechanism of coordination of crimes, the effects are stronger for crimes with multiple perpetrators. We implement a national survey experiment and show that social media persuaded young and low-educated individuals to hold more xenophobic attitudes, but did not increase their openness to expressing these views. Our results are consistent with a simple model of social learning where penetration of social networks increases individuals’ propensity to meet like-minded people. Recording
Title: Towns and Rural Land Inequality in India
Speaker: Prashant Bharadwaj, University of California, San Diego
Date: Thursday, 1st April, 2021
Time: 6 PM
Abstract: This paper highlights the link between rural land inequality and structural transformation, mediated via financial frictions. Using the universe of land records from a large Indian state, we document three empirical facts about rural land inequality. First, rural land inequality is greater near towns; second, rural land inequality is greater near large towns, relative to small towns; and third, higher land inequality near towns is explained via the existence of more small and marginal farmers near towns. These patterns are consistent with a model where medium-sized farmers leave villages and go to the nearby town, thereby increasing rural land inequality near towns. We generate this simple insight in a model with financial frictions, a U-shaped pattern in agricultural productivity and farm size, and migration costs varying with distance to town. We showcase the key role played by financial frictions in the process of structural transformation as it prevents the smallest farmers from moving out of villages.
Title: Quantifying Pressure and Performance in Limited Over Cricket Matches
Speaker: Diganta Mukherjee, Indian Statistical Institute, Kolkata
Date: Friday, 2nd April, 2021
Time: 4 PM
Abstract: I will talk about my recent book "Cricket Performance Management" defining Pressure Indices and applications of Pressure Index. Applications will include: turning point(s) of the match, performance measurement (batting, bowling, batting partnership), match outcome prediction, most dominant team, comparing two similar run chases.
The talk will be at a semi technical level with undergraduate background in statistics and some interest in cricket as pre-requisite.
Title: The Social Costs of Keystone Species Collapse: Evidence From The Decline of Vultures in India
Speaker: Anant Sudarshan, University of Chicago
Date: Friday, 26th March 2021
Time: 9.00 AM
Abstract: Losses of keystone species that affect environmental quality through their ecosystem interactions can have large effects on social costs. However, crucial parameters for the management of their preservation are often not available. Determining an optimal recovery strategy requires knowing the benefits lost in their absence, defensive expenditures linked to their loss, as well as the direct rehabilitation costs. We study the above in the setting of vultures that serve a major public health role by preventing the spread of infectious diseases. Vulture populations fell in the Indian subcontinent due to the presence of a chemical residue in livestock carrion. The use of the chemical painkiller in livestock animals became widespread after its patent expired and generic versions of the drug made it widely accessible for veterinary uses. Using distribution range maps for the affected vulture species, we compare districts before and after the collapse in vulture populations. We estimate all-cause death rates increased, on average, by six percent in the highly-vulture-suitable districts after vultures nearly went extinct. Recording
Title: Delegation in veto bargaining
Speaker: Andreas Kleiner, Arizona State University
Date: Friday, 19th March 2021
Time: 10 AM
Abstract: A proposer requires the approval of a veto player to change a status quo. Preferences are single peaked. Proposer is uncertain about Vetoer’s ideal point. We study Proposer’s optimal mechanism without transfers. Vetoer is given a menu, or a delegation set, to choose from. The optimal delegation set balances the extent of Proposer’s compromise with the risk of a veto. Under reasonable conditions, “full delegation” is optimal: Vetoer can choose any action between the status quo and Proposer’s ideal action. This outcome largely nullifies Proposer’s bargaining power; Vetoer frequently obtains her ideal point, and there is Pareto efficiency despite asymmetric information. More generally, we identify when “interval delegation” is optimal. Optimal interval delegation can be a Pareto improvement over cheap talk. We derive comparative statics. Vetoer receives less discretion when preferences are more likely to be aligned, by contrast to expertise-based delegation. Methodologically, our analysis handles stochastic mechanisms. Recording
Title: Generating a POS Tagged Text Corpus for Bengali: Issues, Challenges, and Outcomes
Speaker: Niladri Dash, Indian Statistical Institute, Kolkata
Date: Monday, 15th March 2021 Recording: Coming soon
Abstract: The generation of a POS tagged corpus is a challenging task both in linguistics and language
technology. It asks for a synchronized method of application of various
tools and techniques
of computational linguistics keeping in mind the unique linguistic
features and aspects of a
language that is put to annotation. Due to the involvement of so many
complex issues and
aspects of linguistics and computation, the effort for generating POS
tagged corpora in many
languages (both in India and abroad) has not been much successful.
Keeping this fact in
mind, in this talk, I like to discuss the methods and strategies that we
have applied to generate
the first POS tagged corpus for written Bengali text, which has
potentials in both linguistics and information technology. During the
process of executing the
project, we have meticulously carried out several linguistic and
computational activities to
achieve our final target of producing a hundred thousand POS annotated
benchmarked sentences. The major activities of the project involved the
conversion of ISCII-
based TDIL Bengali text corpus into the Unicode text; normalization and
the corpus of 3 million words for annotation, rendering normalized texts
into RTF format;
breaking normalized corpus at the sentence level; separation of
grammatically valid sentences
from segments; conversion of normalized sentences from .doc version to
of BIS tagset for Bengali; application of BIS tagset for POS annotation
of words; and final
generation of a POS tagged corpus for linguistics, language technology,
and allied disciplines
(e.g., parsing, machine learning, translation, information retrieval,
generation, online education, etc.). I shall address these issues with
some information relating
to the frequency distribution of POS-tagged words in modern Bengali
Title: Short- and Long-Run Consumption and Non-Payment Responses to Retail Electricity Prices in India
Speaker: Shefali Khanna, Harvard University
Date: Friday, 12th March 2021 Abstract: This paper estimates the short- and long-run responses of retail electricity consumption and bill payment to electricity prices in Delhi, India from 2015 to 2019. Using billing data from one of Delhi's three private electricity distribution utilities, we reconstruct payment histories for more than 1.5 million retail residential, commercial, and small industrial customers. Our empirical strategies exploit features of the regulated electricity price schedule that generate short- and long-run variation in the average price of electricity for these customers. We find that residential demand is very inelastic to large billing shocks in the short run. Large but transient increases in arrears following these shocks suggest that non-payment may play a role in dampening the magnitude of these elasticities. In contrast, we find large long-run elasticities across the customer base, ranging from about -.6 in the top decile of consumption for informal settlement customers to -1.99 in the top quintile of consumption for industrial customers. In addition to providing annual demand elasticity estimates, we find evidence that non-payment rates increase when prices rise in the long run. The effects are particularly large for the poorest informal customers, for whom arrears more than double in response to a doubling in the average electricity price. Taken together with our analytical model, the results suggest that reducing retail subsidies in order to improve utility finances and increase service quality would come at the cost of exacerbating non-payment.
Title: The effects of India’s BITs termination on FDI inflows
Speaker: Elena Kotyrlo and Hryhorii M. Kalachyhin, Higher School of Economics
Date: Friday, 5th March, 2021 Recording
Abstract: Do bilateral investment treaties (BIT) stimulate foreign direct investment (FDI) to a developing country? There is no clear answer to this question.
At the end of the last decade, India conducted a large-scale unilateral termination of the DIS, which peaked in March 2017. We have considered the features of BITs in India, the prerequisites for revising the BIT Model, critical changes in it, and BIT mass termination specificity. Mass unilateral termination of BITs is a phenomenon that allows us to look at their effectiveness from a different perspective. BITs’ impact on FDI flows is usually considered in terms of the impact of the entry
into force or the total BITs number in the country. We consider the consequences of BITs mass unilateral termination by India using the difference-in-difference (DD) method and the synthetic control method (SCM).
The obtained estimates indicate that India’s BITs termination led to a significant decrease (by 61,8% per quarter on average) in attracting investment from countries with which the agreement was terminated. However, most of the decline in FDI inflows is due to the termination of the BITs with developed countries (-70.3% per quarter on average), but not with developing ones. SCM allows concluding that BITs termination did not affect Mauritius’s FDI, the largest investor to India. Using SCM, we establish no spillover effect for Singapore, the largest investor to India without BIT with India. It did not benefit from India’s BITs’ mass termination.
The BITs termination negative impact on FDI volumes indicates that it is expedient for India to renegotiate BITs based on the BIT Model quickly. We also considered an alternative tool for ensuring the promotion and protection of investments – regional trade agreements (RTAs). Although RTAs can be an adequate substitute for BITs in general, this issue remains controversial since negotiations on them cover not only investments and therefore characterized by excessive duration.
Title: Expanding Financial Access Via Credit Cards: Evidence from Mexico
Speaker: Aprajit Mahajan, University of California, Berkeley
Date: Friday, 26th February, 2021 Recording
Title: Female labor supply and jobless recovery
Speaker: Pubali Chakraborty, Ashoka University
Date: Friday, 19th February, 2021 Recording
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 Recording
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 Recording 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
Title: Attack and Interdiction on Networks
Speaker: Bhaskar Dutta, Ashoka University,
Date: Friday, 29th January, 2021 Recording
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 afixed 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 Recording
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 Recording
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 Recording
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 Recording
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
Title: A Structural Framework For Regional Macroeconomic Analysis
Speaker: Jordan Norris, New York University Abu Dhabi
Date: Friday, 30th October, 2020 Recording
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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 Recording:
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
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 Recording:
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.