18th Annual Conference of Economic Association of Bihar

Dr.Debesh Bhowmik has presented the following  paper on 23rd November,2016 during the conference of Economic Association of Bihar.

The following  paper is published in the Bihar Economic Journal,Vol-5,No-2,Nov,2016,9-22

INFRASTRUCTURE, ECONOMIC GROWTH AND THE ECONOMY OF BIHAR

Dr.Debesh Bhowmik

(Retired Principal and Associate Editor,Arthabeekshan-Journal of BEA)

Abstract

The paper studied the nexus between infrastructure and growth in Bihar during 1990-91-2014-15.Firstly,causality and cointegration were shown among investment in power sector and SDP,per capita SDP,net capital formation and growth rate. Secondly, causality,cointegration, VAR,and VECM among social sector investment and SDP,per capita SDP,net capital formation and growth have been calculated during the same period. In both the cases, estimation of double log linear model has been used to get the relationships.The structural break model verified that both the trends of the investment in power sector and social sector have been rising during 1990-91-2014-15 but investment in power sector has one downward structural break in 1994 and one upward structural break in 1998,on the other hand,investment in social sector has three upward structural breaks in 1999,2007,and 2011 respectively. Hodrick-Prescott Filter model removed smoothly the cyclical movements from both the series.

The study explores that infrastructure investment in Bihar in power sector has insignificant positive effects on SDP per capita, net capital formation and growth rate during 1990-91-2014-15 where impact on SDP is positive and significant.On the contrary, infrastructure investment on social sector has positive significant impact on SDP,SDP per capita and net capital formation of Bihar but has insignificant positive impact on growth during the same period. But there is bi-directional causality and cointegration among the variables in both the sectors.VEC model in the social sectors is stable, divergent and insignificant error correction processes. Economic impact of social sector infrastructure investment is higher than that of power sector in Bihar. The paper throws light on some important policies to develop the infrastructure in Bihar and provides some scope of future research irrespective of some limitations. 

Key words – infrastructure, power sector, social sector, causality, cointegration, VAR,

JEL-C32,I1,I2,O4,Q4

Rupee US dollar nominal exchange rate of India:Behaviour,cointegration and vector autiregression

43rd international conference of International Multidisciplinary Research Foundation was held at Lar de sta Terezinha,Margao,Goa during 3-5  November,2016.I have presented my paper on "Rupee US dollar nominal exchange rate of India:Behaviour,cointegration and vector autoregression".The paper was published in the journal titled Business Sciences International Research Journal (page1-19).

The paper studied the nominal exchsnge rate behaviour of rupee us dollar during 1970-2015,with the help of semilog or exponential model,variance ratio test,Baiperron test,H.P.Filter model,AR,ARIMA and GARCH models respectively.Johansen cointegration test and VECM were used to relate exchange rate with its determinants showing the process of error correction .The paper concludes that nominal rupee exchange rate has been depreciating with respect to usdollar at the rate of 5.57% per year or exponentially at the rate of 0 365% per year during 1970-2015.The nominal exchange rate does not follow random walk and random walk with drift.It has three structural breaks at 1984,1991,1998 respectively.It showed non linear trend after minimising cyclical behaviour.Its AR(2),process is stable and convergent and ARIMA(1,1,1) showed stationary and stable but its ARIMA(2,1,2) is nonstationary.The exchange rate series contain high volatility as shown by GARCH(1,1) model.Nominal exchange rate is positively significantly related with current account deficit,fiscal deficit,external debt and whole sale price index and negatively significantly related with interest rate and trade openness respectively.Johansen cointegration test assured that trace statistic has 6 cointegrating vectors and MaxEigen statistic has 3 cointegrating vectors.Thus VECM is stable but divergent with speedy significant error correction of change in current account and fiscal deficit and change in interest rate respectively.

Target rate of inflation,reducing fiscal deficit,debt and slow full convertibility may improve the exchange rate scenario.

43rd Conference of IMRF- A session on Literature and Language

Chairman’s report on the  Session on “Literature and Language” of the 43^rd Conference of International Multidisciplinary Research Foundation

----Dr.Debesh Bhowmik

International Multidisciplinary Research Foundation organized 43^rd  conference at the auditorium of Lar De Sta Sterezinha of Carmelite Monastery,Margao,Goa during 3-5 November,2016.

I have the previlege to chair a session on “Literature and Language” where there were five paper presenters . [1]Jaleel Abd Jaleel --Assistant Professor,Alquadissyah Directorate of Education,Iraq presented a paper on "The role of sociolinguistics in shaping the Indian Individual and society". His paper signifies use of language in different approaches in bilingualism and multilingualism in different culture, society, ethnical and religious aspects in determining the languages.[2]Md.Muntashir Raquib –Graduate Teaching Assistant,Department of English,East West University,Bangladesh,has presented a paper titled “ Robertson’s Ruby:Is it only a Popular Fiction?” where he established to find how Ray weaves a narrative of anticolonial resistance into popular detective story from the Sepoy Mutiny in 1857 and Indigo revolution to spot the light the attitude of the colonizers towards the natives. [3]Nasifa Moquit—Lecturer,MAHSA University,Bangladesh—presented a paper on “Code-Switching and Code-Mixing between Bangla and English:Undergraduate Private University Students in an Informal Setting” where she examined the reasons behind different types of code switching and code mixing among students whose attitudes were positive impacts although negative impacts were reasonable which was found by a random sample survey.[4]Taslima Islam—Graduate Teaching Assistant , Department of English,East West University,Bangladesh—has presented a paper entitled “Violence:The Veiled ‘Dark Matter’ in Chronicles of a Death Foretold” where she talked about three types of violence-subjective violence,objective violence and systematic violence.Her paper stated that Gabriel Garcia Marquez’s novella Chronicles of a Death Foretold(1981) explores the hidden root of ‘la Violencia’ in the long civil war initiated in Columbia in 1946.The trauma of this chaos triggered the violence to take place in “personal,individual,and quasi political scale”.Since Latin America has such a brutal and traumatic history of violence,Marquez exposed how the violence imperialism and political division.This research also highlights the silence as form of violence dwelling in the society while Vicario brothers were committing the violence act.[5]Ahmed Jibal Manar of Dhaka ,Bangladesh ,presented a paper on “Sometimes the wrong train can take you to the right destination:Discrimination of society and community of others in the Lunchbox”. He showed on the aspects related with the otherness theory portrayed through some major characters in Ritesh Batra’s film The Lunchbox(2013).The characters deconstruct the established norms to create their own individual identity in the mainstream timeline.The paper concentrates on major characters.The power relation intertwind in the conventional social norms how their lives are interrelated and how they form a new identity through their  shared otherness and how this separate community of others operates  within the mainstream society and finds a space of their own.

Dr.Debesh Bhowmik—Chairman of this  session concluded and suggested about their papers in the following .

[1]Dr.Bhowmik felt that Jaleel’s  research might help linguistic system at home,in nation and in abroad although there are variations.During the era of globalisation ,multilinguistic problem is natural phenomenon where its nature,problem and solution should be known to all even in the members of home.Prof.Jaleel's effort is great importance in this context.Because,linguistic system can lead to close every people in which country they belong.

[2]Md.Raquib’s attempt is praiseworthy since it tries to explore new arena of research from the view point of Ray’s film but it fall short of adequate explanation in the relationship of film’s background story of Sepoy mutiny and indigo revolution toward fiction in the colonial period in India.However,he is credited to new vision.

[3] Nasifa Moquit’s paper is a good research one which claims future scope in various dimensions code switching and code mixing in language.It has great impact in the development of literature.Her survey results in this respect is also praiseworthy.  

[4] Taslima Islam showed how a novel can interpret different types of violence in the society mentioning causes of violence,sensitivity of violence and tried to comment on government policy.She should give more details about governance and the relation between role of governance and power imbalance so that society’s role in context of violence is minimized.

[5] Ahmed Jibal Manar’s paper is a new concept where he mentioned identity crisis above the mainstream society’s characters in the movie.Their new identity is demanded a new space.The author should mention problem areas and its remedies as well.

Dr.Debesh Bhowmik is felicitated with a beautiful memento given by the Chairman of IMRF-Dr.Ratnakar D.Bala along with  a nice certificate. 

BOOK REVIEW BY PROF.DANTE A.URBINA

BOOK REVIEW BY PROF.DANTE A. URBINA

BOOK-INTERNATIONAL MONETARY SYSTEM:PAST,PRESENT AND FUTURE

(ED. ---Dr.Debesh Bhowmik)

Publisher-Regal Publication Pvt.Ltd,NewDelhi,2016,Rs-1780/-

INDO-CHINA TRADE,YUAN IN SDR BASKET AND THE WORLD ECONOMY

INDO-CHINA TRADE,YUAN IN SDR BASKET AND THE WORLD ECONOMY

ABSTRACT

               

  The paper studies that India’s export and import intensity are positively related with GDP growth rate and both are increasing during 1986-2014.Johansen cointegration test asserted that Trace statistic has 6 cointegrating vectors and Max Eigen statistics has 3 cointegrating vectors among export intensity, growth rate, world share of FDI, world share of foreign exchange reserves, US$/yuan exchange rate.VAR model is stable and variables are related with previous period. In Johansen cointegration test among import intensity, growth rate, world FDI share, world foreign exchange reserve share, US$/yuan exchange rate,it was found that Trace statistic has 3 cointegrating vectors and Max Eigen Statistic has 2 cointegrating vectors and VAR model is stable. It is verified that one percent increase in India’s world share in FDI and dollar-Yuan exchange rate per year led to increase in trade intensity of India to China in export by 0.33% and 1.953% respectively per year significantly during 1986-2014. Moreover, one percent increase in India’s world share in FDI, Chinese global share of FDI, dollar yuan rate and India’s global share of foreign exchanges per year lead to increase in trade intensity of India to China in import by 0.148%, 0.272%,0.912% and 0.622% respectively per year significantly during 1986-2014.

The paper explained that the Chinese Yuan is included in SDR basket with effect from 1/10/2016 in which the decision was delayed and its weight in the basket is underestimated having unchanged the weight of US dollar. It is proposed to reconsider weight of SDR basket by using world share of international trade as percent of world GDP or by total trade as percent of world trade. If SDR be considered as international money in the offing then inclusion of rupee, ruble, rand, Australian dollar, ECOWAS’s common currency should be reconsidered for wider and equitable importance of SDR basket.

The paper reviewed the importance and domination of Indo-China trade in Asia and world in the ancient past but India China relation has broken after the 1962 war and revived again since 1990s.In recent years’ Indo-China cooperation in trade, commerce, money and finance have been incorporated in the paper giving emphasis on their strategic role in the world economy because India China ties can lead to Asian Economic Integration process and financial integration linkages realizing AMF and in the areas of Indo-USA defense treaty, Japan-USA defense treaty, Indo-Russian cooperation, Pakistan China cooperation , Indo-Japan economic cooperation and Indo-ASEAN+3 cooperation respectively.

Key words-Trade intensity,SDR,growth,VAR,cointegration

JEL-C13,C22,F15,F33,F53

NOBEL ECONOMISTS-2016

NOBEL ECONOMISTS-2016

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2016 was awarded jointly to Oliver Hart and Bengt Holmström "for their contributions to contract theory".Their findings on contract theory have implications in such areas as corporate governance, bankruptcy law and political constitutions, said the Royal Swedish Academy of Sciences, which announced the 8 million Swedish crown ($928,000) prize.
Oliver Hart, 68, a British economist teaching at Harvard, and Bengt Holmström, 67, a Finnish economist teaching at MIT
"This theory has really been incredibly important, not just for economics, but also for other social sciences," said Per Stromberg, a member of the prize committee and professor at the Stockholm School of Economics.
Contract theory considers, for example, whether managers should get paid bonuses or stock options, or whether teachers or healthcare workers should be paid fixed rates or by performance-based criteria.
Holmstrom, a 67-year-old professor of economics and management at the Massachusetts Institute of Technology, said he had been friends with Hart for decades and was thrilled to be sharing the award with him.
Hart, an economics professor at Harvard University, has focused on understanding which companies should merge and with what mix of financing, and when institutions such as schools, prisons and hospitals should be privately or publicly owned.
At Harvard since 1993, Hart has argued that the incentives for cost reductions in privatized services, such as private prisons in the United States, are typically too strong.

Holmstrom has studied the setting of contracts for workers from teachers to corporate bosses. He concluded that in high-risk industries, pay should lean toward a fixed salary, while in more stable sectors pay should be more biased toward performance rewards.

Asked at a Cambridge, Massachusetts, news conference about the current high level of executive pay, Holmstrom said, “It is somehow demand and supply working its magic.”

But he said he was concerned about the state of income distribution and the unhappiness of many workers about stagnant wages and incomes.

“I’d much rather live in a society where this wasn’t happening,” he said. “But I’m not prepared to speak about the question about how to repair it” because it would mean tinkering with complex markets.

Most of us sign contracts. Why do we do so? Take the contracts we enter into with our employers, for example. There are two main reasons.

First, a contract helps the two sides of the deal work together over a long period of time. Think of what would happen if each company would have to search for new employees at the start of every day, or vice versa.

Second, the contract creates rules that allow agents with different interests to cooperate to achieve some goal. No market economy can work without such cooperation premised on trust but also backed by the law. How contracts are designed defines our incentives in various situations in the real world.

There are various nuances in our contracts. They could be formal or informal, depending on whether they are enforced by law or social norms. They could be complete or incomplete, which is based on whether they take into account all possibilities that lay in the future.

One side of a contract may know more than the other because of information asymmetry, so insurance companies, for example, may end up covering people with health problems rather than the healthy, through what is called adverse selection.

There are also agency problems—as when managers who are under contract with shareholders actually try to maximize their own earnings rather than those of their shareholders.

Contract theory helps us understand these problems. And helps us solve them through better contract design. Take a simple informal contract. A harried mother has to leave the house for a couple of hours. She is worried her two children will bring the house down by fighting over a large piece of cake in the refrigerator.

The mother leaves a simple instruction—the elder child will cut the cake while the younger one will choose which piece to eat. Now, the elder child cannot cheat. The mother has aligned their interests—or achieved incentive compatibility—through an informal contract.

Contract theory is not just about such parlour games. In two landmark papers written in 1979 and 1991, Holmstrom provided the principles that can help companies draw up contracts to ensure that managers do not sacrifice the long-term health of the firm in pursuit of bonuses linked to short-term performance.

The fact that the 2016 Nobel Prize in economics has gone to two giants of contract theory tells us something else as well. Most of the public attention is lavished on macroeconomics and the related dark art of forecasting. This is where the crisis of economics is the deepest.