Department of Economics

Ashoka University is a private university located in Sonipat, Haryana, India, focusing on liberal arts and sciences. It was established in 2014.&nbsp;It is guided by an academic council of academics and scholars from around the world. The council sets the university&#39;s academic standard, advising on matters of curriculum, faculty hiring and research.&nbsp;

Ashoka University offers a full-time 3 (+ 1) year undergraduate programme. The University comprises of&nbsp;2500 plus students, with a mix of both national and international students.&nbsp; &nbsp;

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Ashoka University

The aggregate cost of the living index requires averaging across household indices. But what if the aggregate index was constructed for the “representative” household as is usually done? The paper examines the resulting bias in the Tornqvist index, widely used for constructing superlative indices as well as for the Cobb–Douglas index, which has a similar functional form. We show that the difference between the two consists of a “plutocratic” bias and a “curvature” bias. The former is well known, but the latter has not been recognized earlier. In empirical applications, the curvature bias is small and orders of magnitude smaller than the plutocratic bias. This suggests much of the overall bias would be removed by constructing the representative agent by democratic averages of budget shares.

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Bulletin of Economic Research

The representative agent bias in cost of living indices

This paper explores how delegation can be used as a signal to sustain cooperation. I consider a static principal-agent model with two tasks, one resembling a coordination game. If there is asymmetric information about the agent's type, the principal with high private belief can delegate the first task as a signal. This is also supported by the forward induction argument. However, in the laboratory setting, this equilibrium is chosen only sometimes. When the subjects have information about past sessions, there is a significant increase in the use of delegation. This finding sheds light on equilibrium selection in Bayesian games.

International Game Theory Review

Delegation Using Forward Induction

We consider a generalization of perturbed best response dynamics in population games with a continuum of strategies. The previous literature has considered the logit dynamic generated through the Shannon entropy as a deterministic perturbation. We consider a wider class of deterministic perturbations satisfying lower semicontinuity and strong convexity. Apart from the Shannon entropy, Tsallis entropy and Burg entropy are other perturbations that satisfy these conditions. We thereby generate the generalized perturbed best response dynamic with a continuum of strategies. We establish fundamental properties of the dynamic and show convergence in potential games and negative semidefinite games.

Journal of Economic Theory

Generalized Perturbed Best Response Dynamics with a Continuum of Strategies

This paper examines the impact of the global financial crisis on firm exit and corporate deleveraging in Slovenia during 2008‒2014 using firm-level data. Firms are classified according to whether they increased their leverage, decreased their leverage or ceased operation during the specified time interval, and the likelihood of being in these three states are estimated. Deleveraging likelihood is analyzed separately for total debt, business-to-business debt, bank debt, and non-bank financial debt. The empirical exercise shows that the influence of covariates on firm exit was different from that on deleveraging, and the impact on deleveraging differed between different types of debt. © 2021 Taylor & Francis Group, LLC.

Eastern European Economics

Firm Indebtedness, Deleveraging, and Exit: The Experience of Slovenia during the Financial Crisis, 2008–2014*

We revisit, within Harsanyi’s impartial observer setting, the question of foundations underlying procedural fairness concerns in welfare judgments. In our setup—that of allocating an indivisible good using a lottery—such concerns, presumably, matter. We draw from the social preferences literature and relax a typical assumption made while addressing this question, namely that individuals in society do not care about procedural fairness and such concerns arise exclusively at a societal level, which are captured by nonlinear social welfare functions (SWFs). In our model, individual attitudes toward procedural fairness are identified and factored into welfare judgments. Specifically, we provide an axiomatic basis within Harsanyi’s (J Polit Econ 63:309–321, 1955) framework to represent procedural fairness sensitive individual preferences by the representation in Karni and Safra (Econometrica 70:263–284, 2002). We then show, in terms of underlying axioms, how such individual assessments incorporating both risk and procedural fairness attitudes can be aggregated by means of utilitarian and generalized utilitarian SWFs. © 2020, Springer-Verlag GmbH Germany, part of Springer Nature.

Economic Theory

Individual sense of justice and Harsanyi’s impartial observer

This paper examines the nature of inter-ethnic relations in North Macedonia drawing on the 2008 European Quality of Life Survey. Ceteris paribus, the self-declared level of subjective well-being is smaller among ethnic Albanians than among Macedonians. In the presence of relative income variables, subjective well-being among both ethnic groups is not significantly associated with their absolute income. The subjective well-being of ethnic Albanians is significantly associated with their income relative to Macedonians. However, the subjective well-being of Macedonians is not affected by income relative to ethnic Albanians. The results suggest that measures are needed to reduce income inequality between ethnic groups. © 2021 Taylor & Francis Group, LLC.

Ethnicity and Subjective Well-being in the Republic of North Macedonia

Mortality due to COVID-19 has varied across the states of India. We exploit this history to investigate the possible role of health policy in the outcome. Using three different measures of the death rate, we find to a varying degree, evidence that the level of public expenditure on health has made a difference to the state-wise mortality rate. Based on this, we proceeded to analyse the expenditure pattern in the states. The average level of expenditure on health is found to be low both of itself and in relation to spending by governments in South and Southeast Asia. In much of the territory of India spending on the police exceeds that of spending on health. Furthermore, richer states spend relatively less on it, implying that spending on health is a matter of choice for states rather than dictated by financial constraints. Two conclusions follow. First, some of the mortality from COVID-19 is policy induced and therefore was avoidable. Second, though the evidence is drawn from the experience with COVID-19, we may assume that assuring health security to the Indian population would require a radical restructuring of the spending priorities of the states.

Indian Economic Review

The importance of investing in a public health system: evidence from COVID-19 mortality

Growth has consistently remained a central topic in economic policy considerations of the government in India. However, there has also been a more scholarly interest in it among social scientists. As a part of the latter tradition, this paper addresses the proper delineation of the phases of growth in India, a matter of some discussion in the literature. Using state-of-the-art statistical methodology, it first establishes the trajectory of growth and then provides a theoretical explanation for that history. With data spanning the period 1950-2020, the procedure adopted is also able to assess the impact on economic growth of the policies of the present government. The results are conclusive. First, it is established that growth in India has accelerated continuously since the 1950s, implying that dynamism in the economy did not have to wait for the liberalising reforms launched in 1991. Next, the performance of India's economy is compared to growth that has taken place in the rest of the world. It is seen that while India's economy has, in recent years, shown a dynamism relative to the rest of the world, it has consistently fallen behind its most dynamic regions, notably in East Asia.

Economic and Political Weekly

Growth transitions in India myth and reality

This paper examines the impact of reduced availability of hard liquor in bars on sexual crimes against women outside their homes. We construct a district level panel dataset on reported crimes and use an identification strategy that exploits a natural experiment that led to a complete crackdown on bars selling hard liquor in a state of India. Using a difference-in-differences strategy, we show that placing restrictions on alcohol sale through closure of on-premise drinking outlets that serve hard liquor reduces reported incidence of sexual assault and harassment against women but has no effect on reported rapes. We conduct placebo tests and show that the result is not driven by existing pre-trends. The result is also robust to an alternative estimation strategy using a synthetic control construction and the most conservative estimate shows a reduction in sexual assaults by 10%. These results have policy implications for regulating social drinking spaces due to their impact on women's public safety.

Journal of Development Studies

Public Safety for Women: Is Regulation of Social Drinking Spaces Effective?

We investigate the sectoral and the distributional effects of a food subsidy program, where food consumption in the economy is subsidized by taxing the manufacturing good producers. In a two-agent model comprising of farmer and industrialist households, agents consume food to accumulate health. Simulations indicate that while the subsidy program increases food output and agents' health both in the short run and the long run, manufacturing output and aggregate real GDP appear to fall in the short run and increase only in the long run. The program does not make both agents better off and exhibits social welfare gains for a limited range of subsidies. © Cambridge University Press 2019.