Biswajit Mandal

Corruption and Trade in General Equilibrium

We use the HOSV model of trade to find out a link between corruption and the pattern of trade, not just its effect on the volume of trade. We prove that greater corruption in labor-abundant countries will restrict the volume of world trade while corrupt capital-abundant countries promote trade. This is caused by intermediaries who are engaged in mitigating the transaction cost of corruption. Relatively corrupt economy will export capital-intensive goods. However, relatively capital-abundant country will be worse off with increasing degree of corruption at home and abroad, whereas the labor-abundant country may gain from further corruption.

Trade Openness, Corruption and Factor Abundance: Evidence from a Dynamic Panel

Using the Heckscher–Ohlin–Samuelson–Vanek (HOSV) framework, this paper illustrates a relationship between corruption and the pattern of international trade that depends on the factor endowments of countries. The relationship between trade openness and corruption is empirically investigated by using a panel dataset on trade openness, corruption and capital–labor ratio, and applying estimation techniques developed for dynamic panels. The regression results provide strong support to the hypothesis that the effect of corruption on trade openness depends on relative factor abundance.

Recessionary Shock, Capital Mobility and the Informal Sector

Using the hybrid of Heckscher–Ohlin and Specific Factor models of trade, we show that the economic recession led to shock results for both capitalists and skilled workers. Some of the unionized unskilled workers lose formal sector employment and move onto the informal sector. When capital moves from the formal to the informal segments, both informal employment and wage can go up in latter’s segment. If capital does not move, informal employment expands and wage drops. Thus, recession may have actually benefitted a large number of informal workers.

Tax on Traded Goods, and Corrupt Non-traded Goods Sector: Implications for Intermediation Activities

This paper uses a Heckscher-Ohlin nugget framework with both traded and non-traded goods. Traded goods are subject to tax whereas non-traded good does not pay tax but is beset with corruption related intermediation. Our motive is to investigate the comparison of the effects of corruption and tax cut. We assume only the non-traded sector to be corruption affected. We argue that a fall in the degree of corruption surprisingly increases the number of intermediators while tax change has no effect on it. But the size of the intermediation activities expands in both the cases. Low corruption diminishes the exportable production and raises importable production while a tax cut does not have any such effect. The welfare implication is ambiguous in case of a decrease in cost of corruption. A tax cut, however, raises welfare unambiguously.

Sector Specific Inflow of Foreign Capital, Non-Traded Sector and Implications for Real Exchange Rate

This paper attempts to investigate the impact on factor prices and real exchange rate owing to an inflow of foreign capital only in the exportable sector of the host country. In doing so, we amalgamate Heckscher-Ohlin and Specific Factor models of trade which is popularly known as the H-O nugget. We show that consequent upon an inflow of capital specific to the exportable sector, both the non-traded good production and the return to the factor specific to the non-traded good decrease while the exportable production expands. The effect of such an inflow of foreign capital on the real exchange rate is unambiguous and it increases.

Infrastructure Development Versus Direct Cash Transfer: A General Equilibrium Comparison

Abstract This paper attempts to provide an explanation to the debate whether infrastructure development is more effective than direct cash transfer to reduce wage disparity between skilled and unskilled workers. We use a simple general equilibrium structure to argue that in presence of symmetric productivity effects direct cash transfer meets the target when such transfer is financed by tax revenue collected from skilled wage bill. Nevertheless, in case of asymmetric productivity effects the arguments boil down to how different sectors absorb infrastructural facility to improve their productivity.

A Simple Model on Motherss Autonomy, Health Inputs, and Child Health

Using traditional health capital model of Grossman (1972) and Wagstaff (1986a) this paper attempts to fill in the theoretical missing link between mothers’ autonomy and household consumption behavior, particularly focusing on the consumption of child health inputs. It has been shown in this analysis that working mothers’ children should be of better health status. Further independent of working status of the mother, the autonomy parameter always induces consumption of more health inputs for the children. However, when autonomy is linked with mothers’ income, the basic results of the model are further strengthened. In fact, income induced autonomy may result in redefining the composite consumption good for the family as an inferior one.

Does Nota Affect Voter Turnout? Evidence from State Legislative Elections in India

This paper explores the impact of introduction of the ‘None of the Above’ (NOTA) option in Indian legislative elections. NOTA was introduced as a ballot option following the Supreme Court ruling in 2013 based on the argument that more choices to voters will enhance voter participation. We take advantage of the state-time variation in introduction of NOTA option in state legislative assembly elections in 2013 to study its impact on voter turnout. Using election data from five major Indian states between 2008 and 2013, we find evidences suggesting that NOTA may not have led to increased voter participation. However, our results are not conclusive.

Finite Change—Implication for Trade Theory, Policy and Development

The paper traces the evolution of trade theory beyond the standard 2X2 models and looks for implications of higher dimensional structures and adjustment problems with large shocks. Typically trade theory and policy talk about expansion and contraction of existing activities. In this paper we explore various situations where certain activities vanish altogether. Similarly other activities may come to existence following major changes in the economic environment. Such regime shifts are interpreted as finite changes as opposed to infinitesimal alterations. These changes allow us to think differently about standard policy changes, all of which have direct implications for developing countries. Emigration, wage inequality and distribution, non-equivalence of tariff and quota in competitive models, capital mobility and corruption are some of the applications involving such finite change. At a theoretical level the paper starts by an interesting interpretation of factor price “non-equalization” hypothesis in the basic Heckscher-Ohlin-Samuelson type models without depending on standard text book type argument.

Time Zones and FDI with Heterogeneous Firms

Based on Helpman et al. (2004), we propose a simple two-country (Home and Foreign) model with heterogeneous firms that capture the role of FDI via utilizing time zone differences. Two countries are located in different time zones and there is no overlap in daily working hours. It will be shown that productivities of the firms undertaking FDI are higher than the productivities of non-FDI firms. Although the results look quite similar with Helpman et al. (2004), the direction of service trade flow is totally different: Foreign subsidiaries of high- productivity firms provide services for the Home market.