Sambit Bhattacharyya

Deep determinants of economic growth

A survey of the recent literature on cross country development reveals that there is an agreement on the key role played by institutions in explaining variation in the level of income per capita. Rodrik et al. (NBER Working Paper No. w8119, February, 2002) goes further to argue the primacy of institutions over integration and geography in a level accounting framework. The robustness of this result is checked by changing the dependent variable from level to growth and find that the same holds true.

Temporal Variation of Capture of Anti-poverty Programs: Rural Public Works and Food for Work Programs in Rural India

Using National Sample Survey data for rural India we examine the incidence of capture in two workfare programs in rural India: the Rural Public Works and the Food for Work Programs for 1993–1994 and 2004–2005 respectively. We discover a high degree of program capture among the general population. Among the traditionally backward groups in Indian rural society – but with considerable variation in their living standards – there appears to be a higher degree of capture among SC (Scheduled Castes), than among ST (Scheduled Tribes). Targeting among SC worsened over time. There was an increase in capture by the fourth quintile (of household per capita expenditure) of SC, ST and landowners. This may be reflective of a varying degree of collusion between the elite and the program implementing agencies (e.g. village councils) over time. Thus, potential benefits of workfare get undermined. We also provide evidence to suggest that income‐based targeting could outperform social group based targeting.

Australian Unemployment in the Long Run, 1903–2007

We develop a two equation model of wage setting and unemployment, which we estimate on annual time series for Australia since Federation. Our model links the real wage level to productivity and to a set of wage pressure variables, while the unemployment rate is linked to the gap between the real wage and productivity and to demand side variables. We evaluate the contribution of different variables to the equilibrium unemployment rate for 1903–1941, 1942–1973 and 1974–2007. We also examine the effects on unemployment of several key policy-related episodes in wage regulation spread over the past century of labour market history.

Distributional Consequences of Commodity Price Shocks: Australia Over a Century

This paper studies the distributional impact of commodity price shocks over the short and the very long run. Using a GARCH model, we find that Australia experienced more volatility than many commodity exporting developing countries over the periods 1865–1940 and 1960–2008. We conduct cointegration tests to assess the commodity price shock inequality nexus. A single equation error correction model suggests that commodity price shocks increase the income share of the top 1, 0.05, and 0.01 percent in the short run. The very top end of the income distribution benefits from commodity booms disproportionately more than the rest of the society. The short run effect is mainly driven by wool and mining and not agricultural commodities. A sustained increase in the price of renewables (wool) reduces inequality whereas the same for non-renewable resources (minerals) increases inequality. We expect that the initial distribution of land and mineral resources explains the asymmetric result.

Growth Miracles and Growth Debacles

In this fascinating book, Sambit Bhattacharyya presents a detailed account of the socio-economic processes that create broad variations in living standards across the globe.

Unbundled debt and economic growth in developed and developing economies: an empirical analysis

We unbundle the effect of debt on economic growth using a new panel dataset sourced from Vague (2014) for 48 countries over the period 1961 to 2015. We distinguish between public, private, household, and non-financial corporation debt. We use the PVAR approach, Granger Causality Tests, and Impulse Response to establish causality. We also test the heterogeneity in the debt growth relationship across developed and developing countries. In our full sample of countries all types of debt appear to be harmful for economic growth. The negative effect of public debt appears to be uniform across developed and developing countries, although the impact is much stronger on developed countries. Household debt appears to be expansionary in developing countries whereas contractionary in developed countries. Non-financial corporation debt appears to have no impact on developing countries but negative impact on developed countries. Finally, total debt (i.e. the sum of public, household and non-financial corporation debt) has a negative impact on growth in developed countries but no impact is detected in the case of developing countries.

Does energy related aid affect emissions? Evidence from a global dataset

Donor countries have been using international aid in the field of energy for at least three decades. The stated objective of this policy is to reduce emissions and promote sustainable development in the global South. In spite of the widespread use of this policy tool, very little is known about its effect on emissions. In this paper we perform an empirical audit of the effectiveness of energy‐related aid in tackling CO2 and SO2 emissions. Using a global panel dataset covering 128 countries over the period 1971–2011 and estimating a parsimonious model using the Anderson and Hsiao estimator, we do not find any evidence of a systematic effect of energy‐related aid on emissions. We also find that the non‐effect is not conditional on institutional quality or level of income. Countries located in Europe and Central Asia do better than others in utilizing this aid to reduce CO2 emissions. Our results are robust after controlling for the environmental Kuznets curve, country fixed effects, country‐specific trends, and time‐varying common shocks.