Standard models in open economy macroeconomics predict that an expansionary (contractionary) monetary policy will lead to a currency depreciation (appreciation). Models that generate this prediction include the Dornbusch overshooting model, the flexible price model, the liquidity-effect models,...

This paper studies optimal monetary policy in a small open economy under flexible prices. The paper's key innovation is to analyze this question in the context of environments where only a fraction of agents participate in asset market transactions (i.e., asset markets are segmented). In this...

Over the past 25 years there has been a remarkable economic catch-up by scheduled castes and tribes (SC/STs) towards non-SC/ST levels in the terms of their education attainment levels, their occupation choices as well as wage and consumption levels. This is remarkable given the centuries of...

Development of an economy typically goes hand-in-hand with a declining importance of agriculture in output and employment. Given the primarily rural population in developing countries and their concentration in agrarian activities, this has potentially large implications for inequality along the...

This paper studies optimal monetary policy in a small open economy under flexible prices. The paper’s key innovation is to analyze this question in the context of environments where only a fraction of agents participate in asset market transactions (i.e., asset markets are segmented). In...

India has witnessed a remarkable catch-up by the historically disadvantaged scheduled castes and tribes (SC/STs) towards non-SC/ST levels in their education attainment levels, occupation choices as well as wages during the period 1983-2012. Using a heterogenous agent, multi-sector model we show...

This document contains supplemental material to Hnatkovska, Lahiri and Paul (2010) paper. It presents detailed estimation results underlying the Tables and Figures in the main text.

What is the relationship between interest rates and the exchange rate? The empirical literature in this area has been inconclusive. We use an optimizing model of a small open economy to rationalize the mixed empirical findings. The model has three key margins. First, higher domestic interest...