The Members of Parliament Local Area Development Scheme (MP-LADS) came in effect in 1993, closely followed by the 73rd Amendment to the Constitution, along with the wave of democratic decentralisation process in India. The MP-LADS allows for a fixed amount, non-lapsable Rs. 2 crores per year for...

The Members of Parliament Local Area Development Scheme (MP-LADS) came in effect in 1993, closely followed by the 73rd Amendment to the Constitution, along with the wave of democratic decentralisation process in India. The MP-LADS allows for a fixed amount, non-lapsable Rs. 2 crores per year for...

A short-run model incorporates instantaneous portfolio equilibrium with macroeconomic flows to clarify the structure of real-financial sector interactions. If equity and foreign exchange markets are introduced in structuralist theories of asset markets in developing countries, the key result...

The paper analyzes incentive compatible task allocation between bureaucrats, central and local politicians in conjunction with the type of task. If effort in one task is an input in another task, giving the bureaucrat the second task as his objective will ensure the completion of both tasks....

Rising deficits and high debt ratios characterized currency crises in countries with low private savings rates and low population densities. But in emerging markets with large population transferring to more productive employment, sustainable debts and deficits may be higher. Debt ratios fall...

Resurgence in Indian inflation since 2007 was associated with sharp food and oil price inflation. Propagation mechanisms that allow these relative prices to affect aggregate prices include governance failures, the effect of food prices on wages, exchange rates on costs and the response to cost...

The paper (i) briefly surveys India‘s policy choices over the reform period with respect to liberalization of the capital account, their underlying rationale and politics, (ii) demonstrates the kinds of capital inflows that resulted; their special characteristics, (iii) assesses the...

A panel regression gives evidence that more flexibility in Asian exchange rates reduces risk associated with bank borrowing abroad, but deviations from mean exchange rates, and from the renminbi, increase risk. Since the exchange rate regime affects bank behavior and the incentives to hedge, the...

An open economy macromodel, calibrated to typical institutions and shocks of a populous emerging market economy, shows that a monetary stimulus preceding a supply shock can abort inflation at minimum output cost, since of the appreciation of exchange rates, accompanying a fall in interest rates...

A widely accepted hypothesis is that concessions demanded by and granted to vested interests are responsible for the steady decline in the government financial position. We argue that it was rather the supply-side shocks of the seventies combined with the political objective of protecting the...