The Burden of Government Debt in the Indian States: Implications for the MDG Poverty Target

debt, Millennium Development Goals, poverty

The Burden of Government Debt in the Indian States: Implications for the MDG Poverty Target

In this paper we explore what impact, if any, government debts have on achieving the Millennium Development Goals for the Indian states. To fulfill the goals, national governments, especially in the developing world, have to undertake major investments in the social sector; but how much they will really be able to do so will depend on the conditions of their finances. For the Indian states we find that government investment in the social sector is extremely important to reduce poverty, but the government's debt burden is actually stopping several states from attaining the MDG targets. Although, in the medium term the impact of the debt on poverty is not very harmful, in the longer run it has a significant negative impact. Therefore for policy purposes reduction in debt should be given a priority.debt, Millennium Development Goals, poverty

Corruption and Competition in the Presence of Inequality and Market Imperfections

We analyze the relation between corruption, competition and inequality in a developing economy context where markets are imperfect and there is wealth inequality. We consider an economy where different types of households (efficient and inefficient) choose whether to enter the production sector or not. Due to information asymmetry and wealth inequality, the market fails to screen out the inefficient types. In addition to the imperfect screening in the credit market, the inefficient type's entry is further facilitated by corruption in the product market. We analyze the market equilibrium and look at some of the implications. We show that a rise in inequality can lead to an increase in corruption along with greater competition. By endogenising the types, we also show how in the presence of corruption, initial wealth inequality will distort the incentives of the poor and lead to trap-like situations.Corruption, Competition, Credit Market, Inequality, Screening.

Does Inequality lead to Conflict?

conflict, wealth inequality, Nash bargaining

Inequality, Corruption, and Competition in the Presence of Market Imperfections

corruption, competition, credit market, inequality, screening

On measuring changes in welfare when changes in consumption bundles are small

The paper examines three extensively used propositions regarding changes in utility and social welfare attributable to small changes in consumption bundles. It is shown that, though these propositions are valid when the changes in consumption bundles are ``infinitesimally small,''' none of the propositions can be sustained when we have finite changes in consumption bundles, even when such finite changes are arbitrarily small. This drastically reduces the usefulness of the propositions for any practical purpose. The paper discusses the underlying formal structure of the problem and identifies the reason why the propositions run into difficulties in the case of finite changes.