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Sarbajit Chaudhuri - One of the best experts on this subject based on the ideXlab platform.

  • endogenous labour Market Imperfection foreign direct investment and external terms of trade shocks in a developing economy
    Economic Modelling, 2016
    Co-Authors: Sarbajit Chaudhuri, Anindya Biswas
    Abstract:

    This theoretical paper shows that developing countries possess an inherent shock-absorbing mechanism that stems from their peculiar institutional characteristics and can lessen the gravity of detrimental welfare consequence of international terms-of-trade disturbances in terms of a static two-sector, full-employment general equilibrium model with endogenous labour Market distortion. The supply of foreign capital in the economy is a positive function of the return to capital. Subsequently, it has been verbally explained why the main result of the full-employment model would remain valid even in a two-sector specific-factor Harris-Todaro type model with urban unemployment. The analysis leads to a couple of important policies that should be adhered to preserve this in-built system. Finally, it offers three important statistically testable hypotheses which would pave the way for future empirical research in this area.

  • international factor mobility informal interest rate and capital Market Imperfection a general equilibrium analysis
    Economic Modelling, 2014
    Co-Authors: Sarbajit Chaudhuri, Manash Ranjan Gupta
    Abstract:

    This paper makes an attempt to provide a theory of determination of interest rate in the informal credit Market in a less developed economy in terms of a three-sector static deterministic general equilibrium model. There are two informal sectors which obtain production loans from a monopolistic moneylender and employ labour from the informal labour Market. On the other hand, the formal sector employs labour at an institutionally fixed wage rate and takes loans from the competitive formal credit Market. We show that an inflow of foreign capital and/or an emigration of labour raises (lowers) the informal (formal) interest rate but lowers the competitive wage rate in the informal labour Market when the informal manufacturing sector is more capital-intensive vis-a-vis the informal agricultural sector. International factor mobility, therefore, raises the degrees of distortions in both the factor Markets in this case.

  • endogenous capital Market Imperfection informal interest rate determination and international factor mobility in a general equilibrium model
    MPRA Paper, 2013
    Co-Authors: Sarbajit Chaudhuri, Manash Ranjan Gupta
    Abstract:

    This paper makes a pioneering attempt to provide a theory of determination of interest rate in the informal credit Market in a less developed economy in terms of a three-sector static deterministic general equilibrium model. There are two informal sectors which obtain production loans from a monopolistic moneylender and employ labour from the informal labour Market. On the other hand, the formal sector employs labour at an institutionally fixed wage rate and takes loans from the competitive formal credit Market. We show that an inflow of foreign capital and/or an emigration of labour raises (lowers) the informal (formal) interest rate but lowers the competitive wage rate in the informal labour Market when the informal manufacturing sector is more capital-intensive vis-a-vis the informal agricultural sector. International factor mobility, therefore, raises the degrees of distortions in both the factor Markets in this case.

  • endogenous labour Market Imperfection and the hos model some counterintuitive trade theoretic results
    MPRA Paper, 2012
    Co-Authors: Sarbajit Chaudhuri
    Abstract:

    This paper introduces endogenous labour Market Imperfection in an otherwise Heckscher-Ohlin-Samuelson (HOS) model. It demonstrates that this framework satisfies the Stolper-Samuelson theorem and the magnification effect and that it is capable of producing certain trade-theoretic results which are contrary to the standard HOS and the Corden and Findlay (1975) results.

  • international factor mobility informal interest rate and capital Market Imperfection a general equilibrium analysis
    MPRA Paper, 2011
    Co-Authors: Sarbajit Chaudhuri, Manash Ranjan Gupta
    Abstract:

    This paper makes a pioneering attempt to provide a theory of determination of interest rate in the informal credit Market in a small open economy in terms of a three-sector general equilibrium model. There are two informal sectors which obtain production loans from a monopolistic moneylender and employ labour from the informal labour Market. On the other hand, the formal sector employs labour at an institutionally fixed wage rate and takes loans from the competitive formal credit Market. We show that an inflow of foreign capital and/or an emigration of labour raises (lowers) the informal (formal) interest rate while lowers the competitive wage rate in the informal labour Market when the informal manufacturing sector is more capital-intensive vis-a-vis the agricultural informal sector. International factor mobility, therefore, increases the degrees of distortions in both the factor Markets in this case.

Sugata Marjit - One of the best experts on this subject based on the ideXlab platform.

  • credit Market Imperfection lack of entrepreneurs and capital outflow from a developing economy
    2020
    Co-Authors: Sugata Marjit, Suryaprakash Mishra
    Abstract:

    This paper explores the impact of credit Market on the entrepreneurs and demand for credit in a credit constrained economy and the resultant impact on the capital flows. In standard trade models the capital flows across countries are explained as a result of the rate of return differentials due to presence/absence of capital among the countries whereby capital flows from the capital rich countries to capital poor countries. We show that the rate of return differentials could arise due to presence/absence of entrepreneurs, i.e., low price of capital in autarky may reflect lack of demand for credit due to scarcity of entrepreneurs and not capital abundance and eventually may lead to capital outflow from a capital scarce country. This is a different way of echoing the sentiment of the well-known “Lucas Paradox” which suggests that capital might flow from the poor to the rich countries. We also show the possibility of trade and capital flow being complements and not substitutes, as is usual in standard models.

  • asset level heterogeneity competition and export incentives the role of credit rationing
    2020
    Co-Authors: Sugata Marjit, Moushakhi Ray
    Abstract:

    Firm heterogeneity is mostly discussed in the literature from the viewpoint of productivity differential. In contrast this paper recognizes wealth heterogeneity as an important factor that results in firm heterogeneity. The issue of wealth heterogeneity and export incentive through credit Market Imperfection over the life cycle of a firm remains largely unaddressed in the literature. This paper studies the dynamics of wealth heterogeneity and export incentive of credit rationed firms through asset building. The theoretical and empirical results indicate that an increase in the initial level of competition implies greater export incentive. However, over the life cycle of a firm, the role of competition is impacted by the intensity of capital accumulation and the initial level of wealth. Greater local competition before the entry of firms in the export Market hurts export incentive by limiting cash flows and asset build up. Thus low profits due to competition allows firms to look for export opportunities but lower cash flows hurt such incentives.

  • inequality structure of production and international trade the role of credit Market Imperfection
    2017
    Co-Authors: Hamid Beladi, Sugata Marjit, Suryaprakash Misra
    Abstract:

    Credit rationing in the presence of asset inequality affects production and trade pattern in this paper, but not in the conventional way. A Ricardian general equilibrium framework with heterogeneous levels of asset ownership is developed to show that more equal asset distribution may contract the output of the credit intensive sector as redistribution to the bottom of the ladder fails to promote entrepreneurs. However, the same in favor of the middle of the ladder may do the opposite. We point out the possibility that an economy with relatively equal distribution of asset ownership may import capital or credit intensive good and also export capital, unlike in a conventional HOS model.

  • on the sustainability of product Market collusion under credit Market Imperfection
    MPRA Paper, 2016
    Co-Authors: Sugata Marjit, Arijit Mukherjee, Lei Yang
    Abstract:

    We study the implication of credit constraints for the sustainability of product Market collusion in a bank financed Cournot duopoly when firms face an imperfect credit Market. We consider two situations without or with credit rationing. When there is no credit rationing moderately higher cost of external finance may affect the degree of collusion, but a substantial increase keeps it unaffected. Permanent adverse demand shock in this set up does not affect the possibility of collusion, but may aggravate the finance constraint and eventually lead to collusion. We also discuss the case with credit rationing.

  • firm heterogeneity international trade and credit Market Imperfection
    2014
    Co-Authors: Hamid Beladi, Avik Chakrabarti, Sugata Marjit
    Abstract:

    We build up a simple Ricardian trade model with Imperfection in the Market for credit which affects the pattern of production. Workers/entrepreneurs are endowed with different levels “capital†and need to borrow to produce the credit intensive good. We argue that in such a framework identical countries may gain from trade without the assumption of comparative advantage. Such a trade will be based on fragmentation. Firms with strong internal cash flow will enter the credit intensive sector. Among those the weaker ones will like to deal in fragments and the richer ones will vertically integrate. Later we generalize our framework where prices and interest rate are determined simultaneously. We also argue why fragmentation may lead to greater efficiency in the presence of credit constraints.

Erkki Koskela - One of the best experts on this subject based on the ideXlab platform.

Jan Konig - One of the best experts on this subject based on the ideXlab platform.

Jaiyoung Choi - One of the best experts on this subject based on the ideXlab platform.

  • Market Imperfection and international trade in a dynamic economy
    International Journal of Economic Theory, 2013
    Co-Authors: Jaiyoung Choi
    Abstract:

    This paper examines the implications of product Market Imperfection for a dynamic economy in a two-commodity and two-factor open economy model in which the home country produces a consumption good (capital good) in a perfectly competitive (monopolistic) Market. Based on a social utility function of constant elasticity of substitution variety, excess demand for the goods, volume of trade, and patterns of specialization are analyzed vis-a-vis the standard case where the capital-good Market is perfectly competitive. Further, it is shown that the presence of imperfect capital-good Market structure does not preclude the possibility of long-run steady-state economic growth.

  • factor growth and foreign investment under product Market Imperfection in the harris todaro economy
    Pacific Economic Review, 2013
    Co-Authors: Jaiyoung Choi
    Abstract:

    This paper examines the ramifications of an imperfect product Market, with reference to factor growth and foreign investment, for a small Harris–Todaro economy with the agricultural (manufacturing) sector under perfect competition (monopoly protected by an import quota). It is shown that factor growth entails multiple component effects of conflicting signs (i.e. the primary growth effect, the distortionary production effect, and production and employment effects induced by changes in the domestic commodity prices), and, hence, can be welfare‐reducing. Similarly, an inflow of foreign capital can be immiserizing when the foreign capital earnings are repatriated at the domestic rental rate.

  • product Market Imperfection and the two sector harris todaro economy
    Review of International Economics, 2012
    Co-Authors: Jaiyoung Choi
    Abstract:

    This paper examines the ramifications of Market Imperfection for a dual economy in the context of the two‐sector Harris–Todaro model with the agricultural (manufacturing) sector under perfect competition (monopoly). Based on a utility function of constant elasticity of substitution variety, it demonstrates (i) existence of a unique equilibrium at which the consumer price ratio and the producer price ratio are synchronized; (ii) several fundamental properties of the model (crucial to extended research on this subject area); (iii) contrary to an earlier result obtained under an oligopolistic manufacturing sector, trade liberalization for a small economy may be immiserizing.