Regional Income Disparities in India and Test for Convergence--1980 to 2006
We examine trends in regional disparities in India over a period of 26 years (1980 to 2006), employing the panel data estimation method based on the neo-classical framework. The analysis reveals that Indian state incomes have experienced convergence. The speed of convergence has been faster during the period 1992-2006, when the Indian economy embarked on detailed structural reforms. Incomes of the special category states (10) have also shown convergence, even at a higher rate. Non-special category states (15) have shown divergence in incomes.
Asset Pricing with Spirit of Capitalism in a Rare Disaster Framework
The equity premium puzzle continues to exist despite diverse approaches employed from different perspectives to solve it. This paper seeks to explain the equity premium puzzle and other related asset pricing puzzles by extending the rare disaster framework developed by Reitz (1988), Barro (2006, 2009), and Barro & Ursua (2008). Unlike other models in the existing literature, the proposed model incorporates suitable proxies for fear and greed, which are believed to play very significant roles in the dynamics of asset prices. The proposed model includes fear of rare disasters as a proxy for fear; and direct preference for wealth-that is, the spirit of capitalism, which has been used for explaining asset pricing puzzles by Bakshi & Chen (1996), and Smith (2001)-as a proxy for greed. It is possible to develop two variants of the model: the basic model which is based on Von Neumann-Morgenstern (VNM) state-separable and time-additive iso elastic expected utility; and its variant which employs recursive preferences proposed by Epstein & Zin (1989, 1991), and Weil (1990). This paper shows the basic version of the model and its calibration using Barro's data for a sample of 35 countries. For this limited sample, the model is capable of generating the required equity premium with very reasonable values of the premium. This is an ongoing research, and it remains to be seen whether the advanced version of the model is capable of addressing Constantinides'(2008) criticism of the explanation of the equity premium puzzle offered by Barro & Ursua (2008).
Servicescape Aesthetics: Exploring the Role of Design
Owing to the intangibility of services, customers generally rely on environmental cues to evaluate the quality of services. There remains a surprising lack of empirical research addressing the aesthetics of service environments (servicescapes) and their role in consumption settings.