Collected Papers in Theoretical Economics (Volume V): Economic Policy and Its Theoretical Bases

Description

Effective policymaking is based on economics which is a blend of empiricism as well as theory. It needs to be grounded not only in data, statistics, and the regularities observed therein, but also analytics, deductive reasoning, and logic, which are the constituents of theory.
Published during 2009–16, the seven years that Basu spent as a policymaker—first as chief economic adviser to the Government of India and then as chief economist of the World Bank—this volume draws on the work done by empirical economists and is rooted in analytics, even while addressing practical, down-to-earth problems.
The papers having a direct bearing on economic policymaking in this quintessential compilation range from topics such as financial regulation, global policy coordination, aspects of the Indian economy like fiscal and monetary policy design, inflation management, food-grain policy and, more generally, the influence of theory on government policymaking.
The volume addresses some of the most compelling challenges of our times, from the global financial crisis and sub-prime mortgage breakdown to corruption control and the design of interventions to provide subsidized food to the disadvantaged segments of society.

About the Author

Kaushik Basu is professor of economics and C. Marks Professor of International Studies at Cornell University, USA. Formerly, he was chief economist and senior vice president of the World Bank and chief economic adviser to the Indian government.

He has published widely in several fields—including development economics, game theory, welfare economics, and law and economics—and in The New York Times, BBC News Online, and The Indian Express.

Basu has received honorary degrees from the University of Bath, UK; Fordham University, USA; Assam University, India; Lucknow University, India; and IIT Bombay, India. In 2008, he was awarded the Padma Bhushan by the president of India.

Table of contents

List of Tables and Figures

1. Introduction
PART I: REGULATION, FINANCE, AND CORRUPTION
2. Why, for a Certain Class of Bribes, the Act of Giving a Bribe Should Be Treated as Legal
3. Too Small to Regulate (co-authored with Avinash Dixit)
4. A Marketing Scheme for Making Money off Innocent People: A User’s Manual
5. A Simple Model of the Financial Crisis of 2007–9: With Implications for the Design of a Stimulus Package
6. Non-recourse Mortgages and Credit Market Breakdowns: A Framework for Policy Analysis
PART II: POLICYMAKING IN A GLOBAL ECONOMY
7. Globalization of Labour Markets and the Growth Prospects of Nations
8. Sovereign Debt and Joint Liability: An Economic Theory Model for Amending the Treaty of Lisbon (co-authored with Joseph E. Stiglitz)
9. How to Devalue Exchange Rates, Without Building Up Reserves: Strategic Theory for Central Banking
10. The Art of Currency Manipulation: How Some Profiteer by Deliberately Distorting Exchange Rates
PART III: THE INDIAN ECONOMY: DIVERSE CONCERNS
11. China and India: Idiosyncratic Paths to High Growth
12. The Rise of the Indian Economy: Fiscal, Monetary, and Other Policy Challenges
13. India’s Foodgrain Policy: An Economic Theory Perspective
14. Understanding Inflation and Controlling It
15. Child Labour and Household Wealth: Theory and Empirical Evidence of an Inverted-U (co-authored with Sanghamitra Das and Bhaskar Dutta)
PART IV: THEORY AND METHOD
16. Fiscal Policy as an Instrument of Investment and Growth
17. Does Economic Theory Inform Government Policy?
18. Randomization, Causality, and the Role of Reasoned Intuition
Index