Browsing by Author "Sihag, Balbir S."

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    Exploring the Origin of Mathematical Economics
    (Scientific Research, 2016-02) Sihag, Balbir S.
    The existing studies on the origin and history of mathematical economics are euro-centric and cover only the past two centuries. It is intended to show that 1) mathematical economics has an ancient origin. Kautilya wrote The Arthashastra during the fourth century BCE and used discrete marginal analysis and combinatory rules to sharpen economic analysis. 2) It is indicated that in the West, image of mathematics has changed directly and that of economics indirectly as the theology/philosophy of the church changed. 3) It is claimed that in India the developments in both economics and mathematics have always been simple, secular and user-friendly to solve problems related to agriculture, construction, navigation and trade.
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    Kautilya on Foresight, Oversight, Regulations, Ethics and Systemic Risk
    (Scientific Research, 2017-04) Sihag, Balbir S.
    In the wake of the recent Great recession of 2008-9, prudential supervision and “too-big-to-fail” have become the focal topics of discussion and policy. Western countries have added prudential supervision to complement the traditional regulatory approach to prevent reoccurrence of financial crisis. Additionally, large financial institutions are subjected to repeated “stress tests” to diagnose the vulnerability of the financial system. Kautilya had argued a long time ago that moral failure was the primary source of the systemic risk. Keeping that in view, relevance of his three insights is presented. Firstly, regulations, prudential supervision and ethical grounding are needed for preventing future financial crisis. That is, current approach of relying only on regulations and supervision, most probably would not prevent future financial crisis. Secondly, if moral hazard resulting from moral failure is the primary source of systemic risk, undue focus on “too-big-to-fail” financial institutions is unwarranted. Thirdly, Financial Stability Oversight Council’s two objectives, promoting market discipline and prevention of another financial crisis, do not seem to be compatible with each other.