Basu, Deepankar

Job Title

Professor, Department of Economics, University of Massachusetts Amherst

Last Name

Basu

First Name

Deepankar

Discipline

Economics

Expertise

Applied econometrics
Development economics
Political economy

Introduction

Deepankar Basu specializes in applied econometrics with a focus on Marxian political economy, and economic development.

Show all metadata

Search Results

Now showing 1 - 10 of 58

Open Access
Bias of OLS Estimators due to Exclusion of Relevant Variables and Inclusion of Irrelevant Variables
(2018) Basu, Deepankar
In this paper I discuss three issues related to bias of OLS estimators in a general multivariate setting. First, I discuss the bias that arises from omitting relevant variables. I offer a geometric interpretation of such bias and derive sufficient conditions in terms of sign restrictions that allows us to determine the direction of bias. Second, I show that inclusion of some omitted variables will not necessarily reduce the magnitude of OVB as long as some others remain omitted. Third, I show that inclusion of irrelevant variables in a model with omitted variables can also have an impact on the bias of OLS estimators. I use the running example of a simple wage regression to illustrate my arguments.
Open Access
Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy, 1948-2007
(2010) Basu, Deepankar; Manolakos, Panayiotis T.
The law of the tendential fall in the rate of profit has been at the center of theoretical and empirical debates within Marxian political economy ever since the publication of Volume III of Capital. An important limitation of this literature is the absence of a comprehensive econometric analysis of the behaviour of the rate of profit. In this paper, we attempt to fill this lacuna in two ways. First, we investigate the time series properties of the profit rate series. The evidence suggests that the rate of profit behaves like a random walk and exhibits "long waves" interestingly correlated with major epochs of U.S. economic history. In the second part, we test Marx's law of the tendential fall in the rate of profit with a novel econometric model that explicitly accounts for the counter-tendencies. We find evidence of a long-run downward trend in the general profit rate for the US economy for the period 1948-2007.
Open Access
Social Hierarchies and Public Distribution of Food in Rural India
(2014) Basu, Deepankar; Das, Debarshi
In this paper, we develop a simple model that shows that consumption of PDS food grains is significantly different between rich and poor households in states where the PDS functions relatively well; in places where the PDS is non-functional, the difference is not significant. Using household-level data from three recent thick rounds of the consumption expenditure survey (2004-2005, 2009-2010 and 2011-2012), we find evidence in support of the predictions from the model. This suggests that one way to make the PDS functional is to make it more accessible to poor and underprivileged households.
Open Access
Service Sector Growth in India: A View from Households
(2015) Basu, Deepankar; Das, Debarshi
This paper studies the phenomenon of service-led growth in India over the past two decades from the perspective of household expenditure. We use consumption expenditure data from four recent “thick” rounds of the National Sample Survey in 1993-94, 2004-05, 2009-10 and 2011-12, and study aggregate services as well as 5 individual categories – education, healthcare, transportation, entertainment, and personal services – for both rural India. We begin by showing that expenditures of non-rich sections of the population are, and continue to remain, a significant source of the demand that has supported growth of the service sector over the past two decades. In particular, we show that the bottom 75 percent of households in terms of monthly per capita expenditure (MPCE) have been the source of between 31 and 54 percent of total expenditure on services, the larger numbers referring to urban India. Next, we show that expenditure on services, as a share of total expenditure, has increased across the expenditure distribution, even when we control for expenditure growth over time. For a poor country like India with widespread under-nutrition, this presents an unusual trend. We highlight the perverse nature of this trend in two ways. First, we estimate bivariate Lowess curves for the share of services in monthly expenditure against real MPCE, for rural and urban India separately, and show that it has been pivoting in a clockwise direction since 2004-05. Second, we confirm this finding by estimating quadratic Engel curves with an instrumental variable strategy. The clockwise pivoting of Lowess and Engel curves, especially true for urban India since 2004-05, mean that spending patterns of poor households – as captured by the share of monthly expenditure devoted to services – increasingly resemble those of the rich, even as income differentials persist. This suggests that poorer households are possibly getting constrained into spending more on services, even when they have inadequate consumption of food, due to larger structural changes beyond their control.
Open Access
The Reserve Army of Labour in the Postwar U.S. Economy: Some Stock and Flow Estimates
(2012-02) Basu, Deepankar
This paper presents some estimates of the stock of the reserve army of labour, and flows into and out of the reserve army of labour for the postwar U.S. economy. Estimates of stocks are presented for the period 1948–2011 at a monthly frequency; 6 month moving average estimates of flows into and out of the reserve army of labour are presented for the period 1990–2011. Some interesting patterns in the stock and flow data are pointed out, and it is suggested that this data base on the active and reserve army of labour can be used for empirical analysis of the labour market from a Marxian theoretical perspective.
Open Access
Relations of Production and Modes of Surplus Extraction in India
(2010-10) Basole, Amit; Basu, Deepankar
This paper uses aggregate-level data, as well as case-studies, to trace out the evolution of some key structural features of the Indian economy, relating both to the agricultural and the informal industrial sector. These aggregate trends are used to infer: (a) the dominant relations of production under which the vast majority of the Indian working people labour, and (b) the predominant ways in which the surplus labour of the direct producers is appropriated by the dominant classes. This summary account is meant to inform and link up with on-going attempts at radically restructuring Indian society.
Open Access
Long Waves of Capitalist Development: An Empirical Investigation
(2016) Basu, Deepankar
In this paper, I investigate the phenomenon of long waves of capitalist development from two perspectives. First, I look for evidence of long waves of economic growth taking the dates for turning points of long waves from the historical literature (Mandel, 1995). Using historical data for 20 capitalist countries from the Maddison-Project, I find that the growth rate of real per capita GDP (and real GDP) is significantly higher in the upswing than in the downswing phase of long waves. I interpret this as evidence of long waves of economic activity. Second, I revisit the method used by Gordon, Weisskopf and Bowles (1983) to identify long waves, using historical data on the U.S. economy from Duménil and Lévy (2013). I use this definition of long waves to test their hypothesis that business cycle downturns are “reproductive” during the upswing phase and “non- reproductive” during the downswing phase of long waves. I find evidence in support of the hypothesis.
Open Access
An Approach to the Problem of Employment in India
(2018) Basu, Deepankar
The challenge of employment in the Indian economy, especially after it growth acceleration since the mid-1980s, relates to its quality rather than its quantity. While employment growth has kept pace with the labour force over the long run, what has grown is informal employment. The coexistence of rapid capital accumulation, robust output growth and lack of growth of formal employment can be understood using the well-known Harris-Todaro model of a dual economy. This framework highlights the key role of the wage gap between the modern and traditional sectors as a determinant of urban informal employment. Hence, one of the most effective and egalitarian ways to address the employment problem is to adopt policies to increase agricultural productivity and income, which can reduce the wage gap. Since crop yields in India are far lower than many other countries in the world, including China, Brazil, and Bangladesh, there is ample scope for land-augmenting and labour-absorbing technological change in Indian agriculture. Efforts to ramp up industrialization should be taken up in earnest only after the wage gap has been narrowed significantly.
Open Access
Marx after Okishio: Falling Rate of Profit with Constant Rate of Exploitation
(2022) Basu, Deepankar; Orellana, Oscar
Can cost-reducing, technical change lead to a fall in the long run rate of profit if class struggle manages to keep the rate of exploitation constant? In this paper we demonstrate, in a general circulating capital model, that if (a) the technical change is capital-using labor-saving (CU-LS), (b) the real wage bundle can change, and (c) the decline in the unit cost of production is bounded above by the change in the nominal labor cost associated with the new technique of production, then viable technical change can be consistent both with a constant rate of exploitation and a fall in the long run rate of profit. This result vindicates Marx's claim in Volume III of Capital, that if the rate of exploitation remains unchanged then technical change in capitalist economies can lead to a fall in the long run rate of profit.
Open Access
Farmer Suicides in India: Levels and Trends across Major States, 1995-2011
(2016) Basu, Deepankar; Das, Debarshi; Misra, Kartik
In the paper, we use data on farmer suicides from the National Crime Records Bureau and population data from the Censuses of 1991, 2001 and 2011 to estimate the suicide mortality rate (SMR) of farmers and non-farmers for 19 major states of India and for the country as a whole. We use movements in the SMR ratio ratio of farmer SMR and non-farmer SMR) to understand the level and trend of the problem of farmer suicides across states and over time. For the country as a whole, and for many individual states, the SMR ratio has increased over time. This suggests that the problem of farmer suicides has become more severe across large swathes of the country, and calls for immediate and well planned policy interventions.