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Arpit Gupta
@arpitrage
, 12 tweets, 4 min read Read on Twitter
One of India's most fundamental growth challenges: generating a Ganges corridor.

Why? Because population density drives economic clusters, which boosts specialization and trade and innovation. And this is where India's population is. ~400m people in this box.
Why is the density relevant? Compare with:

- US northeast, the Boston-Washington corridor. Massive economic/cultural center.
- The Kyoto-Tokyo belt. Linked by Shinkansen trains, this is the economic driver of Japan.

en.wikipedia.org/wiki/Taiheiy%C…
The density of India's Ganges corridor is on par with, if not greater than, other global clusters. Bihar, for instance, has a density of ~1,110 people/sq km. That's over 2x of the Netherlands; on par with the Japanese cluster.

Yet, with a population of 100m, only one city >500k
But it's incredibly poor.
There is a monumental scale challenge here; on par with the growth that India has seen so far.

Connect this whole region -- with rail, roads, water, air -- link up with ports and other inland areas, develop a whole set of urban areas to the level of other global clusters
And there is progress: highway construction:

River cleaning/shipping:

timesofindia.indiatimes.com/india/pepsico-…

economictimes.indiatimes.com/news/environme…
Rural electrification:
Massive shift to LPG gas connections, relieving enormous indoor air pollution from cooking

financialexpress.com/economy/modi-b…
The growth in night-time lights, indicative of electrification and other economic activity, from 2012 -> 2016 is massive in this area
Many recent policy successes in India have countered limited state capacity by using starting with universal ID and scaling using digital and tech solutions (banking, payments, health insurance)
Next steps: much more physical capital to boost the connectivity further; drastically expand cities; build much more housing; and turn this into India's economic heartland
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Arpit Gupta
@arpitrage
Does auto-enrollment into 401(k) retirement accounts increase savings?

Surprisingly, a common finding is *not always.* A look at this literature:

1/
Mardrian and Shea (2001) launched the literature on automatic enrollment. Just from the summary table, you see almost 50 percent of workers got 401(k)s in the cohort defaulted to automatic enrollment; relative to previous cohorts.

Seems valuable!

ssc.wisc.edu/~scholz/Teachi…

2/
But they caution:

"Simulation results reported in a previous version of this paper ... show that default savings behavior under automatic enrollment may actually lead to lower total 401(k) savings after only a few years relative to more traditional 401(k) plans"

3/
Read 11 tweets
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Arpit Gupta
@arpitrage
@dandolfa @arindube @1954swilliamson @gabriel_mathy @teasri @IvanWerning @farmerrf @Noahpinion @asymptosis Sure! First, here is aggregate corporate debt

The riskier stuff consists of levered loans -- adjustable interest rate, low covenant protection -- and often securitized in CLOs (now CLO-squared too wsj.com/articles/hedge…)
@dandolfa @arindube @1954swilliamson @gabriel_mathy @teasri @IvanWerning @farmerrf @Noahpinion @asymptosis This CLO market has grown a ton recently, assisted by their removal from risk-retention requirements

nytimes.com/2018/10/19/bus…
@dandolfa @arindube @1954swilliamson @gabriel_mathy @teasri @IvanWerning @farmerrf @Noahpinion @asymptosis To be fair, this stuff is commonly seen as safer and did not default much, even through crisis.

But the stuff we have today has the potential to be different. For one - the weak covenants can enable asset tunneling

bloomberg.com/news/articles/…
Read 7 tweets
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Arpit Gupta
@arpitrage
Day 2 of the #CEPR Household Finance conference
Day 1 here

Credit Smoothing by Arna Olafsson, Michaela Pagel and Sean Hundtofte

Use of high interest borrowing (in Iceland, overdraft checking accounts):
- heavily used in good times (-> high fees)
- not used to smooth consumption in times of unemployment
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Sameer Sankhe
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Andreas Saari
@AndreasSaari
This one has several gems:
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