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Abstract Using the lens of game theory, the paper attempts to describe the ways in which it can enhance undergraduate understanding in international relations. The author argues that the inherent instability in the game of Kashmir is due to contrasting approaches towards the game by India and Pakistan, that is, infinite versus finite respectively. To exhibit the games being played and their nature, the incidents and statements by the Prime Ministers of both the nation's post-Pulwama incident were scrutinized and decrypted using game theory. The analysis revealed that Pakistan plays the game of Mutual distrust, Chicken and Bullying while India plays the timing games. Further, both the nations play deterrence games, however, their approaches differ – classical versus perfect. Also, the frequent defection of Pakistan from mutual cooperation point in iterated prisoners dilemma inflicts dynamics between the games – shifting it to mutual distrust and to chicken resulting in tensi

We all know 2nd law of thermodynamics. It says that the entropy of the universe is continuously increasing.   This means everything in the universe is getting more and more disordered. Everything, even our brain!! Yeah, and effect of this law on the human brain can be seen. Every day it's getting more and more disordered, more and more lunatic, because otherwise why one would do the work which is self-destructing for him. How does the brain, which made epics in olden days with Curie, with Macmillan, with Newton,   with Mullikan, today is unable to differentiate between what's good for him and what's not. Why his prodigy doesn't understand that reckless use of energy is like poisoning himself. Why can't he understand that leaves/trees are the major source of energy for our every living thing. It's one thing that has made this earth sustainable. We brutally trample the falling autumn leaves, whereas even   dying   those leaves try to give respite to a suffere

We are fortunate to be witnessing a “eureka” moment of humanity. It opens new doors to our understanding of the universe and subsequently our own self. 100 years ago Einstein’s theory of general relativity predicted the formation of black holes. However, Einstein himself denied the existence of black holes several times. He believed that mass would not allow itself to be compressed to the point of collapse. Thus over the course of time researchers had been trying to “see the useable”. They did find indirect evidence of the black hole’s presence. For instance, capturing the strong X-ray flares, “the burps of the blackholes”, which is believed to be released when black holes consume large matter (like a star). Or by observing trajectories of stars and gas that seem to circle around very dark spots in the sky. Or by hearing their whispers. Yes, you read it right! Just as sound waves disturb the air to make noise, the collision of black holes unleashes massive gravitational waves whi

Law of one price says that if two goods are identical, they must sell at the same price. This happens due to arbitrageurs. If prices differ arbitrage tries to close the gap. If transaction costs are small then the prices become identical, however, if transactions cost is significant then prices would differ (obviously). Transaction costs are all costs associated with a transaction over and above the cost of the item that actually changes hands.  Purchasing Power Parity is based on the law of one price for an open economy. The only difference is the law of one price holds for each individual good but PPP comments on the general basket of good. It says that in long run exchange rates of countries should adjust such that the cost of an identical basket of good is the same across countries i.e. P = S.P*; where P is the price level in home country, P* is the price level in foreign country and S is the exchange rate of home currency to foreign currency. The real exchange rate is

Studies have shown that we might have a new entrant to wobble the already shaken climatic system of our planet. We have another loud and clear alarm from nature before we put an axe to our own foot. As you read and I write something strange is happening deep down the womb of the earth which has the potential to disrupt various technologies across the globe, some of which have already started to take corrective steps. The magnetic poles have started to move at unprecedented speeds and possibly we are standing at the doorstep of the magnetic polar flip, i.e. when earth’s magnetic north pole today would become magnetic south while the earth’s magnetic south becoming magnetic north. The poles have moved so much that at present both our north and south magnetic poles of our planet are in the eastern hemisphere. Note that magnetic south is actually earth’s magnetic north while the magnetic north is earth’s magnetic south. Run your brains! (Hint: A freely hanging magnet, like one in the

European Communities were basically three internal organizations that were governed by the same set of institutions i.e. European Coal and Steel Community (ECSC), European Atomic Energy Community (EAEC) and the European Economic Community (EEC). The ECSC (Belgium, France, Luxembourg, Italy, Netherlands, West Germany) was formed by the Treaty of Paris in 1951 to create a common market for Coal and Steel and thereby regulating the industrial production under centralized authority. It served as a model for the EAEC and EEC set up in 1957 Treaty of Rome, sharing its membership and some of the institutions. The EAEC was formed to form a specialist market for the developing nuclear states in Europe. The ECSC and EAEC were governed by different institutions until the Merger Treaty of 1965, which brought them under a single institutional structure of the EEC. ECSC however dissolved completely in 2002 when the Paris Treaty expired. EAEC on the other hand still stands independen

There are two main distortions in the New Keynesian model: 1. markups due to imperfect competition (leads to low employment in the long run): we assume that it is controlled by the fiscal authority. 2. price dispersion due to nominal rigidities (short run): central bank's responsibility Now we will think about what is the optimal value of interest rate. Till now IR was an exogenous variable but now we will convert it to endogenous. Objectives of CB are controlling inflation and smoothening business cycle i.e. keeping inflation gap and output gap small. ​ The above-mentioned function is called the loss function. CB basically wants to minimize the loss function. "Omega" is CB's weight on the 2nd mandate. The formulae's have the square term so that when we derivate we can get the interior solution. A truly micro-founded model should have maximized household welfare. But we do not do that because (a) algebra gets way too messy (b) this objective

Click here to read an easy-to-understand guide to Brexit - beginning with the basics, then a look at the current negotiations, followed by a selection of answers to questions the BBC has been sent.

This story is featured in BBC Future’s “Best of 2017” collection. Click here to read.

The Monetary Institute's "Our Money, Our Banks, Our Country - Money Creation in the Modern Economy" conference was held in Zurich, Switzerland on February 5, 2018. Professor Richard Werner, Chair in International Banking, University of Southampton, England provided this overview of how money is created in nations throughout the world and the impacts and consequences of the current system. 

NK model takes the RBC model backbone and adds to that the price stickiness. To incorporate price stickiness we assume that firms are price-setters and thus move away from the perfect competition assumption. In the NK model we assume goods heterogeneity i.e. firms make a variety of goods which are not perfect substitutes. There are numerous or continuous of firms, each of which set their own price but does not impact the industry aggregates and thus takes all other prices as given. Further, they only take labour as the factor of production and have the same exogenously decided technology factor. On the other hand, households consume a variety of goods and supply labour to earn wages.  The only difference in the monopolistic competition we get is the two-stage budgeting of households. They have to allocate spending across different varieties for a given amount of income and also have to choose between consumption and leisure. So, first, we solve for how much of each variety of

In our models so far we had assumed that agents live infinitely, which everybody knows is unrealistic. So, in this model attempt was made to relax this assumption. Also, we try to look that if generations overlap and have to trade with one another then how will the competitive decentralized equilibrium change (if it does). This model allows for the possibility that the decentralized competitive equilibrium be different from the social planner's allocation. In fact, the competitive equilibrium may not be the Pareto optimal solution.  Key assumptions: Time is discrete here but goes on forever. The model consists of "young" and "old" generations. Each generation lives for two periods and die. At the start of every period, the same number of identical people are born. In the beginning, however, there were two types of households, those born then and the initial old. In every period every individual receive an endowment of perishable consumption goods i.e. two

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T he Real Business cycle model, as discussed in another article, does not include monetary components in its analysis. This is because in the RBC models neither holding money gives utility nor it earns interest, thus there is no motivation to hold the same. However to understand the effect of monetary policy, impact of money on prices and comment on the optimal inflation rate we need to include monetary components into the model. Mainly two approaches are used to explicitly incorporate the frictions and motivate households to hold money - Money in utility approach and Cash in advance approach.  First, we will discuss the first model i.e. MIU. Money in Utility (MIU) model: In Money in Utility approach, holding money provides utility to the households since it eases the transactions and also reduces the transaction costs. The money is stuck to the household utility function in the form of real balances. The household budget constraint changes by the inclusion of real money balan

​ According to the Keynes theory, the source of fluctuations in the aggregate demand. The aggregate demand further varies due to changes mainly in investment. It occurs through the following process (shown in figure 1). The entrepreneurial expectations form the prospective yield (the expected income from the investment), which changes the marginal efficiency of capital (the rate of return on capital invested), thus changing the amount of capital investment in the economy. The capital investment (accelerator) then transfers the effect onto the aggregate demand (via multiplier i.e. changes in aggregate demand depends on the multiplier and the accelerator). (for more details you can watch this short video by marginal revolution university: click here ). According to the Keynesians, government policies can help stabilize the demand. To understand the policy: monetary and fiscal, implications on the aggregate demand, we will now peek into the IS-LM curves. The investment saving liqui