I work on endogenous growth theory and emerging market real business cycle models.

Factor Income Taxation, Growth and Investment Specific Technological Change

With Monisankar Bishnu and Chetan Ghate

Updated: February, 2014. 

Abstract: We construct a tractable endogenous growth model with endogenous investment specific technological change (ISTC) to explain why advanced economies with similar growth rates have widely varying factor income taxes. Public and private capital stock externalities are assumed to augment ISTC. A specialized labor input augments final good production. We show that several labor and capital tax combinations can implement the planner's growth rate on the balanced growth path. We show that allowing for endogenous ISTC and externalities leads to a divergence between the welfare maximizing factor income tax mix and the factor income tax combination that implements the planner's allocation. A simple numerical exercise offers an explanation for how the trade-off between factor income taxes is affected by the magnitude of the externalities. 

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WORK IN PROGRESS

A Model of the Indian Business Cycle

With Chetan Ghate and Suchismita Tarafdar

Updated: June, 2014. 

Abstract: A common feature across emerging market economies (EMEs) is that while government expenditure and real interest rates are more volatile than output they can be pro-cyclical or even counter-cyclical. To explain this observation, we introduce fiscal policy into a standard emerging market business cycle model with interest rate shocks. We show that in addition to serving as an automatic stabilizer, fiscal policy also makes real interest rates a-cyclical or pro-cyclical. Finally we use this model to replicate some the key features of the Indian business cycles. 

On Food Security

With Anuradha Saha

Updated: March, 2014. 

Abstract: This paper builds a theoretical model on India's Food Security Act. We analyze the effects of this law on output and employment of agriculture and manufacturing sector. We find that in the long run such a food subsidy programme increases the output of the food sector but lowers the manufacturing output. Further, the price of food crop relative to the price of the manufacturing good declines. We also determine the law's welfare effects on the farmer and the entrepreneur. In the long run, this food subsidy programme may have welfare gains for the two agents only for a certain range of subsidies.   

Other Projects

Sovereign Debt and the Indian Business Cycle

Financial Development, Gold Accumulation. and Growth