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Research

CURRENTLY WORKING ON

My research is currently focused on understanding the economic performance and dynamics of emerging economies, particularly India. This part of a big question in Economics - why are some countries rich and some poor? In particular, why have so few countries transitioned to a developed economy? Why do countries fail to overcome the middle-income trap? Will the current set of emerging economies, particularly India, manage to overcome that and emerge as developed economies? Additionally, I have also looked into the impact of covid on the Indian economy.

#productivity #policy #reform #innovation #imitation #entry #exit #skill #India

Productivity in India is low. We use plant-level data of Indian manufacturing firms and study two aspects. First, did the major economic reforms in India in the 1990s increase productivity? Second, we look at which kind of firms contribute to increasing productivity in India - new entrants, exiting or surviving firms? Which kind of firms are entering, exiting or surviving? 

Evolution of the distribution of plant-level productivity (with Shweta Jain) Working Paper

#covid #lives #livelihoods #impact #India #labor #industry #manufacturing

The impact of covid on the Indian economy and the lives and livelihoods of the people has been huge. We study different aspects of that.

Lives and Livelihoods: An Exit Strategy from Lockdown For India (with Soma Dey and Shweta Jain), 30 May, 2020. EPW, Special Article, Vol. 55, Issue No. 22.

“Impact of COVID -19 on Manufacturing Industries in India: Networks and Trade Dependence”,with Shweta Jain, in The COVID-19 Pandemic, India and the World. Economic and Social Policy Perspectives, Rajib Bhattacharyya, Ananya Ghosh Dastidar, and Soumyen Sikdar (eds), Routledge, India, September 2021.

#labor market #labor force participation #India 

While India has a large and relatively young population, the labor force participation rate in India is quite low. The big question is why? We use CMIE Consumer Pyramid Data to study this. First, we construct transition probabilities and use those to look at the impact of covid on the Indian Labor Market. Then we use a search theory model to look at why are people choosing to stay out of labor force.

Labour Market Dynamics and Worker Flows in India: Impact of Covid-19 (with Aakash dev), 2023, The Indian Journal of Labour Economics.

 Why are people choosing not to work: An exploration using  household search theory model (with Aakash Dev) Work in progress

#frictions #BusinessCycleAccounting #monetary #India

We estimate the different wedges for the Indian economy using a Monetary Business Cycle accounting framework.

Monetary Business Cycle Accounting Analysis of Indian (with Kshitiz Mishra), 2021, Journal of Quantitative Economics, Vol. 19, pages 471-491.

#fiscal policy #federalism #reform #GST #Optimal Taxation

We build an optimal taxation model with two levels of government - central and state. We use the framework to look at the case of India's transition to GST. 

Optimal Taxation in a Federation and GST in India (with Trishita Ray Barman) Working Paper

Older Papers

Some work that I have done a while back.

#growth #trade #convergence #diversification #minimumfixedpoint

 

A Stochastic Dynamic Model of Trade and Growth: Convergence and Diversification (with Malik Shukayev), 2012. Journal of Economic Dynamics and Control, vol. 36(3), pages 315-454, March.

Note on a Positive Lower Bound of Capital in the Stochastic Growth Model (with Malik Shukayev), 2008. Journal of Economic Dynamics and Control, vol. 32(7), pages 2137-2147, July.

We study the volatility of growth rates and find that it differs systematically across countries. Our empirical investigation reveals that disparity in polity across countries is significant in explaining the difference in volatility, rather than initial income, inequality or instability of regimes, which are the commonly cited reasons in the literature. We find that less democratic countries are more volatile. To explain this observation we use a stochastic dynamic model in which democracy is parameterized by the fraction of people who benefit from being in power. The government in this model maximizes the utility of the group in power using uniform income taxes but transfers to the favored group only. When there is a bad shock in this economy, the marginal utility of agents in power is high. So, when the transfer is divided among a few, gains from increased transfer outweigh distortionary costs of higher tax. Thus, the optimal tax policy in non-democratic countries, in contrast to that in democratic countries, is such that tax rates are high when there is a bad shock and low when there is a good shock (i.e., procyclical). Further, we show that procyclical tax rates will lead to higher volatility of growth rates than under alternative tax policies. Thus, our model is successful in explaining why tax policies are pro-cyclical in some countries, a commonly observed phenomenon, in addition to providing reasons for differences in volatility of growth rates across countries.

The empirical relationship between average growth rate and volatility of growth rates, both over time and across countries, has important policy implications, which depend critically on the sign of the relationship. Following Ramey and Ramey (1995) a wide consensus has been building that, in the post WWII data, the correlation is negative. We replicate their result and then find that it is not robust to either the definition of growth rate, or the composition of the sample. We show that the use of log difference as growth rates, as in Ramey and Ramey, creates a strong bias towards finding a negative relationship. Further, we exhaustively investigate this relationship, for various growth rates, across time, countries, within groups of countries and states in the Unites States. We use different methods and control variables for this inquiry. Our analysis suggests that there is no significant relationship between the two variables in question. However, we observe that the volatility of growth rates differs widely across countries, particularly between democratic and non-democratic countries. The latter finding is quite robust to a variety of controls, definitions of growth rates and time periods. We claim it is an important fact that existing political-economic models cannot explain.

 

Chatterjee and Shukayev's response to "Ramey & Ramey Response to Chatterjee-Shukayev "Are Average Growth Rate and Volatility Related?""

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