Publications
Land and Housing: The Twin Forces of Non-Balanced Growth
Journal of Macroeconomics, 2023
Perceptions, Biases and Inequality, with Dyotona Dasgupta
Journal of Economic Behavior & Organization, 2022
Tax Policy and Food Security: A Dynamic Analysis, with Pawan Gopalakrishnan
Macroeconomic Dynamics, 2019
Growth of Business Services: A Supply-Side Hypothesis, with Satya P. Das
Canadian Journal of Economics, 2015
Land Acquisition and Industrial Growth, with Satya P. Das
Indian Growth and Development Review, 2015
Journal of Macroeconomics, 2023
Perceptions, Biases and Inequality, with Dyotona Dasgupta
Journal of Economic Behavior & Organization, 2022
Tax Policy and Food Security: A Dynamic Analysis, with Pawan Gopalakrishnan
Macroeconomic Dynamics, 2019
Growth of Business Services: A Supply-Side Hypothesis, with Satya P. Das
Canadian Journal of Economics, 2015
Land Acquisition and Industrial Growth, with Satya P. Das
Indian Growth and Development Review, 2015
Working Papers
The Great Indian Savings Puzzle, with Chetan Ghate and Pawan Gopalakrishnan
Updated: July 2023. Available on request
Abstract: India's savings rate surged from 13% in 1970 to 38% in 2008, declining steadily thereafter to 30% in 2019. Unlike other developing or developed nations, the savings rate in India shows a hump-shaped trajectory with its peak coinciding with the Great Recession of 2007-2009. We build a neoclassical monetary-growth model to explain the long-run savings pattern in India. We find that inflation dynamics had a key role in explaining the post-2009 decline in the savings rate. A fall in inflation, as is observed in India in the period 1991-2019, increases future wealth and via perfect foresight induces households to smooth consumption along the transition path. This entails high consumption in the initial periods relative to later periods. Our model matches perfectly with data when we extend the model to allow rising formalization in the economy. We do this by including two types of households: Ricardian who work in the formal sector and save, and Rule of Thumb households who work in the informal sector and don't save.
Towards a Theory of Behavioral Poverty Traps, with Dyotona Dasgupta
Abstract: In a dynamic setting, we build a theoretical model to capture the macroeconomic implications of parental biases on poverty traps and income inequality. Less privileged parents have biased perceptions about ‘self-efficacy’. Perceived self-efficacy is shaped by socio-economic background. We find that biases increase the extent of poverty trap. Without any biases, there exists a poverty trap only when the parental warm glow is low. With biases, there emerges a poverty trap even for moderate warm glow. For high parental warm glow, there may exist a poverty trap. Income inequality in presence of biased parents is always (weakly) higher.
Country Size, Per-capita Income and Comparative Advantage: Services versus Manufacturing, with Scott Bradford and Satya P. Das
Abstract: The paper develops a trade model with novel implications: that richer and larger nations have comparative advantage in manufacturing, while poorer and smaller nations have comparative advantage in services. Two forces drive these results: non-homothetic tastes that cause demand to shift toward services as income increases; and services having a higher degree of product differentiation than manufacturing, which leads larger nations to shift their production more towards manufactures. Empirical analysis using data from 2005 through 2016 finds support for the theoretical predictions: per-capita income and nation size have positive relationships with manufacturing comparative advantage indices and negative relationships with services comparative advantage indices.
Updated: July 2023. Available on request
Abstract: India's savings rate surged from 13% in 1970 to 38% in 2008, declining steadily thereafter to 30% in 2019. Unlike other developing or developed nations, the savings rate in India shows a hump-shaped trajectory with its peak coinciding with the Great Recession of 2007-2009. We build a neoclassical monetary-growth model to explain the long-run savings pattern in India. We find that inflation dynamics had a key role in explaining the post-2009 decline in the savings rate. A fall in inflation, as is observed in India in the period 1991-2019, increases future wealth and via perfect foresight induces households to smooth consumption along the transition path. This entails high consumption in the initial periods relative to later periods. Our model matches perfectly with data when we extend the model to allow rising formalization in the economy. We do this by including two types of households: Ricardian who work in the formal sector and save, and Rule of Thumb households who work in the informal sector and don't save.
Towards a Theory of Behavioral Poverty Traps, with Dyotona Dasgupta
Abstract: In a dynamic setting, we build a theoretical model to capture the macroeconomic implications of parental biases on poverty traps and income inequality. Less privileged parents have biased perceptions about ‘self-efficacy’. Perceived self-efficacy is shaped by socio-economic background. We find that biases increase the extent of poverty trap. Without any biases, there exists a poverty trap only when the parental warm glow is low. With biases, there emerges a poverty trap even for moderate warm glow. For high parental warm glow, there may exist a poverty trap. Income inequality in presence of biased parents is always (weakly) higher.
Country Size, Per-capita Income and Comparative Advantage: Services versus Manufacturing, with Scott Bradford and Satya P. Das
Abstract: The paper develops a trade model with novel implications: that richer and larger nations have comparative advantage in manufacturing, while poorer and smaller nations have comparative advantage in services. Two forces drive these results: non-homothetic tastes that cause demand to shift toward services as income increases; and services having a higher degree of product differentiation than manufacturing, which leads larger nations to shift their production more towards manufactures. Empirical analysis using data from 2005 through 2016 finds support for the theoretical predictions: per-capita income and nation size have positive relationships with manufacturing comparative advantage indices and negative relationships with services comparative advantage indices.