How Productive is Public Investment? Evidence from Formal and Informal Production in India (Joint with Santanu Chatterjee & Abhinav Narayanan) Journal of Development Economics
We use firm-level data on formal and informal production in India to examine the sectoral consequences of government investment in public infrastructure. Our results indicate that the output elasticity of public capital, proximity to highway infrastructure, time since project completion, and firm size are important determinants of the sectoral effects of infrastructure on firm productivity. First, we show that while public capital is associated with a positive and significant output elasticity for formal sector firms, it has no systematic effect on informal firms. Next, using a major highway construction project in India, we show that proximity to a newly completed highway and the time since project completion are productivity-enhancing for formal firms, with these benefits distributed evenly across firm size in that sector. By contrast, similar benefits do not accrue to informal firms. Specifically, the presence of large firms in areas close to a newly completed highway crowds out the output of small informal firms, thereby mitigating the overall benefits of public investment for the informal sector.
The European Refugee Crisis and House Prices: Evidence from England and Wales (Joint with William D. Lastrapes); Journal of Housing Economics 49
We estimate the effect of asylum seeker dispersal on house prices in the UK from 2004 to 2015. Using two empirical models of house transactions prices and asylum seeker inflows, we find that asylum seekers have small but non-trivial negative effects on housing prices, but only for lower priced and lower quality housing units. Our panel data regressions rely on variation across time and local areas, and account for potential endogeneity bias using instrumental variables, to identify these causal effects. Time series regressions, on the other hand, depend only on plausibly exogenous nationwide inflows of new asylum seekers.
The Macroeconomic Consequences of Remittances (Joint with Berrak Bahadir & Santanu Chatterjee); Journal of International Economics 111, 214 - 232
This paper analyzes the dynamic absorption of remittances at the macroeconomic level, contrasting two possible effects on economic activity, depending on whether these accrue to hand-to-mouth wage earners or credit-constrained entrepreneurs. Using an open economy DSGE model with heterogeneous households, we show that the effects of remittances are inherently contractionary if they accrue to the first group, and expansionary when they accrue to the second group. Calibrating the model to the Philippines using both aggregate data as well as micro-evidence from the Family Income and Expenditure Survey (FIES), we show that accounting for both binding credit constraints and the internal distribution of remittances improves the model's fit to the data. Welfare gains result when the distribution of remittances is skewed towards entrepreneurs.
Williams College of Business
Department of Economics
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Cincinnati, OH 45207