Kar, S., Pritchett, L., Roy, S., & Sen, K. (2022). Doing business in a deals world: The doubly false premise of rules reform. Journal of Economic Policy Reform, 25(4), 361-387. https://doi.org/10.1080/17487870.2022.2125391
Endogenous Human Capital Growth and Structural Transformation (JMP)
Abstract: In recent decades, Korea, followed by China, has experienced structural shifts characterized by a prolonged hump-shaped trend in manufacturing, significantly influenced by their openness to trade. In contrast, India's manufacturing sector has failed to exhibit a hump-shape pattern in manufacturing, as noted in recent literature. This paper explores the factors underlying these divergent trajectories, particularly focusing on differences in human capital as a key determinant of structural transformation. By developing an endogenous growth model where human capital drives structural change, we analyze the asymptotic results and transitional dynamics across sectors— agriculture, manufacturing, and services. Our findings suggest that the differential growth rates of high-skilled and low-skilled labor contribute significantly to the unique patterns of industrialization and deindustrialization observed in China and India, highlighting the varying impacts of human capital on sectoral shifts in developing economies.
Optimal Taxation with Debt-financed Capital in an Impoverished Economy (with Anand Shankar & Rajesh Singh)
Abstract: This paper examines optimal taxation in capital-constrained economies that borrow externally to fund consumption and investment, repaid over a finite horizon via proportional or lump-sum taxes. Under proportional rules, the government front-loads borrowing and maintains flat taxes and consumption—smoothing welfare, while lump-sum taxes achieve first-best capital accumulation and higher long-run welfare. Economies with high consumption elasticity pursue early fiscal austerity and steady capital growth; those with low elasticity prioritize consumption smoothing at the cost of larger initial borrowing. Crucially, extending debt maturity further unlocks welfare gains by tempering tax and consumption volatility, vital for infrastructure-dependent developing countries.
Portfolio Choice and Gold Consumption: A Study of India’s Gold Demand (with Anand Shankar)
Does Corruption Facilitate Business? Evidence from India (with Sabyasachi Kar)
Evolving Agricultural Market Integration in Post-Liberalization India