Prof. Nikhil

Fiscal Policy and Transmission: The Case of India's States

MS Teams

13 Oct, 2021

All are cordially invited to the Econ-Talk “Fiscal Policy and Transmission: The Case of India's States" by  Dr. Nikhil Damodaran (Jindal School of Government and Public Policy), on Wednesday, Oct 13, at 3.30pm.

Title: Fiscal Policy and Transmission: The Case of India's States. 

Abstract: We exploit exogenous variations in fiscal policy to estimate cross sectional regional multipliers for India’s states. These estimates validate the size of fiscal multiplier from a two country New Keynesian model and facilitate its decomposition between domestic stimulus and inter-state spillover. We find that increases in spending generate larger domestic expansion than reductions in excise or VAT. Although an increase in spending worsens home trade balance, it triggers a positive spillover on the trading partner thus contributing to regional stability. We also implement a fiscal devaluation through excise-VAT adjustments which rely on interstate trade to boost domestic output.

Date: Oct 13, 2021 (Wednesday); Time: 3.30-5.00pm

MS-Team Link: