Research

Land Institutions, Agricultural Productivity, and Climate Shocks                           (Job Market Paper) - Draft

This paper studies the effect of weather-related risk on land misallocation. Drawing on household panel survey data from rural India linked with high-resolution drought data, I document that institutional barriers to renting land induce a misallocation of land across farmers of heterogeneous abilities, and impede adaptation mechanisms to heightened drought risk. Adaptation occurs through adjustments in leasing activity, farming participation, and crop selection. These adjustments, in turn, shape land misallocation, indicating that drought risk amplifies the productivity costs of land rental barriers. I formalize this mechanism and quantify the aggregate efficiency costs from drought-related risk by developing a general equilibrium model in which farm investment is risky and land rental activity is subject to barriers. I calibrate the model using the household panel and drought data and find that drought-induced efficiency losses are 1.7 times larger, and welfare losses more than twice as large, in villages with the highest rental barriers relative to those with the lowest. These results indicate that the costs of distortionary land policies are amplified by weather-related production risk, highlighting the role for land institutions in helping developing economies mitigate the adverse effects of an increasingly volatile climate.

Trade Liberalization, Structural Change, and Skill Premium Growth in India (submitted) - Draft, Slides

This paper examines the impact of changing trade costs on skill premium growth and sectoral value-added shares in India between 1995 and 2005. I develop a quantitative trade model featuring multi-stage production and two types of labor, in which structural change and skill premium growth arise through relative price effects and shifting comparative advantage. I calibrate the model to India and two trading partners, then simulate trade cost reductions and sectoral productivity growth over time. Counterfactual exercises show that trade cost reductions alone can explain much of India’s service sector expansion, manufacturing decline, and skill premium growth, whereas productivity growth in isolation plays a limited role. The interaction between changing trade costs and productivity growth, however, is quantitatively important. The two-stage structure is important, as it generates an amplified elasticity of relative wages with respect to trade costs, and allows the model to match moments that a one-stage model cannot. 

The Sovereign Spread Compressing Effect of Fiscal Rules During Global Crises, with Ergys Islamaj and Agustin Samano - World Bank Version

This paper studies whether fiscal rules can signal fiscal responsibility and compress borrowing costs for emerging economies during periods of global crisis. Using daily data on sovereign spreads for 58 emerging market economies from 2019-2022 and 26 countries from 2007-2009, this paper shows that the compressing effect of fiscal rules on sovereign spreads is stronger during global crises. We find that the existence of a fiscal rule reduces sovereign spreads with a high degree of statistical significance, regardless of the extent to which enforcement of the rule occurred during the global crisis. In our baseline test covering the COVID-19 timeframe, estimates of the average spread compressing effect of fiscal rules range from 319 to 378 basis points. We also find that for countries that deviated from a fiscal rule during a global crisis, the median duration to return to the baseline fiscal balance is 3.5 years. This fact explains why the spread compressing effect is independent of the enforcement of the rule during a global crisis, as lenders expect countries to return to compliance with the fiscal rule in the aftermath of a crisis. Our results suggest that second-generation rules have increased not only the flexibility but also the credibility of fiscal rules, even during crisis periods. 

Barriers to Adoption: Evidence from BT-Corn, with Honey Batra and Jason Hall - Draft

How well suited to the developing world are developed world technologies?  This question is central to understanding differences in technology adoption across the development spectrum, but has been challenging for the literature to address empirically.  We make progress on this question by exploiting unique characteristics of one of the most important agricultural innovations in recent history - BT corn - to construct a new dataset.  This dataset matches BT crops with the set of insects each kills.  We then leverage recent advances in large language models to extract information from the scientific literature on the country-level importance of each of those insects.  Our approach allows us to directly construct counterfactual yield gains under adoption across the global income distribution.  We find that the gradient of potential yield gains with respect to development is flat.  The level of predicted gains is also substantial in much of the developing world, with our baseline estimates averaging 53% in Sub-Saharan Africa.   

Strategic Enforcement of Fiscal Rules under Sovereign Risk, with Leonardo Barreto and Ergys Islamaj and Agustin Samano - Draft

Motivated by the unprecedented deviations from fiscal rules during the COVID-19 pandemic, we develop a sovereign debt model featuring strategic enforcement of fiscal rules. Empirically, fiscal rules have been associated with lower borrowing costs in emerging markets during episodes of global financial stress, even when these rules are temporarily suspended. To rationalize this pattern, we enhance a sovereign debt model with the possibility of deviating from the fiscal rule by imposing an exogenous cost of deviation. We show that, if there is no deviation cost during a global crisis, the model can rationalize quantitatively the sovereign spread compressing effect of fiscal rules. Overall, the findings suggest that fiscal rules can help emerging markets and developing economies signal fiscal responsibility during episodes of global financial stress, reducing borrowing costs relative to countries without fiscal rules.