Job Market Paper
International Financial Flows, Credit Allocation and Productivity
[Link]
This paper examines how financial liberalization shapes domestic credit allocation and real economic outcomes using detailed bank-firm matched data for India. We exploit a 2004 reform that raised foreign shareholding limits in Indian banks and identify differences in credit allocation patterns across banks with varying exposure to foreign capital inflows. More-exposed banks received larger capital inflows, which relaxed their funding constraints and expanded their overall lending. This increase in bank lending was directed towards the more productive firms in the economy, raising their investment and reducing the overall dispersion of marginal revenue product of capital (MRPK) across firms. This improvement in credit allocation was associated with foreign equity inflows rather than foreign debt financing, highlighting the importance of the form of capital inflows. Quantifying the aggregate effects of this reallocation, we find that the liberalization generated significant gains in total factor productivity (TFP).
Presentations: GWU Macro Lunch (2024, 2025), IMF Research Department Seminar (2026), NEUDC (2026), AEA (2027)
Coverage: Ideas of India Podcast @ Mercatus Center
Research in Progress
A History of the Future of Emerging Markets
with Atish R. Ghosh
This paper examines whether shocks to emerging market output are best understood as “level” or “growth” shocks, and whether forecasters incorporate such information efficiently. Using successive vintages of IMF World Economic Outlook projections for a panel of major emerging market economies, supplemented by Consensus Forecasts, we identify shocks as forecast revisions and distinguish their effects by sign and source. We find pronounced asymmetries. Positive shocks to the emerging market’s own output or to world trade, terms-of-trade, commodity prices, capital-inflows, or emerging-market trading partners are associated with faster medium-term growth. By contrast, most negative shocks dissipate with little or no impact on growth or even on the medium-term level of output. The one exception is financial crises, especially banking crises, which generate the largest and most persistent output losses by lowering medium-term growth. Forecasters recognize many of these effects but systematically underestimate the effect of favorable shocks and overestimate the impact of (non-crisis) adverse shocks. Since the existing literature suggests that emerging markets’ growth is best modelled as shocks to the trend growth rate — rather than fluctuations around a stable underlying trend — these results provide useful insights into the determinants of emerging markets’ output growth, an issue of particular salience as many seem to languish in the middle-income trap.
Draft available upon request
Do Open Capital Markets Spur Growth? Evidence from Asian Countries, 1820-1931
with Graciela Kaminsky and Zheyu Yang
This paper examines capital inflows to China, India, and Japan during the first episode of financial globalization (1830-1931). These countries engaged with international capital under distinct institutional arrangements: Britain guaranteed returns on Indian railway investments to attract capital, China was integrated under unequal treaties following the Opium Wars and Japan borrowed voluntarily to fund railways and industrial growth after the Meiji Restoration. We construct a novel database for these countries by systematically compiling data on all known bond and equity issuances issued primarily in London and other major financial centers, including Paris, Frankfurt, Berlin, Hamburg and New York and link them to macroeconomic indicators such as trade, output and terms of trade. The dataset also incorporates information on interest rates and business cycles from leading financial centers. Using this resource, we analyze how global financial conditions and local institutional arrangements shaped borrowing patterns and economic outcomes. We find that capital inflows and terms-of-trade improvements significantly boost medium-term growth, while UK interest rate hikes depress it. Import demand shows no significant effect, global liquidity impacts remain short-lived, and financial disasters fundamentally reshape growth trajectories. Altogether, these findings underscore the importance of global financial conditions in driving periphery growth during the first era of financial globalization, offering new insights into the historical roots of emerging market vulnerability to external financial forces.
Presentations: III Congress Globalization and Growth in the History of East and Southeast Asia (2025), AEA (2027)
Slides available upon request
Monetary Policy Transmission to Consumption: Evidence from Transaction-Level Data
with Donghao Wu
This paper studies the transmission of monetary policy to household consumption using high-frequency transaction-level data from the United States. Leveraging daily credit and debit card spending mapped to detailed Personal Consumption Expenditures (PCE) categories, we estimate dynamic consumption responses to monetary policy shocks using a local projections framework. We find that spending responds rapidly, with significant effects emerging within weeks, and that contractionary shocks generate larger and more persistent declines than expansionary shocks. Overall, our results suggest that monetary policy affects consumption more quickly than implied by aggregate data, while highlighting the roles of heterogeneity and measurement in shaping observed transmission dynamics.
Presentations: GWU Macro Lunch (2025, 2026)
Selected Policy Contributions
International Monetary Fund
The IMF and the Global Financial Crisis
Forthcoming, IMF History (Case Study)
The Design and Evolution of IMF-Supported Programs: 2000–2019
Forthcoming, IMF History: Overview II (Chapter).
Reserve Bank of India
State Finances: A Study of Budgets of 2019–20
Pre-PhD Publications
The Openness-Inflation Puzzle: An Asymmetric Approach with Irfan Ahmad Shah
Macroeconomics and Finance in Emerging Market Economies, 15(2): 125–139, 2022.
Does Government Deficit Crowd Out Private Investment? An Empirical Analysis for National and Sub-National Governments with Pushpa Trivedi, Sangita Misra and Kaushiki Singh
ICFAI University Press Journal of Applied Economics, 18(3): 7–36, 2019.