Articles by Hari K Nagarajan

The impact of restricted and unrestricted fiscal grants on tax effort of panchayats is examined using nationally representative panel data on finances. Three pathways are proposed through which these impacts accrue: wages, profits, and incentives. In order to deal with the simultaneities of grants received and taxation, a system of equations is estimated simultaneously, where the first stage equations predict the grants. The results show that a wage impact on taxation exists, but is very small and the productivity impact of grants on taxes is negligible. This means that incentive effects associated with the specifics of the intergovernmental fiscal system in the states are the main determinant of village taxation. Several policy conclusions are advanced.

The policy of allocation of foodgrains under the Public Distribution System (PDS) has been very ad hoc in India with allocation being fixed on a 'historical basis'. This paper uses four sets of pooled equations for predicting stable levels of per capita consumption of rice and wheat in physical terms in rural and urban India. Foodgrain demand and the own-price, cross price and income elasticities of demand are estimated for all states. A formula that is based on the concept of subsidising real consumption through PDS is proposed.

Short-Run Dynamics A Tale of Two National Stock Markets Raghbendra Jha Hari K Nagarajan This paper models price dynamics in the two national stock exchanges. It is discovered that there are well-defined relations between stock prices in the long run in each of these markets. Hence market segmentation is strongly ruled out. Second, the short-run behaviour of stock prices is such that no stock price can be considered to be independent of the others. Short-run price movements are mostly random or unstable, but the impulse response function analysis suggests that the instability does not persist for long. Finally, there seems to be a marked difference in the reaction in the two markets for the same stocks in terms of the responses to firm specific and market specific shocks. This may point to differences in the types of traders in these two exchanges.