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IGIDR Webinar: Fiscal Policy and Transmission: The Case of India’s States

Date 8th July 2020 @ 4:00 pm - 5:00 pm

Speaker: Dr. Nikhil Damodaran, Jindal School of Government and Public Policy, Haryana

Date & Hour: 08 July 2020, 4:00 pm

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

Abstract: The magnitude of interstate trade in India adds a unique dimension to within and interstate transmission of fiscal policies. We exploit regional variations in fiscal policy to examine its local potency and spillover using a two country New Keynesian model. We find that an increase in spending generates larger domestic expansion than a reduction in excise or VAT cut. 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


8th July 2020
4:00 pm - 5:00 pm
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