Research Interests:
Monetary Policy, Crime in socioeconomic context, Racial Disparities in Housing, Domestic Violence
Publications:
Reports:
Working Papers:
Works in Progress:
Monetary Policy, Crime in socioeconomic context, Racial Disparities in Housing, Domestic Violence
Publications:
- Does Monetary Policy Favor the Skilled? - The Quarterly Review of Economics and Finance, Vol 86, November, 2022
Abstract: This paper examines whether the impact of monetary policy on welfare is altered when labor skill heterogeneity is incorporated in a limited participation framework. By endogenizing labor-leisure decisions and including labor heterogeneity, we find that not only is there a risky component to the income of financial market participants, but the wage income of non-participants is also subject to risk. This generates a diminished impact of monetary policy on welfare along with a stronger redistributive impact. The redistributive effect is further strengthened for higher levels of non-interest bearing savings among non-participants of financial market. In particular, expansionary monetary policy redistributes consumption and leisure from low to high skilled workers via an increased wage premium along with direct gains accrued from monetary transfers by high skilled agents who are connected to financial markets. Thus, welfare gains attributed to monetary expansion are far less when considering skill heterogeneity. Further, such gains are subject to the share of high skilled labor in the production of goods - increasing that share above a threshold renders a welfare-improving role for monetary tightening. To explore the implications of these results, we also analyze the impact of monetary policy in a crisis scenario. (Pre-publication Version) - Role of Insurance in Wildfire Risk Mitigation, with Patricia Gallagher - Economic Modeling, 2022
Abstract: With wildfire-risk rising globally, the role of home insurance continues to remain under- studied in the search for mechanisms to mitigate loss from wildfire. This study investigates whether insurance policies effectively discourage homeownership in fire-prone zones. Using zip-code level data from Los Angeles between 2011-2018, we employ linear regression, GMM and machine-learning to examine the extent to which wildfire-risk impacts FAIR plan vis-a-vis market insurance. Results indicate that insurance policies do not effectively disincentivize homeowners away from high-risk zones which is novel to the existing literature. This is because the marginal impact of wildfire-risk on both insurance premiums, is relatively lower compared to other factors, especially for private insurance. Moderate-to-high risk areas continue to remain underinsured. Evidence of underinsurance was found in racially diverse neighborhoods. Recommendations include designing policies such that difference in risk-premium reflects difference in wildfire-risk to discourage homeownership in high-risk zones. (Pre-publication Version) [Media Mention: The Atlantic] - Crime, Correction, Education and Welfare – What Role Does the Government Play?, with Jose Aranzazu - Journal of Policy Modeling, Vol 44 (2) 2022
Abstract: As federal, state and local governments continue to allocate a significant share of their resources to law enforcement and correctional spending, concerns have risen that spending in education and welfare is declining. With fiscal pressure in the United States mounting, it is important to determine the effectiveness of public spending in deterring crime. This paper compares the effectiveness of the impact of government spending on welfare and education with that of law enforcement and correction on crime. Using panel data from 50 U.S. states over a time period of 1994-2014, results of linear regression with panel corrected standard errors as well as GMM estimation reveals that public welfare and education spending can potentially lower violent and property crime rates but law enforcement spending can only deter property crime. However, correctional spending can exacerbate both types of crimes. There is little to no evidence of the presence of crowding out of one category of spending by another. This results in the policy implication that more resources be allocated towards welfare and education programs. (Pre-publication Version) - Determinants of Juvenile Crime - Evidence from India - International Journal of Social Economics, 2021, Vol. 48 Issue 12
Abstract: Using data from 2009 - 2016 across 31 states and union territories, this paper investigates determinants of juvenile delinquency in India as well as explores the nature of the complex relationship between economic variables and crime rate. The paper employs a panel corrected standard error model due to the presence of heteroskedasticity and contemporaneous correlation. Additionally, due to possible feedback effect from independent variables resulting in endogeneity, a two-step Generalized Method of Moments (GMM) is utilized to estimate a system of equations. Estimation results indicate that macroeconomic factors - GSDP per capita and adult unemployment rate - are significant in explaining the juvenile crime rate in India. Higher poverty rate and percentage of slums were found to increase juvenile crime. This paper also demonstrates the harmful effects that domestic violence has on juvenile delinquency. Finally, education has a deterring impact on crimes relating to juveniles but deterrence factors do not. While some implications are consistent with those found in previous studies of crime in developed and developing countries, the analysis in this paper also reveals unique results. For example, the adult unemployment rate was negatively correlated with juvenile crime, and an increase in police density exhibits a positive association with the juvenile crime rate. Further analysis of crimes by type (property and violent), reveals additional insights. In addition to that, contrary to hypothesis, by employing GMM estimation the paper finds no evidence of a negative impact of juvenile delinquency on economic growth. (Pre-publication Version) - What Does (and Does Not) Affect Crime in India? - International Journal of Social Economics, 2020, Volume 47 Issue 4
Abstract: This paper uses data from 2010–2016 across 32 states and union territories to investigate the determinants of crime in India. Results indicate the significance of demographic factor – population density and socioeconomic factors – poverty, income inequality and literacy rate – in accounting for crime in India. Among the macroeconomic factors, only GSDP per capita was found relevant. The study also reveals the importance of deterrence variables – chargesheeting rate, conviction rate, pendency in police as well as court cases – in explaining crime rates. Unlike the existing studies which use fixed effects or random effects, this paper utilizes a panel corrected standard errors model due to the presence of heteroskedasticity and contemporaneous correlation. While some implications are in line with those found in previous studies of crime in developed and developing countries, the effects of literacy rates and deterrence variables on crime are unique to the current analysis. (Pre-publication Version) - Distributional Role of Monetary Policy under Limited Credit Access - Research in Economics, Volume 72, 2018, Issue 4, Pages 494-510
Abstract: The paper explores the redistributive effects of a monetary policy shock in a limited participation framework with limited credit access. Expansionary monetary policy redistributes consumption from traders to non-traders. This redistribution is the largest when only financial market participants have a choice between multiple means of payments while non-participants do not. Welfare analysis reveals that the effectiveness of monetary policy on the economy is the greatest when all agents (financial market participants and nonparticipants) can choose from alternative means of payment in a financially segmented model. The model is calibrated to the US economy for quantitative analysis. (Pre-publication Version) - Who Does the Affordable Care Act Help and Who Does It Fail? with Carol Cui - Business Forum, Volume 27, Issue 1, 2018, Pages 33-38 (2018)
Abstract: This study uses the 2007 and 2013 Annual Social and Economic Supplement of the Current Population Survey to examine the effect of the Affordable Care Act (ACA) on health insurance coverage among adults in the U.S. It finds that the ACA has improved coverage for men, youth, minorities, and low-income and less-educated individuals. However, those who are self-employed or do not work full-time have been negatively impacted. (Pre-publication Version) - Macroeconomic Determinants of Crime - Evidence from India with Carol Cui - Journal of Quantitative Economics, 16, pages 187-198 (2018)
Abstract: This paper uses data from 1991–2015 to examine the relationship between crime, GDP per capita, inflation, and unemployment rate in India. The Johansen cointegration test confirms the presence of cointegration relationship between the variables. The Toda-Yamamoto Granger causality test suggests that all the macroeconomic variables can significantly affect the crime level in India, and vice versa. (Pre-publication Version) - Impact of Rising Government Debt, under Labor Endogeneity - Journal of Economic Research, 23 (2017) 253-267
Abstract: Several advanced economies are heading towards a period of fiscal stress; aging pop- ulation raises government transfers which in turn increases nominal government debt. Existing literature studies how alternative combinations of monetary and fiscal policies can stabilize real debt in the face of exponentially rising transfers. This paper develops an overlapping generations (OG) model to study the implications of endogenous labor supply on the path of real government debt under alternative policy regimes. This paper shows, theoretically, that switching to an alternative policy regime where mon- etary authority is passive in the face of rising transfers, even before the economy is at the fiscal limit, might stabilize inflation better than an active monetary regime. The model in the paper has been calibrated to the US economy to demonstrate dynamic effects. (Pre-publication Version)
- Monetary Policy and Alternative Means of Payment - The Quarterly Review of Economics and Finance, Volume 65, August 2017, Pages 378-387
Abstract: This paper captures the trade-offs between alternative payment instruments where each is associated with costs and benefits. Most models of cash-credit choice assume cash is a safe non interest-bearing asset and credit is interest-bearing but costly. Here, I consider the risk of loss from using cash resulting from theft and foregone interest earnings. I use a cash-in-advance model to analyze the channel through which monetary policy could have a positive impact on the economy by altering the incentives for cash-credit choice. The model indicates that although expansionary monetary policy increases total consumption, the resulting substitution toward credit might increase transactions cost, which may not result in improving welfare. The net effect depends on the change in transactions cost of using credit relative to the responsiveness of theft to inflation. The assumption of fixed cost of credit is crucial to these results. Calibration of the model to the US and Polish economy confirms the results. (Pre-publication Version)
Reports:
- Economic Recessions and Inequality: A Review of the Effects of Recessions and Policy Responses, with E. Shiau - A report prepared for the Centre for California Studies at Sacramento State University, November 2022
Abstract: Income and wealth inequality have been a persistent and growing problem in the state of California over the last 40 years. This report focuses on the role of economic recessions—primarily the 2008 Great Recession and the 2020 COVID-19 Recession—on income and wealth inequality with particular attention to their impacts on housing access and affordability. By reviewing the literature, this report outlines the relationship between economic recessions and inequality, how the unique characteristics of economic recessions lead to disparate impacts, and the particular impact of economic recessions on housing access and affordability. Through a literature review, this report also provides a discussion and assessment of federal and state policies designed to address the impact of economic recessions. It concludes by presenting empirical findings from original research that demonstrate the unique impact of economic recessions on housing access and affordability in California and Los Angeles.
Working Papers:
- The Impact of a Centralized Response System on Violence Against Women – Evidence from India’s Dial-100 (Under Review)
Abstract: With crimes in India rising exponentially, particularly violence against women, several states have launched a centralized emergency response system, between 2013 and 2018, to reduce the time taken by law enforcement to respond to calls for service. Exploiting this staggered timing, I use a generalized difference-in-difference approach to estimate its impact on crimes against women in states and districts of India. Results indicate that overall, there is a significant negative impact – about 25% – on overall violence against women in the treated states. Specifically, domestic violence and sexual assault have decreased by 49% and 38%, respectively. This has also improved a secondary outcome – indictment for cases of gender-based violence. Consequently, suicides related to dowry or sexual abuse have also registered a decline. In contrast, there appears to be no such impact on non-gender violence, crimes against men or property crimes. - Crime and Inequality in India (Invited Book Chapter) (Under Review)
Abstract: On one hand accelerating crime rates in India, in recent years, have been a matter of concern since it can potentially serve as an impediment to economic growth. On the other hand, income inequality has also exhibited a sharp increase. This chapter investigates the underexamined causal linkage between crime and inequality in India using time series data for 1966-2019, panel data for 33 states over 2009-2019 as well as cross-sectional data for 612 districts. Spatial distribution of crime rates and income inequality imply the presence of a positive relationship over time. Results indicate a one-way Granger causality where income inequality granger-causes crime. Further, both panel and cross-sectional analyses also demonstrate the existence of a convex relationship between crime and inequality. Higher economic growth along with widening inequality and rising poverty tends to increase crime. Among several categories of crime, while violent crime, crime against women, and against SC/STs increase with rising income inequality, property and economic crimes do not exhibit a significant relationship with inequality. - Does a Centralized Emergency Response System Increase Crime Reporting Among Minorities? – Evidence from India (Under Review)
Abstract: In this paper, I study the impact of establishing a centralized emergency response system (CERS) in a developing country on atrocities towards historically disadvantaged minorities. To answer this question, I exploit the staggered implementation of CERS between 2013 and 2018 in several states in India to estimate its impact on caste-based crimes. Results of a generalized difference-in-difference approach indicate the presence of a significant reporting effect, that is, an increase in reporting of crimes by minority groups – about 38.56% – in the treated states. Thus, the study contributes to the literature that seeks to shed light on factors that could lead to improvement in reporting of crimes among minority groups. - Unintended Consequence of Proposition 47 on DUI - Evidence from Los Angeles (Revision Requested)
Abstract: This study investigates the impact of Proposition 47 on driving under influence (DUI) related to drugs within Los Angeles. Results of interrupted time series analysis as well as event study and difference-in-difference analyses indicate a short-term increase in DUI related to drugs to be an unintended consequence of this proposition. In the longer term, there appears to be a declining trend in DUI related to drugs, however, it does not go back to levels that existed prior to the enactment of the proposition. The absence of such trends for DUI related to alcohol corroborate the results. - Byproducts of racial justice: Effect of Proposition 47 in California on DUIs - with V. Koppa (Draft coming soon!)
Abstract: Under Proposition 47, which was passed by voters in California in November 2014, few nonviolent drug and property offenses were downgraded from felonies to misdemeanors. This measure remains controversial and in the news to this day. The proponents argue that it was the right step toward prison reform reducing incarceration rates and unsustainable overcrowding of prisons. The opponents argue that it has led to a significant rise in property crimes. In this paper, we examine the effect of this measure on policing – as finding contraband during a police stop can only be booked as a misdemeanor – and the fallout from that on road safety. Using a synthetic control approach, we ask if the measure led to a change in policing and road accidents. Initial evidence suggests that the number of police stops reduced and there was a significant increase in traffic collisions and injuries and a smaller increase in fatalities
- Impact of Majoritarian Politics on Crimes Against Caste-Based Minorities
Abstract: Can a majoritarian political party being in power lead to an increase in crimes against minorities? I examine this question in the context of India where the right-wing nationalist Bharatiya Janata Party (BJP) won an unprecedented victory in the 2014 national elections and where caste-based crimes are a major concern. With states where BJP won majority votes in 2014 being the treatment group, I use a difference-in-difference research design and administrative crime data from 2006-2019 to estimate the impact of BJP's electoral victory on violence against caste-based minorities. Results indicate that overall there is a significant increase in caste-based crimes - about 42% - in treated states compared to control states following the 2014 electoral win of BJP. Falsification tests, alternative specifications and additional robustness checks demonstrate the validity of the main results. - Impact of Majoritarian Politics on Violence Against Women; Draft coming soon!
- The Differential Impact of Covid-19 Pandemic on Distressed Neighborhoods – Did Opportunity Zones Make a Difference? Draft coming soon!
Abstract: The Tax Cuts and Jobs Act of 2017 created an Opportunity Zone (OZ) Program to encourage investment in distressed communities. Existing research shows little to no evidence of positive impact on employment, earnings, housing growth but points towards surging real estate prices. This paper explores the differential impact of the Covid-19 pandemic on these distressed communities. Specifically, it uses a difference-in-difference approach to compare the effect of the Covid-19 shock on tracts selected for OZ with tracts eligible but not included in the program. Multiple indicators, including home loans, small business loans, assessed property value, mortgage-to-income ratio, rent-to-income ratio, and crime are utilized to examine neighborhood and housing outcomes. Preliminary analysis suggests that the pandemic had unequal impacts on communities that were selected as OZs compared to those eligible but not selected. Thus, examining the disparate neighborhood impacts of economic shocks can inform future policy decisions with the goal of addressing social, economic, and racial inequality. - Differential Effects of Economic Shocks on Gender Inequalities in Urban Neighborhoods, with E. Shiau; Draft coming soon!
Abstract: We examine the impact of major economic shocks on gender disparities across neighborhoods. In particular, we compare and contrast the effects of the two most recent global economic shocks – the Great Recession of 2008-09 and the Covid-19 Pandemic – on socioeconomic outcomes for women vs. men and the manner in which neighborhoods mediate the impact of these shocks. Using the City of Los Angeles as a case-study, the study utilizes a multilevel model analysis to estimate trajectories of poverty rate, unemployment rate, median income, borrowing for home loans, homeownership rate, for women and men. Additionally, a difference-indifference analysis is employed to estimate the extent to which the gender gap persists. Preliminary results indicate the presence of gender inequalities in socioeconomic outcomes with significant variation across neighborhoods. Consistent with the results of existing studies relating to the labor market, socioeconomic outcomes for women were found to be worse in the more recent pandemic related recession compared to the recession related to the financial crisis. Further analysis by a breakdown of race would provide additional insights on manner in which the intersection of race and gender would impact neighborhood outcomes.
Works in Progress:
- Does Gentrification Relocate Crime? Evidence from Los Angeles
- Inequality, Recessions and Policy Responses, with E. Shiau
- The Effect of Qualified Opportunity Zones on Crime Rates
- Monetary Policy and Labor Choice in a Segmented Markets Model, with A. Zervou