Nirupama Rao

Assistant Professor of Economics and Public Policy

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Nirupama Rao

Nirupama Rao is an Assistant Professor of Economics and Public Policy at NYU’s Wagner School of Public Service.  Her research concerns the economic effects of fiscal policy, focusing on the impact of policy on firm production, investment and pricing decisions and individual consumption decisions.  She has studied how excise taxes on oil production affect the extraction decisions of domestic producers, the effectiveness of federal tax credits for R&D, and investigated the composition and importance of corporate deferred taxes. In other work she has examined how regulation and taxation interact in alcohol markets and the implications of pricing behavior for tax pass-through. She is a recipient of the National Tax Association Dissertation Award.  Rao completed her PhD in economics at MIT in June 2010 where she previously earned her undergraduate degree.  Prior to graduate school, she worked at the Andrew W. Mellon Foundation. She is currently on leave serving as a Senior Economist at the Council of Economic Advisers in Washington, D.C.  

Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

Download Syllabus

Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

Download Syllabus

Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

Download Syllabus

Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

Download Syllabus

Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

Download Syllabus

Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

Download Syllabus

2016

Abstract

We assess the concentration and duration of zero tax liabilities and of transfers, using data from the Panel Survey of Income Dynamics. We find that neither is strongly concentrated. In at least one year, 68% owe no federal tax, 78% receive transfers, and 58% receive transfers other than Social Security. Of those not owing federal tax in any given year, 18% pay tax the following year, and 39% contribute within five years. Of those who receive transfers other than Social Security within a given year, nearly 44% stop receiving such transfers the next year, and more than 90% stop within ten years.

Abstract

This paper uses detailed UPC-level data from Nielsen to examine the relationship between excise taxes, retail prices, and consumer welfare in the market for distilled spirits. Empirically, we document the presence of a nominal rigidity in retail prices that arises because firms largely choose prices that end in ninety-nine cents and change prices in whole-dollar increments. Theoretically, we show that this rigidity can rationalize both highly incomplete and excessive pass-through estimates without restrictions on the underlying demand curve. A correctly specified model, such as an (ordered) logit, takes this discreteness into account when predicting the effects of alternative tax changes. We show that explicitly accounting for discrete pricing has a substantial impact both on estimates of tax incidence and the excess burden cost of tax revenue. Quantitatively, we document substantial non-monotonicities in both of these quantities, expanding the potential scope of what policymakers should consider when raising excise taxes.

2015

Abstract

This paper assesses the economic factors associated with corporate inversions, including the 48 inversions that have occurred since the analysis of Desai and Hines (2002). The analysis presented here is observational, not causal, as it examines how the business activities of firms that chose to invert changed after expatriation. In addition to statistically assessing the equity market’s reaction to inversion announcements, this paper examines how firms alter their patterns of employment and investment after inversion. In particular, the paper follows how the foreign shares of an inverting firm’s employment and investment change following inversion, relative to comparable non-inverting firms. The behavior of inverting firms following expatriation is assessed going back to 1980 as well as only after the 2004 policy change, which made expatriation through merger with a foreign firm with substantive foreign business activities more attractive. The results suggest that inverting firms have higher shares of the employees and capital expenditures located abroad after inversion relative to changes experienced by similar non-inverting firms. Further, these increases are not attributable to one-time changes due to the inclusion of a new foreign partner’s existing workforce and ongoing investments; foreign shares of employment and investment are higher two and more years after inversion relative to the first year just after inversion when any one-time increases would register.

Abstract

This paper investigates the relationship between dividend payouts and corporate investment. We find significant heterogeneity in the relationship across firms — heterogeneity that helps reconcile competing results in the literature. Drawing on financial filing data from Compustat, we first broadly replicate the statistically significant negative relationship estimated by Auerbach and Hassett (2003). We show that this relationship does not hold if the variation is restricted to within-firm only. Our null results suggest a relatively precise zero estimate for the mean firm. Next we investigate heterogeneity in the relationship between dividends and investment.  Using quantile regression methods, we find that this negative relationship is concentrated at the top of dividends distribution: only firms from the 70th percentile and above exhibit a strongly negative relationship, and it is these firms that drive the negative estimates of pooled OLS regressions reported in prior work.

2014

Abstract

This paper examines the impact of the U.S. federal R&D tax credit between 1981-1991 using confidential IRS data from corporate tax returns. The empirical analysis makes two key advances on previous work. First, it implements a new instrumental variables (IV) strategy based on tax changes that directly addresses the simultaneity of R&D spending and marginal credit rates. Second, the analysis makes use of new restricted- access IRS corporate return data describing R&D expenditures. Estimates imply that a ten percent reduction in the user cost of R&D leads the average firm to increase its research intensity—the ratio of R&D spending to sales—by 19.8 percent in the short-run. Long-run estimates imply that the average firm faces adjustment costs and increases spending over time, though small and young firms show evidence of reversing initial increases. Analysis of the components of qualified research shows that wages and supplies account for the bulk of the increase in research spending. Elasticities of qualified and total research intensities from a smaller sample suggest firms respond to user cost changes largely by increasing their qualified spending, meaning that the type of R&D the federal credit deems qualified research is an important margin on which the credit affects firm behavior. 

2013

Abstract

We study the relative benefits of taxation versus market structure regulations for distilled spirits. One popular regulation, called post and hold, helps wholesalers set collusive prices as the competitive equilibrium of a single period game. Assembling new datasets of wholesale and retail prices, and sales, we show PH leads to average wholesale markups of 30-40%, with higher markups on expensive products. Taxes distort relative prices less than PH. We show Connecticut could increase tax revenue by 350% and improve consumer welfare while holding alcohol consumption fixed. However, we also show our counterfactual policy may be slightly regressive compared to PH. 

Abstract

The widespread boom in U.S. oil production has prompted state debates on levying new taxes on oil. This paper uses new well-level production data and price variation from federal oil taxes and price controls to assess how taxes affect production. Empirical estimates suggest an after-tax price elasticity ranging between 0.295 (0.038) and 0.336 (0.042). Response along the extensive margin is minimal. There is no discernible evidence of spatial shifting of production to minimize tax liabilities. Taken together the results suggest that taxes reduced domestic production in the 1980s, and the response largely came from wells that continued to pump oil, albeit at a reduced rate.

2011

Abstract

A firm's deferred tax position can influence how it is affected by a transition from one tax regime to another. We compile disaggregated deferred tax position data for a sample of large U.S. firms between 1993 and 2004 to explore how these positions might affect firm behavior before and after a pre-announced change in the statutory corporate tax rate. Our results suggest that the heterogeneous deferred tax positions of large U.S. corporations create substantial variation in the short-run effect of tax rate changes on reported earnings. Recognizing these divergent incentives is important for understanding the political economy of corporate tax reform.

2009

Nirupama S. Rao and Pablo Kurlat. Unemployment Insurance in Governing America, Facts on File, New York, 2009 William E. Cunion and Paul Quirk, eds.