Nirupama Rao

Nirupama Rao
Assistant Professor of Economics and Public Policy

NYU | Wagner Faculty 295 Lafayette Street New York NY 10012 USA

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.  

Semester Course
Spring 2014 PADM-GP.2140.001 Public Economics and Finance

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.


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Spring 2014 PADM-GP.2140.002 Public Economics and Finance

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.


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Fall 2013 PADM-GP.2140.001 Public Economics and Finance

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
Fall 2013 PADM-GP.2140.002 Public Economics and Finance

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
Spring 2013 PADM-GP.2140.001 Public Economics and Finance

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
Spring 2013 PADM-GP.2140.002 Public Economics and Finance

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
Fall 2012 PADM-GP.2140.001 Public Economics and Finance

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
Fall 2012 PADM-GP.2140.002 Public Economics and Finance

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.


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Fall 2012 PADM-GP.2147.001 Corporate Finance and Public Policy

This course introduces students to the main areas of corporate finance and how they relate to policy issues and discussions. The course covers topics in the three main areas of corporate finance: 1) capital structure (financing choices), 2) valuation (project and firm valuation) and 3) corporate governance (optimal governance structures). We will analyze how public policy, through taxes, public expenditures and regulation, affect these aspects of corporate finance. The course will additionally explore how key economic events have shaped public policy and influenced corporate financial practices. Case analysis will be used to enable students to understand practical application of the corporate finance theory introduced in the course and will also incorporate discussion of corporate finance in the context of social enterprises. 


Download Syllabus
Spring 2012 PADM-GP.2140.001 Public Economics and Finance

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.


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Date Publication/Paper
2015

Rao, Nirupama S. (with Chris Conlon) 2015. Wholesale Prices, Retail Prices and the Lumpy Pass-Through of Alcohol Taxes
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Abstract

This paper examines the pass-through of taxation in the market for distilled spirits. By using detailed UPC level data from Nielsen Homescan, as well as state specific wholesale prices from the regulator in Connecticut we are able to measure the pass-through rate of taxation at both the wholesale and the retail level. We find that pass-through of taxes to wholesale prices is incomplete and approximately 70% while pass-through of taxation to retail prices is often excess of 100 and as high as 160%, consistent with other results on the pass-through of excise taxes for spirits. This over-shifting of the tax burden onto consumers is difficult to rationalize with profit maximizing firm behavior and log-concave demand (such as Linear Demand, Logit, or Probit). We offer an alternative explanation which incorporates dynamics in price adjustment, and shows that large pass-through rates are an artifact of small tax increases and lumpy price adjustment via $1.00 increments. When firms follow an (s, S) rule, this has implications for a policy where tax-increases minimize over-shifting behavior that generates additional deadweight loss per unit of government revenue.

Rao, Nirupama. 2015. Corporate Inversions and Economic Performance Forthcoming ~ National Tax Journal
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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.

Nirupama S. Rao (with Aparna Mathur, Michael S. Strain and Stan A. Veuger) 2015. Dividends and Investment: Evidence of Heterogeneous Firm Behavior Forthcoming ~ Public Finance Review
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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

Rao, Nirupama S. 2014. Do Tax Credits Stimulate R&D Spending? The Effect of the R&D Tax Credit in its First Decade Revise & Resubmit ~ Journal of Public Economics
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Abstract

This paper examines the impact of the R&D tax credit between 1981-1991 using confidential IRS data from corporate tax returns. The key advances on previous work are an instrumental variables strategy based on tax law changes that addresses the simultaneity between R&D spending and its user cost and the use of new confidential data. 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 11 percent in the short-run. Long-run estimates imply that firms do face adjustment costs and further increase spending over the longer-run. Analysis of the components of qualified research shows that wages and supplies account for the bulk of the increase in research spending. Comparisons of the elasticity across firms of different sizes, industries, tax status, multi-national status and credit history are also made. Neither small nor young firms appear more responsive in the static analysis but the dynamic model reveals stronger short-run responses, suggesting that they may face lower adjustment costs or liquidity constraints in financing R&D. Long-run and retiming analyses show no evidence that firms allocate their qualified research spending over time to maximize their R&D tax credits. 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 what R&D the federal credit deems qualified research is an important margin on which the credit affects firm behavior.

2013

Rao, Nirupama S. (with Chris Conlon) 2013. The Price of Liquor is Too Damn High: Alcohol Taxation and Market Structure Under Review
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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. 

Rao, Nirupama. 2013. Taxes and U.S. Oil Production: Evidence From California and the Windfall Profit Tax Revise & Resubmit ~ American Economic Journal: Econ Policy
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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

Rao, Nirupama, James Poterba and Jeri Seidman 2011. Deferred Tax Positions and Incentives for Corporate Behavior Around Corporate Tax Changes National Tax Journal 64, 1 (March 2011): 27-57
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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

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

05/16/2013
How the R&D Tax Credit Is Like Duct Tape [Op-Ed]
US News & World Report