Primary Research Focuses: Development Economics, Public Finance

Secondary Research Focuses: Environmental Economics, Energy

References: 

• Michael Greenstone (Committee Chair)
• Robin Burgess
• Ijaz Nabi
• Tim Dobermann

Job Market Paper: "Do Value-Added Taxes Distort Input Decisions? Evidence from Pakistan"

[Abstract] We examine how firms’ input choices respond to the value-added tax (VAT) on purchases, using detailed VAT return data from Pakistan and a quasi-experimental variation in electricity VAT rates. Contrary to traditional theories that intermediate VATs don’t affect production decisions, our study reveals a significant elasticity of electricity demand to VAT rates (-0.81). These findings aren’t attributed to tax evasion shifts but to frictions in the VAT refund system. Specifically, many firms, not collecting VAT on output, depend on government reimbursements for their VAT credits, explaining our results.