Rahul Singh Chauhan

How does local debt stay sustainable when the tax base is mobile? Exploiting plausibly exogenous variation in funding gaps driven by relative portfolio performance, I find that widening pension deficits significantly increase net out-migration of households and income flows from underfunded to better-funded states. This mobility erodes the tax base, raising the effective cost of funding pensions and constraining governments' ability to close shortfalls through higher contributions. States facing higher migration risk — those that face larger out-migration when local taxes rise — systematically under-contribute relative to actuarially required levels and shift pension assets toward opaque, higher-yielding alternatives such as private equity and hedge funds. To interpret these findings, I develop a spatial model of tax-setting and pension investment under endogenous migration. The model highlights a migration–funding–risk feedback loop: governments that fail to internalize out-migration overestimate tax capacity, under-contribute, and induce fiduciaries to pursue riskier portfolios.

When the Federal Reserve (Fed) expanded its balance sheet via quantitative easing (QE), commercial banks typically financed reserve holdings with uninsured demandable deposits. They also issued credit lines to corporations. In the aggregate, these bank-issued claims on liquidity did not shrink commensurately when the Fed halted QE and turned to quantitative tightening (QT). Consequently, banks that increased liquidity risk exposure — especially small and regional banks — became vulnerable to liquidity shocks, necessitating further liquidity provision by the Fed. The evidence suggests that the expansion and shrinkage of central bank balance sheets has led to liquidity dependence of banks on central banks.

I show that product scope is an important predictor of firms' creditworthiness, even after residualizing for size and other firm characteristics, and helps explain creditor–firm sorting. Using a bank regulatory reform and a large non-bank bankruptcy in India as laboratories, I show that non-bank lenders substitute for constrained bank credit heterogeneously, altering the composition of firms that receive credit and grow. Firms with narrower product scope obtain credit and expand both scale and scope during the non-bank credit boom. However, when non-bank funding collapses, banks do not replace lending to these smaller borrowers. Instead, the product-scope expansion helps exposed firms partially hedge the shock by reallocating sales across fewer product lines. I rationalize these dynamics in a quality-ladder model with credit constraints and endogenous creditor sorting. The model shows that stable non-bank funding can generate growth among smaller firms in ways that lower bank capital regulation alone cannot.

I analyze the impact of anonymous political financing via electoral bonds on the Indian corporate sector. Political donors are more likely to announce investment projects in the year they donate, particularly in states governed by the ruling party. Donations are associated with increased capital expenditures and employment but also with reductions in MRPK and TFP. Government-owned banks are more likely to lend to donors connected to the ruling party. Political donors exhibit higher market share, pursue acquisitions, and increase price markups. Industries with higher donations show greater dispersion in MRPK and MRPL, signaling increased resource misallocation.