Working Papers

“Pollution Havens? Carbon Taxes, Globalization, and the Geography of Emissions” with Livio Stracca. ECB Working Paper No. 2862

This paper studies the impact of national carbon taxes on emissions. To do so, we construct a cross-country panel dataset, matching measures of emissions of carbon dioxide with information on the introduction of carbon taxes and their implied price on carbon. Importantly, we consider both measures of territorial emissions - emissions emitted within a country’s borders - and consumption emissions - emissions emitted anywhere in the world to satisfy domestic demand. Using panel local projection methods, we find that carbon taxes reduce territorial emissions over time, but have no significant effect on consumption emissions. Our estimates are robust to propensity-score weighting adjustments and are driven by countries which are more open to trade. Carbon taxes also lead to a modest increase in imports, suggesting that international trade may act as a conduit for reallocating the production of emissions away from locations where carbon is taxed. Together, our findings highlight the limitations of national carbon taxes in isolation, and the importance of international cooperation in reducing global emissions.

“Does Wealth Inhibit Criminal Behavior? Evidence from Swedish Lottery Players and Their Children” with David Cesarini, Erik Lindqvist and Robert Östling. NBER Working Paper 31962

There is a well-established negative gradient between economic status and crime, but its underlying causal mechanisms are not well understood. We use data on four Swedish lotteries matched to data on criminal convictions to gauge the causal effect of financial windfalls on player’s own crime and their children’s delinquency. We estimate a positive but statistically insignificant effect of lottery wealth on players’ own conviction risk. Our estimates allow us to rule out effects one fifth as large as the cross-sectional gradient between income and crime. We also estimate a less precise null effect of parental lottery wealth on child delinquency.

“What Shapes Spillovers from Monetary Policy Shocks in the United States to Emerging Market Economies?” with with Erik Andres-Escayola, Peter McQuade, and Marcel Tirpák. ECB Working Paper No. 2973

Monetary policy decisions by the Federal Reserve System in the US are widely recognised to have spillover effects on the rest of the world. In this paper, we focus on the asymmetric effects of US monetary policy shocks on macro-financial outcomes in emerging market economies (EMEs). We shed light on how domestic factors shape external monetary policy spillover effects using indicators on the macro-financial vulnerabilities and monetary policy stances of EMEs. We find that a surprise tightening of monetary policy in the US leads to an immediate tightening of financial conditions which leads to a decline in activity and prices in EMEs over one year. Importantly, these effects are amplified in periods of high vulnerabilities and attenuated when EMEs follow a prudent monetary policy stance. Our findings help explain the greater resilience of many EMEs to the Fed’s post-COVID-19 tightening cycle, and highlight the benefits of the broad improvements of monetary policy frameworks in these countries.

“Real Effects of Credit Supply Shocks: Evidence from Danish Banks, Firms, and Workers” with Simon Juul Hviid. Danmarks Nationalbank Working Paper No. 206

  • Winner of the Ola Bengtsson Award for best paper at the SHoF/SSE 9th National PhD Workshop in Finance

Bank lending cuts can lead firms to reduce their level of employment, yet little is known how these shocks affect the composition of firms’ employees and outcomes at the worker level. This paper investigates the effect of bank distress on the provision of credit, and its effects on employment beyond firm level aggregates. To do so, we use a novel dataset built from administrative and tax records linking all banks, firms, and workers in Denmark. We show that banks that were particularly exposed to the 2008/2009 financial crisis cut lending to firms, and firms were unable to fully compensate with financing from alternate sources. The decrease in credit supply led to a drop in firm level employment with effects concentrated amongst firms with low pre-crisis liquidity, and on employment of nonmanagerial and low-educated employees. At the worker level, we find that positive effects on unemployment were driven by effects on nonmanagerial, low-educated, and short-tenured workers, as well as workers in low-skill occupations. Our estimates suggest that cuts in bank lending can account for up to 6% of the fall in total employment, and are an important factor behind heterogeneous employment dynamics in times of contractionary credit.

Works in Progress

“A Model of Search in Credit and Labour Markets with Heterogeneous Workers”

How do frictions in credit markets affect firms’ choices over which workers to hire? To study this question, I build a search and matching model of credit and labour markets with heterogeneous labour. Firms first search for a bank to cover the costs of posting a vacancy. Firms that secure financing then search for workers of varying skill in the labour market. Upon meeting a worker the firm faces a trade-off: hire that worker in the present period and produce output, or wait for a potentially higher skilled worker to come along. Firms’ optimal behaviour is determined by tightness in the labour market, itself determined by frictions in both credit and labour markets. Greater credit market frictions drive labour market tightness down, leading firms to seek higher skilled workers.