Can International Technological Diffusion Substitute for Coordinated Global Policies to Mitigate Climate Change? • IMF Working Paper: June 2021
In short, yes. I use a multi-region integrated assessment model with fuel-specific endogenous technical change to examine the impact of Europe and China reducing emissions to zero by mid-century. Without international technological diffusion this is insufficient to avoid catastrophic climate change. But when innovation can diffuse overseas, long-run temperature increases are limited to 3 degrees. This occurs because policy not only encourages green innovations but also dissuades dirty innovations which would otherwise spread. The most effective policy package in emissions-reducing regions is a research subsidy funded by a carbon tax, driven in the short term by the direct effect of the carbon tax on the composition of energy, and later by innovation induced by research subsidies. Green production subsidies are ineffective because they undermine incentives for innovation.
Parameterizing Debt Maturity (With Christopher Johns) • IMF Working Paper: April 2021
This paper examines ways to summarize the maturity structure of public debts using a small number of parameters. We compile a novel dataset of all promised future payments for US and UK government debt from every month since 1869, and more recently for Peru, Poland, Egypt, and Nigeria. We show that there is a unique parametric form which does not arbitrarily restrict debt issuance – portfolios of bonds with exponential coupons. Compared to the most popular alternative, this form 1) more accurately describes changes in debt maturity for these six countries and 2) gives a quite different interpretation of historical debt maturity. Our work can be applied not just to analyze past debt movements, but – because parameter estimates are relatively similar across countries – also for monitoring changes in debt maturity, including in countries where data are partial or incomplete.
Using a new daily index of social unrest, we provide systematic evidence on the negative impact of social unrest on stock market performance. An average social unrest episode in an typical country causes a 1.4 percentage point drop in cumulative abnormal returns over a two-week event window. This drop is more pronounced for events that last longer and for events that happen in emerging markets. Stronger institutions, particularly better governance and more democratic systems, mitigate the adverse impact of social unrest on stock market returns.
Epidemics may have social scarring effects, increasing the likelihood of social unrest. They may also have mitigating effect, suppressing unrest by dissuading social activities. Using a new monthly panel on social unrest in 130 countries, we find a positive cross-sectional relationship between social unrest and epidemics. But the relationship reverses in the short run, implying that the mitigating effect dominates in the short run. Recent trends in social unrest immediately before and after the COVID-19 outbreak are consistent with this historic evidence. It is reasonable to expect that, as the pandemic fades, unrest may reemerge in locations where it previously existed.
Measuring Social Unrest Using Media Reports (With Maximiliano Appendino, Kate Nguyen, and Jorge de Leon Miranda) • Revise & Resubmit, Journal of Development Economics • IMF Working Paper: July 2020 • IMF Finance & Development: August 2021
We present a new index of social unrest based on counts of relevant media reports. The index consists of individual monthly time series for 130 countries, available with almost no lag, and can be easily and transparently replicated. Spikes in the index identify major events, which correspond very closely to event timelines from external sources for four major regional waves of social unrest. We show that the cross-sectional distribution of the index can be simply and precisely characterized, and that social unrest is associated with a 3 percentage point increase in the frequency of social unrest domestically and a 1 percent increase in neighbors in the next six months. Despite this, social unrest is not a better predictor of future social unrest than the country average rate.
Do persistently low nominal interest rates mean governments can safely borrow more? I argue standard models of debt sustainability cannot address this issue. The key model parameter in a wide class of models is the long-run difference between the nominal risk-free interest rate and the nominal growth rate. If negative, maximum sustainable debts are unbounded. Data from five advanced economies suggest that this differential is indeed likely negative; different approaches all produce negative point estimates and confidence intervals implying low probabilities of positive values. And even if the long-run differential were positive, the quantitative impact of short-term fluctuations is tiny.
The fiscal cost of conflict: Evidence from Afghanistan 2005-2017 • Revise & Resubmit, World Development • IMF Working Paper: September 2018 • Latest version: December 2020 • Code for Generalized Synthetic Control estimator
I use a novel monthly panel of provincially-collected central government revenues and conflict fatalities to estimate government revenues lost due to conflict in Afghanistan since 2005. Headline estimates are large, implying future revenue gains from peace of about 6 percent of GDP per year and total revenue losses of $3bn since 2005. The key challenge to identification is omitted variable bias, which I address by extending Powell’s (2017) generalized synthetic control method to a dynamic setting. This allows estimation of impulse response functions robust to very general forms of omitted variables bias.
Why are Countries’ Asset Portfolios Exposed to Nominal Exchange Rates? (With Jonathan Adams), Journal of International Money and Finance, February 2021 • IMF Working Paper: December 2017 • Published version
Most countries hold large gross asset positions, lending in their domestic currency and borrowing in foreign currency. As a result, their balance sheets are exposed to nominal exchange rate movements. We argue that when asset markets are incomplete, this exposure provides partial insurance against shocks that move exchange rates. We demonstrate that this insurance motive can simultaneously generate realistic gross asset positions and resolve the Backus-Smith puzzle: that countries’ relative consumption and real exchange rates are negatively correlated. Local perturbation methods are inaccurate in this setting as they approximate around the wrong interest rate, even when they correctly characterize the average portfolio holdings. So to accurately solve the equilibrium portfolio problem, we extend Maliar and Maliar (2015)’s global projection method.
PhD, Economics • June 2016
M.Sc. Econometrics & Mathematical Economics, with Distinction • June 2008
M.A. Mathematics, First Class • June 2005
R package implementing Powell's (2017) Generalized Synthetic Control method. This allows consistent estimation of treatment effect when 1) omitted variables are not fully captured by time and unit fixed effects, and 2) treatment is non-dichotomous. The package provides functions for calculating point estimates and for hypothesis testing.
Links: Vignette CRAN github page