Research
My research focuses on empirical macroeconomics and labor markets, and more specifically on automation and labor markets, international macrofinance, financial markets and exchange rates, consumption and wealth.
Publications
Aggregate consumption and wealth in the long run: the impact of financial liberalization
joint with Lorenzo Pozzi. Journal of Applied Econometrics (2022), 37(1), 161–186. Link to paper.
Available as IFN Working Paper No. 1339, 2020. Link to working paper.
This paper investigates the impact of financial liberalization on the relationship between consumption and total wealth (i.e., the sum of asset wealth and human wealth). Financial liberalization is persistent and may signal changes in expected future consumption growth rates and/or in rates of return on wealth that, through the intertemporal budget constraint, affect the current consumption-wealth ratio. We estimate the long-run relationship between consumption, total wealth and financial liberalization by state space methods using quarterly US data. The results show that the trend in the consumption-wealth ratio is well-captured by our baseline liberalization indicator. We find that the increase in this indicator over the sample period has increased the consumption-wealth ratio with about ten percent. Investigating the responsible channel, additional estimates show that financial liberalization has predictive power for aggregate consumption growth rather than for returns, a result that supports an incomplete markets interpretation of the link between liberalization and the consumption-wealth ratio.
Journal of Money, Credit and Banking (2022), 54(2-3): 569-598.
Available as IFN Working Paper No. 1246, 2018, link to paper. Winner of the SUERF/UniCredit & Universities Research Prize in 2017.
Many currencies, especially from countries with negative net foreign assets, depreciate during financial turbulence. Using a panel of 26 currencies for the period 4/2002 – 12/2019, I show that the net foreign asset composition is related to the exchange rate sensitivity to global financial market uncertainty changes. Net foreign debt is associated with a higher sensitivity, whereas net equity and FDI are not. Ownership matters too, as this association is stronger for private net liabilities. In emerging markets, this vulnerability arises from net other investments, while G10 currencies are more sensitive the more private net portfolio debt the countries have.
Financial Reforms and Low-Income Households' Impact on International Consumption Risk Sharing
International Finance (2022), 25(3): 375-395.
Available as IFN Working Paper No. 1261, 2019. Link to working paper. Link to dataset.
Complete financial markets allow countries to share their consumption risks internationally, thereby creating welfare gains through lower volatility of aggregate consumption. Using a panel of 116 countries between 1970-2019, I show that a higher share of low-income households reduce consumption risk sharing, especially so in less-developed countries. Moreover, I find that a broad range of financial market reforms and financial integration have a positive impact on international consumption risk sharing in poorer developing countries, while in emerging market countries, financial market development, financial reforms, and capital account openness has an impact. In advanced economies, financial (stock and bond) market development as well as financial integration improves international risk sharing. A lack of financial reforms, a lower degree of financial integration and a high share of low-income households thus contribute to the degree of risk sharing being lower in developing countries than in advanced economies.
Digitization-based automation and occupational dynamics
joint with Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson. Economics Letters, vol. 189, February 2020.
Available as IFN Working Paper No. 1299, 2019. Link to working paper.
We examine the relationship between occupational automation probabilities and employment dynamics over nearly two decades. We show that employment and wage shares of occupations with a higher automation risk have declined in Sweden over the period 1996-2013. This has occurred both in the aggregate private business sector but also within firms, where the wage share changes have been larger than the employment share changes. Combining the automation risk in workers’ occupations with individual worker characteristics, we find substantial heterogeneity. This includes that education dampens the automation risk of workers, as the average automation probability of low-skilled workers is almost twice as high as of university graduates. Employment shares in high-risk occupations have moreover declined across all wage levels, and most so in high-wage occupations.
Working papers
Importing Automation and Wage Inequality through Foreign Acquisitions
joint with Fredrik Heyman and Joacim Tåg. IFN Working Paper No. 1457, 2023. Link to paper
Is technology or trade driving increases in wage inequality? We propose that technology interacts with trade in the form of foreign direct investments to widen domestic wage inequality. We show that foreign acquisitions of domestic firms disproportionately affect wages for workers who perform tasks sensitive to the technology specialization (software or robotics) of the acquiring firm. Based on Swedish matched employer-employee data covering two decades and staggered difference-in-differences methods we find wages to decline by up to 5.2% annually over an eight-year post period. Our results suggest that a trade policy aimed at attracting foreign companies with high technological capabilities can help countries advance technologically, but this may come at the cost of increased domestic wage inequality.
Dollarization and Financial Development
joint with Geoffrey Bannister and Jarkko Turunen. IMF Working Paper No. 18/200, 2018. Link to paper
Despite significant strides in financial development over the past decades, financial dollarization, as reflected in elevated shares of foreign currency deposits and credit in the banking system, remains common in developing economies. We study the impact of financial dollarization, differentiating across foreign currency deposits and credit on financial depth, access and efficiency for a large sample of emerging market and developing countries over the past two decades. Panel regressions estimated using system GMM show that deposit dollarization has a negative impact on financial deepening on average. This negative impact is dampened in cases with past periods of high inflation. There is also some evidence that dollarization hampers financial efficiency. The results suggest that policy efforts to reduce dollarization can spur faster and safer financial development.
Okuns lag i Finland – ett samband som förändrats med tiden (Okun’s law in Finland – a relationship that has changed over time)
BoF Online 9/2010, 14.12.2010 Bank of Finland
This paper studies how the negative relationship between unemployment and output growth in Finland has changed between 1975 and 2009, and evaluates how the factors affecting the relationship have evolved. The dynamic unemployment elasticity with respect to growth, called Okun’s dynamic beta, is estimated both through Okun’s gap and difference models. Even though the dynamic beta varies over time and the business cycle, the results indicate that the relationship between unemployment and growth has weakened. Rolling regressions of the difference model also suggest a weaker beta. A structural break in the law was identified between 1993 and 1994, which coincides with a major recession in Finland. When separate regressions are run for the two time periods, Okun’s dynamic coefficient is almost twice the size in the time period preceding the recession. The weakened relationship between unemployment and growth can partially be explained by lower unemployment benefits in relation to the average income level, less temporary contracts and increased working hour flexibility.