My Ph.D in economics was awarded in July 2013 by the University of Edinburgh. Before returning to university to study economics, I was a qualified life insurance Actuary (FFA 2006). My previous degrees were in Mathematics and Physics.
I have a diverse set of research interests within applied micro- and macro-economics with the common theme of trying to inform long term policy issues. Amongst other projects, I have worked on the link between state size and productivity using trade models, the problem of optimal climate change policy using models with credit frictions, and I have studied inequality using microsimulation models.
The goal of my work is to provide policy relevant research, and my experience to date has included engaging with policy makers and writing in the press, both about general economic issues and about my specific research.
Selected Research Highlights
REVISE & RESUBMIT AT THE ECONOMIC JOURNAL
Since the market valuation of fossil fuels companies is contingent upon the value of their reserves, and the market valuations of many other fi.rms are contingent on their being able to purchase cheap energy as an intermediate input, the credible implementation of climate change targets could cause large asset price falls. If investors are leveraged, this may precipitate a fire-sale as investors rush for the exits, and generate a large and persistent fall in output and investment. Maintaining productive capacity by massively expanding low carbon infrastructure whilst carbon intensive infrastructure is retired is vital if society is to successfully implement policies which will address climate change. There may thus be a trade-off between the quantity of low carbon investment that the market can deliver and the rate at which climate policy mandates that carbon intensive infrastructure is retired. We model this trade-off by introducing a second investment good in a Kiyotaki & Moore (1997) economy. We find that it is welfare enhancing to gradually liquidate carbon intensive capital rather than to take strong and immediate action, and for the government to take an active role in recapitalising investors who have been impacted by the implementation of climate policy.
This paper measures the effect of sharing a national state on the degree of trade integration. We call the causal effect of this political integration, the economic integration - this is the additional trade integration gained by entities which come together to form a country rather being independent countries. The existence of very large border effects, even within the European Union, is well known, and is a consequence of this aforementioned economic integration. Nevertheless, there are two potential reasons why these border effects could overestimate the gains from sharing a state. First, there could be a substitution of frictions: by integrating within a state, there could be a deterioration of links to the rest of the world. We see that this is not the case. Secondly, there could be an issue of endogeneity and selection bias: places which share larger affinities are more likely to both trade with each other and to select into sharing a state. We conclude that this is an important issue and so this endogeneity means that estimates of the average border effect overstate the reductions in trade frictions achieved by sharing a state. To deal with this endogeneity problem we propose an alternative approach. We identify marginal regions (regions which could conceivably be independent countries by themselves) and marginal countries (countries that are the closest trading partner in the data to the country to which that marginal region belongs). We propose that the gap in trade frictions between these marginal regions and marginal countries is a much better estimate for the causal impact of state sharing. Even controlling for selection bias, we find that the gains from economic integration are still substantial: it is about one third of the total gains from trade.
Resource scarcity is naturally associated with high resource prices that can incentivise the exploitation of marginal resources and the usage of alternatives. However, in this paper the incentives are related to the profitability of the extractive sector, rather than simply the higher price of its output. Since energy is an essential input to the economy, its supply affects the marginal products of other factors, and in general equilibrium its supply affects the costs that the extractive industry faces. Energy sector profitability is therefore ambiguously affected by the quality of available energy resources. There are conditions related to the returns to scale in the economy which can cause lower energy sector profitability with lower energy quality. This means that marginal resources may be abandoned as high quality resources are lost. An economy which exhibits constant, or weakly increasing, returns to scale can operate at any level of energy quality, since profitability rises with falling energy quality and we observe results consistent with the usual Hotellings Rule. However an economy which exhibits strongly increasing returns to scale cannot operate with only low quality energy resources and profitability may fall with falling energy quality. It is therefore possible that an energy quality shock disincentivises, rather than incentivises, the use of marginal resources and alternatives. Ultimately, a strongly increasing returns to scale economy may have no steady state equilibrium under a decentralised market allocation, despite such an allocation being technologically feasible.