Working Papers

• ESG Shocks in Global Supply Chains, with Guoman She and Alminas Žaldokas, 2024

We show that U.S. firms cut imports by 29.9% when their international suppliers experience environmental and social (E&S) incidents. These trade cuts are larger for publicly listed U.S. importers facing high E&S investor pressure and lead to cross-country supplier reallocation, suggesting that E&S preferences in capital markets can be privately costly but have real effects in far-flung economies. Larger trade cuts around the incident result in higher supplier E&S performance in subsequent years, and in the eventual resumption of trade. Our results highlight the role of investors in ensuring suppliers' E&S compliance along global supply chains. 

• Smokestacks and the Swamp, with Stefan Lewellen, Arkodipta Sarkar, and Xiao Zhao, 2024

We examine how politicians' individual preferences shape firms' emissions decisions and financial outcomes. Using a regression discontinuity design involving close U.S. congressional elections, we show that plants decrease emissions and increase abatement investment following close Democrat wins.  Firms reallocate emissions away from Democrats, leading to emissions spillovers in other districts.  However, reallocation is imperfect: firm-level costs increase and M/B ratios decline after firms' representation becomes more Democratic.  Pollution-related illnesses decrease around plants in Democratic districts, suggesting that firms' pass-through of politicians' environmental preferences can significantly affect local communities. Our results provide direct support for Bénabou and Tirole (2010)'s theory of stakeholder capitalism by showing that differences between voters' and politicians' preferences lead to large effects on firms' environmental externalities.

• Passing Through? Bank Entry and the Deposits Channel, with Stephen A. Karolyi and Stefan Lewellen, 2021 

We examine monetary policy transmission when deposit market structure is endogenous.  Expansionary monetary policy stimulates bank entry, especially when entry barriers are low. Banks' deposit quantity sensitivities are increasing in entry barriers, but the number of local banks is decreasing in entry barriers, and this channel dominates.  Hence, higher entry barriers are associated with reduced monetary policy transmission.  We test this prediction using novel, network-based measures of entry barrier shocks stemming from U.S. bank deregulation.  Consistent with the model, local establishment and employment growth increase more in response to expansionary monetary policy when entry barriers are lower.

• Deregulation, Market Structure, and the Evolution of U.S. Banking, with Stephen A. Karolyi and Stefan Lewellen, 2024  [Deregulation Data]

We argue that the deregulation of the U.S. banking sector in the late 1980s played an important role in facilitating risk build-up and cross-sectional differences in bank performance prior to the Global Financial Crisis. Deregulation increased deposit competition, squeezing banks’ net interest margins. Banks responded by increasing risk-taking, engaging in M&A activity, and developing new sources of income. Banks in early-deregulating states were compelled to make risk-taking and business model changes that provided long-term advantages over banks in late-deregulating states. Using network-based measures of bank deregulation intensity, we verify these patterns in the data.

Other Refereed Publications

• Measuring the Impact of Longevity Risk on Pension Systems: the Case of Italy, with Carlo A. Favero, 

North American Actuarial Journal, 18(1), 2014, 87-103.

• The Impact of Longevity Risk on the Term Structure of the Risk-Return Tradeoff, 

Rivista di Politica Economica, (4), 2012, 79-119.