Research Projects
Research Projects
Firms' heterogeneous (and unintended) investment response to carbon price increases (2024), with L. Steininger (ECB Working Paper)
Abstract
We study the heterogeneous pass-through of carbon pricing on investment across firms. Using balance sheet data of 1.2 million European firms and identified carbon policy shocks, we find that higher carbon prices reduce investment, on average. However, less carbon-intensive firms and sectors reduce their investment relatively more compared to otherwise similar firms after a carbon price tightening shock. Following carbon price tightening, firms in demand-sensitive industries see a relative decrease not only in investment but also in sales, employment and cashflow. Moreover, we find no evidence that higher carbon prices incentivise carbon-intensive firms to produce less emission-intensively. Overall, our results are consistent with theories of the growth-hampering features of carbon price increases and suggest that carbon pricing policy operates as a demand shock.
Monetary Policy and the Firm-level Labor Share: A Story about Capital (2024), with L. Steininger (ECB Working Paper)
Abstract
We study the heterogeneous effect of monetary policy across firms with different labor shares. Our goal is to obtain evidence on a labor-intensity transmission channel that should in fact be operating for other kinds of demand shocks as well. The basic idea is that labor is special: unlike capital, it cannot be pledged against loans as collateral due to property rights. Based on a sample of over one million European firms, we document substantial heterogeneity in terms of firms' investment response: when conditions tighten, fixed capital stock of labor-intensive firms decreases relative to capital-intensive production. Concomitant corporate dynamics include a decline in long-term debt and the profitability of labor dependent firms. These findings cannot be explained by other proxies for financial constraints such as age, size or financial leverage. Our results suggest that the impact of monetary policy is driven by asset-based borrowing constraints of high labor share firms and provide evidence for the role of external finance in this relation. Taken together, these findings point to new venues for modeling firms’ borrowing constraints, and suggest that monetary policy is more potent in an economy characterized by a high labor share.
The Costs of Transitioning to a Green Economy, with E. Lukmanova and K. Rabitsch
Distributional and macroeconomic implications of carbon taxation: Regional variation in revenue recycling
Trade in Times of Uncertainty (2023), with B. Meyer and H. Oberhofer, The World Economy
Abstract
This paper studies the direct and indirect trade volume and trade cost effects of uncertainty on international trade and economic welfare using a structural gravity framework for a panel of 97 developed and developing countries from 2000 to 2018. We find that the sign and magnitude of the effect depend on whether uncertainty originates from the importing or exporting country. Moreover, applying a cross-sectional gravity model, we show that an uncertainty shock directly reduces cross-border trade flows. The paper illustrates the suitability of the proposed modelling approach by means of two counterfactual scenario analyses in which we calculate the general equilibrium trade and welfare effects of uncertainty induced by the unexpected outcome of the Brexit referendum in 2016 and the outbreak of the COVID-19 pandemic in 2020.