Current research
Finance and Society
Does Finance Change the Taste for Redistribution?, with M. Korinek and L. Weill, European Journal of Political Economy, revise-resubmit
Abstract: This paper investigates whether financial development shapes people's preferences for redistribution. Although a large literature examines the effects of finance on growth and inequality, much less is known about its influence on the political demand for redistribution. Using individual-level data from the World Values Survey and the European Values Study, we estimate the relation between financial development and preferences for income equality. We find no significant average effect of financial development on redistributive demand. However, this aggregate neutrality masks significant individual-level heterogeneity. We find that financial development is associated with lower support for redistribution among men, married individuals, and right-leaning respondents. In contrast, the effect is significantly positive for more educated individuals. These results suggest that financial development reshapes the political landscape not by shifting average preferences, but by altering the composition and polarization of pro-redistribution coalitions.
Wealth Concentration, Executive Constraints and Democratic Erosion
Abstract: This paper asks whether rising wealth concentration contributes to democratic erosion. Using a panel of more than 100 countries from 1995 to 2024 and local projections, we show that within-country increases in wealth inequality are followed by a persistent decline in liberal democracy. The effect builds gradually and is most pronounced after about five years, consistent with delayed institutional erosion rather than abrupt regime collapse. The pattern is robust to country and year fixed effects, a broad set of controls, alternative measures of wealth inequality and democracy, and an instrumental-variables strategy based on inequality in neighboring countries. The adverse effects are stronger in less consolidated democracies, suggesting that weaker institutional foundations are especially vulnerable to wealth concentration. We then examine potential mechanisms. The evidence points most strongly to institutional capture: across all three wealth-inequality measures, higher concentration is associated with weaker executive constraints. By contrast, evidence for distorted democratic contestation is limited, and evidence for repression is weaker and less robust. Finally, comparable specifications using income inequality yield smaller and less persistent effects, consistent with the view that wealth is more tightly linked to durable political power than income flows.
Government Ownership of Banks and Income Inequality, with V. Broz and L. Weill
Abstract: Currently, around 15 per cent of banking assets worldwide are under government ownership and some countries establish development banks to promote inclusive growth. This study explores the impact of government-owned banks on income inequality, using data from 180 countries over the period 1995–2020. Applying a local projections framework using novel instrumental variable, we find that government ownership of banks increases income inequality, with the effect being concentrated in developing countries, high-financial-development and non-democratic countries. Our estimates indicate that the peak impact on inequality materializes in a bit less than a decade.
Wealth Inequality and the Dynamics of Green Innovation, with B. Fisera
Abstract: We examine the impact of wealth inequality on green innovation using two complementary datasets: a country-level panel and firm-level data on automotive innovators, covering dozens of countries since the mid-1990s. We employ the local projections approach, multiple identification strategies, including a novel shift-share instrument, and state-dependent specifications. A one-percentage-point increase in the wealth Gini reduces cumulative green patenting by about 2.5 percent over five years, with little effect on non-green patenting. The negative effect is concentrated in countries with low human capital, weak political stability and rule of law, pointing to political-economy and institutional frictions rather than differences in economic development. The negative effects are also stronger for innovators with limited access to financial markets and a greater reliance on bank financing, especially for female innovators and small firms. Overall, wealth inequality emerges as an important constraint on the green transition and on the effectiveness of climate policy in stimulating innovation.
Climate, Finance, and Macroeconomy
Temperature and the U.S. Economy: From Demand to Supply-Side Effects?, with M. Garcia Rodriquez and C. Pinilla-Torremocha
Abstract: We examine how the macroeconomic effects of temperature shocks have evolved in the United States since 1947. Using a time-varying parameter vector autoregression with stochastic volatility estimated on monthly data, we document a structural shift in the propagation of temperature shocks. Before the 1980s, higher temperatures induced demand-like dynamics—output and prices rose together. Since the 1980s, responses have become supply-like: real activity declines persistently while prices rise on impact and turn negative only thereafter. A sectoral decomposition confirms shifts in agriculture, manufacturing, and services, with the services sector as the primary driver of recent GDP dynamics. Our results reveal that food, services, and energy prices drive most of the aggregate price adjustments, while core prices remain muted. Temperature shocks now explain a rising share of medium-run output and price variation, and greater ex-ante temperature uncertainty depresses equity valuations on impact. Overall, temperature shocks have become increasingly contractionary and inflationary in nature.
Earthquake Warning Systems and Insurance Premiums in Chinese Provinces, with F. Yahya and M. Hussain
Abstract: This paper studies the effects of Earthquake Early Warning Systems (EWS) on insurance premiums across Chinese provinces from 2007 to 2023. Panel econometric results show that EWS adoption reduces premiums on average but generates strong heterogeneity across the distribution. Premiums fall at lower quantiles, consistent with information-efficiency gains in less developed markets, while they increase at upper quantiles, reflecting greater risk revelation and capacity constraints in mature markets. The effects are strongest in high-risk and financially developed provinces. Spatial estimates indicate that EWS lower premiums locally but raise premiums in neighboring regions. Overall, the insurance impact of EWS depends on market maturity and spatial spillovers rather than infrastructure adoption alone.
Macro-Finance
Measuring Financial Uncertainty: New Evidence from 140 Years of US Newspapers, with S. Kapounek
Abstract: We construct a new monthly news-based index of U.S. financial market uncertainty by analyzing more than 100 million articles from 11 major newspapers from 1885 to 2025. We also build disaggregated subindexes for banks and the stock, bond, and money markets, which display distinct dynamics and highlight the value of sector-level measurement. The index spikes around major financial and policy episodes and differs meaningfully from option-implied volatility and broad policy-uncertainty measures. Using VARs and smooth-transition VARs on monthly data since 1985, we show that financial uncertainty shocks lower industrial production and employment, depress equity prices, and are followed by monetary easing. The shocks widen credit spreads, raise bank margins, and contract bank lending, with financial responses peaking faster than real activity. The macroeconomic effects are markedly stronger in recessions, consistent with a financial-uncertainty multiplier. The index provides a long-run barometer useful for research on monetary policy, financial stability, and international spillovers.
Not so active current research:
Government Spending and Term Structure of Interest Rates in a DSGE Model, with L. Kaszab, A. Marsal and K. Rabitsch
Abstract: Fiscal policy uncertainty shapes the yield curve by amplifying bonds’ hedging role and altering risk premia, with monetary policy determining how inflation risk transmits across maturities.
Central Bank Communication, Uncertainty, and Bank Liquidity Creation: US Evidence, with B. Fisera, I. Hasan, S. Kapounek and L. Weill
Abstract: Uncertainty undermines bank liquidity creation, but central bank communication can reduce it.