Current research
Finance, Politics and Society
Wealth Inequality and the Direction of Innovation: Evidence from Green Patenting, with B. Fisera
Abstract: We show that the distribution of wealth shapes not only how much economies innovate, but what they invent. Combining a cross-country panel of green and non-green patenting with firm-level data on automotive innovators, we find that higher wealth inequality persistently reduces green innovation while leaving non-green patenting largely unaffected. A one-percentage-point increase in the wealth Gini is followed by a cumulative decline in green patenting of about 2.5 percent over five years. The effect is strongest where financial and institutional frictions are more severe: credit markets are less developed, political stability is weaker, and the rule of law is more limited. Firm-level evidence points to the same mechanism, with stronger effects among small firms and firms with a higher share of intangible assets. Green patenting by female innovators is also more affected by wealth inequality. In European countries, the same restrictive carbon-pricing shock raises green patenting substantially less in high-inequality economies. Across local projections, augmented inverse probability weighting, shift-share instrumental-variable exercises, and state-dependent specifications, the results consistently indicate that wealth inequality redirects technological change away from green innovation.
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.
Public Banks, Private Gains? Government-Owned Banks and Income Inequality, with V. Broz and L. Weill
Abstract: This paper examines the effect of government ownership of banks on income inequality using a panel of 180 countries over 1995–2020. We combine cross-country data on bank ownership with measures of income inequality to estimate instrumental-variable local projections. We find that government ownership of banks increases income inequality. The effect builds gradually and peaks around 7–9 years after the increase in public ownership: a 10-percentage-point rise in government ownership raises the Gini index by approximately 1–1.7 points, though precision declines at the longest horizons. The effect is most consistently observed in developing countries and in countries with weaker democratic institutions. These findings challenge the view that government ownership of banks is inherently inclusive and suggest that, in the absence of strong institutional constraints, state-owned banks may reinforce rather than reduce existing disparities.
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 in the United States have evolved since 1947. Using a time-varying parameter VAR with stochastic volatility estimated on monthly data, we document a pronounced structural shift in their propagation. Prior to the 1980s, higher temperatures exhibit demand-like dynamics, with output and prices rising together. In recent decades, however, responses have become increasingly supply-like: real activity declines persistently, while prices rise on impact and turn negative at longer horizons. A sectoral decomposition shows that this shift is broad-based, with the services sector playing a central role in recent output dynamics. A detailed analysis of price components reveals that food, energy, and services prices drive most of the aggregate price response, while core inflation remains largely muted. Temperature shocks also explain a growing share of medium-run output and price fluctuations. The shift coincides with rising and more persistent temperatures and remains robust to controlling for monetary policy and regulation, suggesting that a warming climate—rather than changes in the policy or regulatory environment alone—has made temperature shocks increasingly contractionary.
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, Journal of International Financial Markets, Institutions and Money, revise-resubmit, 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.