Working papers

Abstract: We study how populist governance has affected sovereign yields in Europe since 1960. Using fixed effects and synthetic control methods (SCMs), we find comprehensive evidence that bond markets impose a populist risk premium, which we define as an increase in sovereign yields in periods of populist governance. We also show that the populist risk premium (PRP) varies across the term structure of bond yields and the ideological position of the incumbent populist. While short-term yields seem unaffected, the longer end of the yield curve sees a positive PRP, particularly for left-wing populists. SCMs confirm the substantial heterogeneity in the PRP across the term structure, as do several robustness checks. This is consistent with recent evidence of a lasting impact of populist governance on income levels, triggering substantial long-term fiscal risks. There are two primary mechanisms underlying the observed heterogeneity in the PRP: fiscal and monetary policy convergence in Europe, and stronger internal constraints on executive power relative to those in South and North America. 

Under review at the European Economic Review

Abstract: We estimate the effects of California’s cap-and-trade program (CCTP) on the greenhouse gas (GHG) emissions of California’s manufacturing, waste, and electricity-generation (EG) sectors 8 years after the programme has taken effect. We also estimate its effects on California’s relative change in carbon intensity of its thermal EG plants and renewable-energy’s share of total electricity generated. Using a difference-in-differences approach, we are unable to identify a reduction of GHG emissions of California’s affected manufacturing plants relative to the closely matched control group of facilities in other states, although we do find a 12.5% abatement effect on California’s waste sector. In addition, we estimate higher CO₂ emissions and carbon-intensity of its EG sector relative to that of the control group of states. Contrary to theory predictions, our evidence suggests that the first 8 years of the CCTP were largely ineffective in delivering a simultaneously low-cost and accelerating path to industrial net zero. Therefore, while alternatives exist and changes to the scheme might yield results in the future, the CCTP does not offer a convincing blueprint for industrial net zero policies thus far.

Under review at Energy Economics

Supplementary material (data and code) here

Abstract: We study how individual votes on climate issues by Members of the European Parliament (MEPs) depend on their age, gender, ideology, and country of origin. Unsurprisingly, younger MEPs show stronger support for climate action. MEPs also appear divided on climate policies primarily along ideology. We show that the division is not between the extremes: MEPs from the political extremes appear similar in their aversion to pro-climate action. Instead, climate policy polarization in the European Parliament is between the centre and the extremes. Significant interaction effects between age, ideology and gender are also evident. From a policy perspective, this highlights the need to bridge both ideological and generational divides among key legislators to advance climate action.

Under review at Environmental and Resource Economics 

Supplementary data and code here

Abstract: I discuss politically optimal restrictions on citizen movement in a pandemic. To find the political equilibrium, a standard voter preference framework is extended with features of a society where citizens make choices under pandemic conditions. Specifically, their vaccine choice is endogenous and they are vaccine-hesitant, they do not readily comply with restrictions, lockdowns tax their available time for work and leisure, and access to vaccines is unequal. Citizens also vote for their preferred level of restrictions. In a median-voter equilibrium, the majority will choose zero restrictions, unless the government offers some positive income support, or a subsidy, which depends on the severity of restrictions. Voters will tolerate harder restrictions when the subsidy grows. The minimum subsidy and additional conditions for existence of a majority support for non-zero restrictions are discussed. Large-scale evidence using Google's citizen mobility data from the COVID-19 pandemic supports the theory. A set of policy implications completes the analysis, which could help governments build political support for their planned containment measures in future pandemics.

Supplementary material (+ replication package) here.

Under review at the European Journal of Political Economy