Corporate Taxation, Entrepreneurship and Financial Frictions (solo-authored) [Draft] [Slides] 

An economic environment which encourages entrepreneurial activity among high ability individuals is crucial for economic prosperity. In this paper, prospective entrepreneurs face two main barriers to entry: (i) Wealth barrier and (ii) Distortionary government policies - this is modelled as corporate taxes. I simulate a model with occupational choices, calibrated to the UK economy to analyse the effect of a rise in corporate taxation. I show that a 6% increase in UK corporate taxes significantly lowers the prospective profits of an entrepreneur, which discourages high ability, asset poor individuals from selecting into entrepreneurship. These displaced individuals join the labour force, exerting downward pressure on wage rates as a result of higher labour supply. Lower incomes in the economy affects economic activity, decreasing aggregate consumption and output. However, policies aimed at improving access to finance could potentially enable high ability, asset poor individuals transition into entrepreneurship which reverses the adverse effects of higher corporate taxes. 

What’s the Melting Pot Worth? Multiculturalism and House Prices (joint with Hisham Farag, Christoph Gortz, Danny McGowan, Huyen Nguyen and Max Schroder) [Paper]

Featured on: Economics Observatory, BBC, NIESR

We estimate the premium or discount buyers pay for housing assets in a multicul-tural neighborhood. We exploit plausibly exogenous variation in British colonizationpatterns in Northern Ireland during the early 1600s which created neighborhoods of varying religious composition that persists until today. These religious groups areculturally distinct, but are observationally equivalent linguistically, in ethnicity and along socioeconomic dimensions. Buyers pay a 9.6% premium to purchase a housein a multicultural neighborhood. Multiculturalism transmits to real asset prices by increasing asset liquidity and housing demand. We develop a model that ties these insights together showing segregated neighbourhoods appeal to buyers similar to existing residents, whereas demand is higher in multicultural areas because a broader spectrum of society is willing to live there. 

Defining Current and Expected Financial Constraints using AI (joint with Christoph Gortz, Danny McGowan and Max Schroder) [Paper]

We develop a novel annual measure of current and expected financial constraints for publicly listed US firms over 1993 to 2024. Applying artificial intelligence to 10-K filings’ text enables more accurate and context-aware detection of financial constraints than traditional text classification techniques. Uniquely, we distinguish constraints affecting firms presently from those anticipated for the future. These constraint types are associated with distinct financial profiles and transition dynamics from which we distill three novel facts: (i) Expected constraints are seldom realized, instead, firms typically become unconstrained or postpone constraints further into the future. (ii) Firms frequently mitigate current constraints within a year, but persistence rises with severity. (iii) Firms prioritize resolving immediate over future constraints. Notably, timing-related heterogeneity impacts the practical application of the widely-used cash flow sensitivity of cash: while it identifies anticipated future financial constraints, it conflates distinct constraint types – unconstrained and currently constrained – and therefore fails to capture all financially constrained firms. A general implication of our work is that firms’ observable financial decisions remain informative for identifying financial constraints as liability-cashflow sensitivities distinguish unconstrained from currently binding constraints.

Publications

The Economic Effects of ‘Excessive’ Financial Development (joint with Rodolphe Desbordes and Markus Eberhardt) - Oxford Bulletin of Economics and Statistics (2025)  [Paper] [Slides] 

Featured on VoxEU

We study the causal implications of high levels of financial deepening for economic devel-opment and banking crises in a panel of countries over the past seven decades. We adopt afactor-augmented heterogeneous difference-in-differences estimator and find, in contrast tothe existing literature, that very high levels of financial development do not lead to lowerlong-term economic growth or a higher likelihood of banking crises associated with ‘credit booms gone bust’ cycles or excessive capital inflows. We submit this null result to a battery of robustness checks adopting alternative specifications, alternative aggregate data for households versus firms, and carrying out theory-driven heterogeneity analysis