Hello! I am a PhD candidate in Economics at Oxford. I study the macroeconomic and financial effects of climate change and climate policy. My research combines structural models from international economics and finance with empirical evidence, utilising text based and machine learning methods.

Previously, I was a PhD intern at the Bank of England.

Research Papers

Climate Change, Adaptation, and Sovereign Risk
Draft available upon request

Abstract

Many heavily indebted economies are also highly exposed to natural disasters. As climate change makes these disasters more frequent and severe, the incentive to invest in adaptation to build resilience grows, but how does sovereign risk affect this motive? Using a novel measure of adaptation derived from government budgets I show that countries with lower sovereign ratings invest less in adaptive capital. Moreover, natural disasters increase the cost of borrowing for these countries. I embed these mechanisms in a sovereign default model showing that default risk could either increase or decrease optimal adaptation relative to a benchmark with perfect financial markets. Limited commitment tightens the budget constraint while also creating an additional incentive to adapt in order to reduce borrowing costs. For emerging market economies the first channel dominates and sovereign risk restricts adaptation. These economies suffer from an `adaptation trap' dynamic: high borrowing costs restrict adaptation, leading to higher climate damages in the future which increase borrowing costs further. I conclude by showing that debt relief policies can be effective in improving climate resilience, sometimes at no cost to investors.

The Carbon Premium and Policy Risk Exposure: A Text-Based Approach Draft available upon request

Abstract

Shifts in climate policy stringency have heterogeneous effects on firms’ profitability. Does the market price this risk? This paper provides new evidence on this question, utilising a supervised machine learning algorithm to construct a firm-level measure of climate policy risk exposure. Firms exposed to climate policy risk have negative abnormal returns on climate policy announcement days. I build a set of such dates and characterize abnormal return responses using Risk Factors discussions in 10-K filings. The algorithm uncovers predictors of policy risk exposure in the text which are used to construct an exposure score for each firm. This exposure score is correlated with emissions, environmental lobbying behaviour, and is predictive out of sample. Higher exposure is not associated with a premium. Green preference shifts are considered as a mechanism to rationalize this result. I find that empirically identified preference shocks can partly explain the lack of a climate policy risk premium.

Work in Progress

Climate Tariffs, Firm Heterogeneity, and Productivity
with Martin Bodenstein, Federico Di Pace, Aydan Dogan and Marco Garofalo

Abstract

Disasters and Global Imbalances
with Andrea Ferrero

Abstract

Market Neutrality and Climate Non-Neutrality

Abstract