Research
Publications
Environmental Regulation and Productivity Growth in the Euro Area: Testing the Porter Hypothesis
joint work with: Nicola Benatti (ECB), Petra Kelly (Imperial College London), Paloma Lopez-Garcia (ECB)
Journal of Environmental Economics and Management (forthcoming), ECB Working Paper No. 2820
This paper examines the impact of changes in the stringency of environmental regulations on productivity growth. We exploit several data sources, including the OECD Environmental Policy Stringency Index and balance sheet information from ORBIS and iBACH, to test the Porter hypothesis, according to which firms’ productivity can benefit from more stringent environmental policies. We estimate the regulatory impact over a five-year horizon using panel local projections. To identify the direction of the effects, we estimate equivalent emissions for all firms in our sample using a machine learning algorithm. As suggested by the country-level analysis and confirmed by the firm-level analysis, policy tightening negatively affects productivity growth of high-polluting firms and to a larger extent than that of their low-polluting peers. Hence, we do not find support for the Porter hypothesis in general. However, not all policies have the same impact - non-market based policies are the most detrimental to productivity growth - and not all highly polluting firms are affected in the same way - the negative impact is mitigated for large firms, which may benefit from easier access to finance and greater innovativeness.
Working Papers
Equalising Monetary Policy - the Earnings Heterogeneity Channel in Action
Job Market Paper
This paper studies the effects of conventional and unconventional monetary policy measures on the wage distribution. Using administrative labour market data from Germany, I construct quarterly inequality measures that allow me to analyse the effects of policy rate and quantitative easing (QE) shocks on wage inequality over the period 1999 to 2019. The results show that wages increase across the whole wage distribution three to six quarters after expansionary policy rate or balance sheet shocks. QE affects wages at the bottom of the distribution more than at the top, leading to significant and persistent equalising effects. Policy rate cuts also tend to decrease wage inequality, but their effect is less pronounced. These equalising dynamics stem from the fact that after an expansionary policy shock low-income worker, especially young men, benefit more in terms of wages from finding or switching a job than high-income workers.
Help Wanted: Drivers and Implications of Labour Shortages
joint work with: David Sondermann (ECB)
ECB Working Paper No. 2863 [R&R in Applied Economics]
Labour shortages have become prevalent across advanced economies. Yet, little is known about which firms are more likely to face them and the impact they have on the labour market. We create a firm-level dataset spanning 28 EU countries, 283 regions and 18 sectors, contributing to close this gap. We find that structural factors play the dominant role. Firms in regions with limited labour supply as well as innovative and fast-growing firms are particularly prone to face labour shortages. Moreover, shortages tend to aggravate at business cycle peaks. Linking labour shortages to labour market tightness and matching efficiency, in the spirit of search and matching models, we empirically determine their impact on wages and hiring. Firms with higher shortages pay a wage growth premium to keep and attract workers, increasingly so if they face excess demand. At the same time, those are the firms that hire less than the average.
Work in progress
The impact of Environmental Regulation on Clean Innovation: Are There Crowding Out Effects?
joint work with: Nicola Benatti (ECB), Petra Kelly (Imperial College London), Paloma Lopez-Garcia (ECB)
We examine the extent to which environmental regulation affects innovation and which policy types provide the strongest incentives to innovate. Using a local projection framework, we estimate the regulatory impact on patenting activity over a five-year horizon. As a proxy for environmental policy exposure, we estimate greenhouse gas emissions using a machine learning algorithm. At the country-level, policy tightening is largely associated with no statistically significant change in environmental technology innovation. At the firm-level, however, environmental policy tightening leads to higher innovation activity in technologies mitigating climate change, while the effect on innovation in other technologies is muted. This suggests that environmental regulation does not lead to a crowding-out of non-clean innovations. The policy type matters, as increasing the stringency of technology support policies and non-market based policies leads to increases in clean technology patenting, while we do not find a statistically significant impact of market-based policies.
Buy or Rent: Measuring the Distributional Effects of Monetary Policy on the Housing Market
joint work with: Nicolas Syrichas (Freie Universität Berlin)
Utilizing a large dataset of 23 million listings across 385 regions in Germany over the period 2007-2023, we investigate the distributional effects of monetary policy on housing markets. Germany's robust and liquid rental market, which distinguishes it from other advanced economies documented in the literature, allows us to compare house price and rental dynamics. Using high-frequency monetary policy shocks, both conventional and unconventional, we find heterogeneous responses in posted house prices and rents across regions. Expansionary monetary policy has contributed significantly to housing price increases over the past decade but less so to the observed increased price dispersion. Sales listings show a stronger response to ECB balance sheet expansions than to changes in policy rates or forward guidance, and the effects are more pronounced for house prices than for rents. This approach also provides a nuanced understanding of regional differences in housing market responses to monetary policy.
Work in Progress
Publications