"Flooded House or Underwater Mortgage? The Macrofinancial Implications of Climate Change and Adaptation”

I study how climate change affects housing markets, mortgage credit, and private adaptation in a general-equilibrium framework with overlapping generations. Households are exposed to physical climate risks that damage housing and degrade land, which is inelastically supplied. While exposure to future climate risk lowers expected resale values, realized climate damages reduce habitable land, driving house prices up over time through scarcity. In frictionless markets, forward-looking prices support efficient private adaptation. However, constrained households underinvest in resilience, implying that pricing alone may be insufficient. Unequal adaptation amplifies wealth inequality and accelerates land degradation. Over generations, the adaptation gap widens endogenously as tightening credit constraints further limit investment in resilience. A counterfactual shift from constrained homeownership to landlord-based ownership shows that separating adaptation investment from borrowing constraints can restore efficiency.

Redistribution and unemployment insurance

This paper analyzes the interactions between redistribution and unemployment insurance policies and their implications for the optimal design of tax-benefit systems. In a setting where individuals with different earnings abilities are exposed to unemployment on the labor market, I derive a Pareto-efficiency condition linking taxes and transfers when employed to benefits when unemployed. This Pareto-efficiency condition extends the standard Baily–Chetty formula for optimal unemployment insurance and shows that redistribution through unemployment benefits is efficient: (i) replacement rates should be monotonically decreasing with earnings, from 1 at the bottom of the earnings distribution to almost 0 at the top, (ii) the more redistributive the tax-transfer is, the more redistributive unemployment benefits should be, and vice versa. Empirical applications to the US and France show that these interactions between redistribution and unemployment insurance have sizable quantitative implications for optimal policy.

 “Causal Inference for Asset Pricing” w/ Valentin Haddad, Zhiguo He, Péter Kondor & Erik Loualiche.

This paper provides a guide for using causal inference with asset prices and quantities. Our framework revolves around an elementary assumption about portfolio demand: homogeneous substitution conditional on observables. Under this assumption, standard cross-sectional instrumental variables or difference-in-differences regressions identify the relative demand elasticity between assets with the same observables, the difference between own-price and cross-price elasticity. However, we uncover a missing coefficient problem: cross-sectional estimators mechanically absorb substitution patterns across assets. Recovering substitution is essential to answer many natural counterfactual questions, and requires analyzing the response of portfolios to exogenous time-series variation. The same principles apply to the estimation of multipliers measuring the price impact of supply or demand shocks. Our assumption maps to familiar restrictions on covariance matrices in classical asset pricing models, encompasses demand models such as logit, and accommodates rich substitution patterns even outside of these models. We discuss how to design experiments satisfying this condition and offer diagnostics to validate it.

"Magical Implemenation"

A principal must decide which of two parties deserves a prize. Each party privately observes the state that determines which of them is deserving. The principal provides each party with a text describing the conditions for deserving the prize and asks them to report the state of nature. The parties are not strategic. Each party activates a cheating procedure that relates to the state and the text provided. The principal magically implements his goal if he can devise a pair of texts that allow him to recognize a cheater by applying what we call the “one-way cheating principle”.

“What’s in a u?”

We revisit the long-lasting debate about the meaning of the utility function used in the standard Expected Utility (EU) model. Despite the common view that EU forces risk aversion and diminishing marginal utility of wealth to be pegged to one another, here we show that this is not the case. Marginal utility for money is an input into risk attitude, but it is not its sole determinant. The attitude towards ‘pure risk’ is also a contributing factor, and it is independent from the former. We discuss several theoretical implications of this result, for the following topics: (i) non-neutral risk attitudes for profit maximizing firms; (ii) risk aversion over time lotteries in the presence of discounting, and convex time budget decisions; (iii) the equity premium puzzle. We also discuss matters of identification: (i) for firms; (ii) via proxies; (iii) via standard MLE methods under parametric restrictions; (iv) in intertemporal-choice problems; and (v) cross-context elicitation in multi-dimensional settings, and its relationship with the methods and results from the psychology literature.