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Working Paper
It's Good Weather for More Government: The Effect of Weather on Fiscal Policy
I show that weather conditions on election day affect future fiscal policy. When it rains during state elections, there is an increase in the relative income of voters, which is followed by an increase in expenditure and debt. The increase in expenditure is directed towards a larger police and safety budget. This result is compatible with a model of complementarity between consumption and public goods. In the model, high-income voters support an increase in safety budget because they benefit more from it than low-income voters.
Working Paper
Clouded Judgment: The Role of Sentiment in Credit Origination
Using daily fluctuations in local sunshine as an instrument for sentiment, we study its effect on day-today decisions of lower-level financial officers. Positive sentiment is associated with higher credit approvals, and negative sentiment has the opposite effect of a larger magnitude. These effects are stronger when financial decisions require more discretion, when reviews are less automated, and when capital constraints are less binding. The variation in approval rates affects ex-post financial performance and produces significant real effects. Our analysis of the economic channels suggests ...
Working Paper
Weather, Social Distancing, and the Spread of COVID-19
Using high-frequency panel data for U.S. counties, I estimate the full dynamic response of COVID-19 cases and deaths to exogenous movements in mobility and weather. I find several important results. First, weather and mobility are highly correlated and thus omitting either factor when studying the COVID-19 effects of the other is likely to result in substantial omitted variable bias. Second, temperature is found to have a negative and significant effect on future COVID-19 cases and deaths, though the estimated effect is sensitive to which measure of mobility is included in the regression. ...
Journal Article
Climate Risk and the Fed: Preparing for an Uncertain Certainty
While the severity and scope of a changing climate remains unclear, the consensus is that it poses a significant risk to the global economy and financial system. As monetary policymakers, the Fed’s job is to navigate this uncertainty by anticipating the potential changes and understanding their implications.
Report
The Effects of Weather on Massachusetts Municipal Expenditures: Implications of Climate Change for Local Governments in New England
In New England, municipal governments provide a variety of public services that are vital to residents and businesses, such as public works, police and fire services, and general government administration. However, the region and its local governments face an increasing threat from climate change. As recorded by the National Oceanic and Atmospheric Administration, New England states have become hotter and wetter and have experienced an increased number of extreme precipitation events since 1900. Rising temperatures and more frequent extreme precipitation events are projected for the region ...
Discussion Paper
Crisis Chronicles: The Hamburg Crisis of 1799 and How Extreme Winter Weather Still Disrupts the Economy
With intermittent war raging across much of Western Europe near the end of the eighteenth century, by about 1795, Hamburg had replaced Amsterdam as an important hub for commodities trade. And from 1795 to 1799, Hamburg boomed. Prices for goods increased, the harbor was full, and warehouses were bulging. But when a harsh winter iced over the harbor, excess demand and speculation drove up prices. By spring, demand proved lower than supply, and prices started falling, credit tightened, and the decline in prices accelerated. So when a ship bound for Hamburg laden with gold sunk off the coast, an ...
Journal Article
The Impact of Weather on Retail Sales
Variation in weather could cause greater disruptions to a range of economic outcomes as severe weather events become more frequent or more extreme. Analyzing daily sales at a national apparel and sporting goods brand’s stores reveals that weather effects on store sales are surprisingly persistent, even after accounting for shoppers simply changing when and where they make their purchases. Moreover, sales at stores that have more experience with adverse weather events have a lower response, suggesting that adaptation may reduce the negative impact of increasingly severe weather on sales.
Working Paper
Sellin' in the Rain: Weather, Climate, and Retail Sales
I apply a novel machine-learning based “weather index” method to daily store- level sales data for a national apparel and sporting goods brand to examine short-run responses to weather and long-run adaptation to climate. I find that even when considering potentially offsetting shifts of sales between outdoor and indoor stores, to the firm's website, or over time, weather has significant persistent effects on sales. This suggests that weather may increase sales volatility as more severe weather shocks be- come more frequent under climate change. Consistent with adaptation to climate, I ...
Working Paper
The Impact of Weather on Local Government Spending
While there is a new and rapidly growing literature on the effects of climatic factors on economic and social outcomes, little research has been conducted to understand the fiscal impact of weather, especially at the sub-state level. Using data from Massachusetts municipalities from 1990 through 2019, this paper estimates government spending as a function of temperature and precipitation while controlling for municipality and year fixed effects and municipality-specific time trends. The results show that weather has statistically significant and economically meaningful effects on local ...
Journal Article
Extreme Weather and Financial Market Uncertainty
Extreme weather can have negative, minimal, or even positive effects on business performance—creating significant uncertainty about outcomes for those businesses. Financial markets show heightened uncertainty among investors for companies that have been hit by hurricanes. This uncertainty persists for several months after a hurricane’s landfall, as reflected by continued discussion of hurricanes in analyst calls. Comparing expected volatility to actual volatility shows that markets have underreacted to the uncertainty caused by hurricanes. After Hurricane Sandy, a particularly salient ...