Projects
- Unintended Environmental Cost of Monetary Tightening: The Federal Reserve and Air Pollution [Draft] [Proceeding: EWMES] — When interest rate increases, clean investment decreases, firms shift from clean to traditional energy, and pollution rises.
- The Construction Financing Channel of Global Monetary Spillovers (with Kaiji Chen, Juanyi Xu, and Jingbo Yao) [Draft] [Proceeding: EWMES] — A Federal Reserve rate hike spills over into the construction sectors of developing countries, which is observable by nighttime light.
- Education and the Urban-Rural Earning Difference in China Since 2010: A Cross-Distributional Analysis [Draft] — China's urban-rural earnings gap narrowed in the 2010s due to demand-side factors at the lower end of the distribution, and more equal accesses to education will further reduce the gap.
Summary
Abstract: I study the environmental effects of US monetary policies using satellite-based air pollution records. Surprisingly, an unexpected monetary tightening reduces output but increases air pollution. The puzzle can be explained by the clean investment channel: Higher firm financing costs hinder clean investment and subsequently increase pollution. Using aggregate time series, firm ESG records, and regional data, I show that clean investment is more sensitive to monetary policies than conventional investment, yielding environmentally less favorable production conditions after a tightening. Considering environmental amenities in consumer welfare, my environmental DSGE model implies that monetary and fiscal policies should coordinate to control inflation while minimizing environmental impacts.
Summary
Abstract: We document a construction-financing channel for the international transmission of US monetary policy. Combining high-frequency monetary shocks with nighttime light (NTL) big data, our empirical design provides the temporal and spatial granularity needed to trace real spillovers and their underlying mechanisms. Using China as a laboratory, we link parcel-level construction activity to land transactions and firm-level financing structures. We find that US monetary tightening significantly reduces construction activity. The contraction is larger for projects undertaken by firms with higher overall debt burdens and, especially, by firms with greater reliance on offshore bond financing, and it is further amplified by the ``three red lines'' policy that tightened domestic leverage constraints. Extending the analysis to a global sample, we find that the response of nighttime lights to US tightening is generally negative, especially in emerging economies.
Summary
Abstract: I study the decrease in China's urban-rural earning inequality from 2010 to 2020 across the earning distribution. The convergence of rural earnings to urban earnings is universal across the distribution, particularly at the lower end, and the median earning gap declines by a third. Most of these changes (60 percent at the median) are due to the declining skill-based wage premium, primarily influenced by non-educational factors, such as a demography-induced labor shortage in blue-collar jobs. The findings suggest the potential to further narrow the urban-rural income gap, in line with the rural poverty alleviation campaign, through policy attention to the educational attainment of rural residents.
- My current research projects align with 8 of the 17 UN Sustainable Development Goals (SDG)
Real-time Trend
- Geospatial data
- International financial markets
