Projects
- Unintended Environmental Cost of Monetary Tightening: The Federal Reserve and Pollution (Job Market Paper) — When interest rate increases, clean investment decreases, firms shift from clean to traditional energy, and pollution rises.
- The International Spillover of Monetary Policy Shock: New Evidence from Nighttime Light (with Kaiji Chen, Juanyi Xu, and Jingbo Yao) — A Federal Reserve rate hike spills over into the construction sectors of developing countries, which is observable by nighttime light.
- Urban Expansion: The Aftermath of COVID-19 Lockdown from the Perspective of Nighttime Light — The city-wide COVID-19 lockdowns have had long-lasting impacts after their lifting, especially on the construction sector.
- Education and the Urban-Rural Earning Difference in China Since 2010: A Cross-Distributional Analysis — 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 impacts of US monetary policy shocks 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. This channel has emerged since the global financial crisis. Consistently, the post-tightening pollution increase coincides with the decreasing renewable energy ratio, and is stronger among cleaner firms and states. Considering environmental amenities in consumer welfare, optimal monetary policy should coordinate with fiscal policy to control inflation while minimizing environmental impacts.
Summary [Draft]
Abstract: We revisit the spillover effects of US monetary policy using a new nighttime light (NTL) big data as a high-frequency, granular proxy for real economic activity. By merging this data with firm-level information and transaction-level datasets on land auction and bond issuance by Chinese real estate firms, we find that an unexpected US tightening significantly reduces its output via a novel construction channel—NTL fluctuations are primarily driven by non-built-up areas rather than city centers or suburbs. Furthermore, lands purchased by firms with weaker financial conditions, especially those with foreign bond issuance, experience a larger contraction in NTL intensity. Our evidence suggests that this construction channel of US monetary policy spillover applies to other emerging economies.
Summary
Abstract: I use the high-frequency nighttime light data to study the economic costs of 27 citywide lockdown events across China during the COVID-19 pandemic. I find the lockdown decreased annualized GDP growth by 3.6 percent during the enforcement period. The impact continued for a year post-lockdown, with a cumulative effect of -4.4 percent on GDP growth. The post-lockdown impact only existed in the non-built-up area, hindering urban expansion and the construction sector. My empirical findings are consistent with the predictions of a two-sector model, suggesting potential long-term economic costs of the lockdown and the need for effective sector-specific post-lockdown stimulative policies.
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
