An account of our 7-year empirical journey to document the climate securitization hypothesis — and the dollars spent by a $4t firm to silence the evidence. Hopefully the 130,000+ lines of code written to visualize the impact of hurricanes have been useful.

open.substack.com/pub/policyan...

Multiple Equilibria in Quantitative Spatial Models.

Slides of my talk at the Econometric Society in San Francisco on Friday. Leads to a numerical algorithm that provides counterfactual maps of cities. PDF version: www.dropbox.com/scl/fi/sacbe...

The peer review process should be opened in economics. One way to do this is to embrace @alphaxiv.org www.alphaxiv.org/explore/papers

When the policymaker can commit, there is more exposure to flood risk (households move closer to the flood-exposed areas, by about 0.6% of the Height Above Nearest Drainage) and there is less capitalization of flood protection in house price. 9/n

We then estimate the timeline of optimal flood protection investments with an intertemporal budget constraint. How do we protect a place knowing the response of the future policymaker, who will be tempted to increase their future investment? We solve this problem by solving the FOCs. 8/n

We then try counterfactual levee designs, by parameterizing the targeted area and performing counterfactual impulse response analysis. This below is for different "spatial designs," i.e. different choices of areas chosen for protection, for a one time investment. 7/n

The Blanchard and Kahn approach provides impulse response maps of the impact of a USACE levee. (green is the leveed area). 6/n

We then use the methods of Blanchard and Kahn on the estimated model to estimate impulse response functions of one-period or two-period investments. Mobility costs are estimated, and affect the welfare impacts of the investment. Over a few periods, the welfare impacts turn negative. 5/n

We use a variety of specifications to see if these investments have an impact on prices, population density, demographics. 4/n

Leveed areas protect specific places within each metropolitan area, and these areas tend to have initially lower density, lower prices, and higher shares of minority households. This changes over the course of the postwar period. 4/n

Why does commitment matter? KP suggested studying levees as a prime example of dynamic inconsistency.

Population flows, price apprec., and demographic changes affect the marginal return of place-based inv. These general equilibrium flows are key, as evidenced by Balboni, Hsiao, and Fan. 2/n

New wp with @mattkahn1966.bsky.social

"Time Consistent Infrastructure Investments: Optimal Flood Protection Policies in Spatial Equilibrium"
papers.ssrn.com/sol3/papers....

this builds on Kleinman, Liu, Redding (2023), on Kydland, Prescott (1977), and on the lit. on flood infrastructure. A 🧵

If you are in San Francisco, come either / or to one of our sessions. Our session at AFA 1/3, our session at the Econometric Society 2/3, or our session at AREUEA 2/3 . 2025 is the year of submitting papers, no more open projects!

New CBO report on the risks of climate change to the US in the 21st Century. www.cbo.gov/system/files...

Citing two of our papers on PLS RMBS and GSE MBS.

Quite a different estimate when looking at excess mortality due to temperatures and excess mortality due to hurricanes. One suggests adaptation, the other one suggests rising impacts. Complicated.

www.nature.com/articles/s41...

A relevant insight.

Interesting graph highlighting the different impacts of monetary policy on mortgage rates across countries -- although the Canadian bar is *slightly* misleading. Canadian rates reset at renewal, there is no 30-year FRM.

What an interesting day discussing climate risks with Steve Hou ‘s team at @bloomberg.com . The paper is making a lot of progress .

There is an intense debate in Canada between the Liberals and the Tories. The Conservatives want a complete abolition, and Justin Trudeau is wavering. Published work helps: The tax is progressive (doi.org/10.1016/j.re...) but doesn't seem high enough to lead to aggregate CO2 reductions in emissions.