Selected publications


Fostering green investments and tackling climate-related financial risks: which role for macroprudential policies? 

2019, co-authored with Lilit Popoyan, under publication at Ecological Economics Journal
While there is a growing debate among researchers and practitioners on the possible role of central banks and financial regulators in supporting a smooth transition to a low-carbon economy, the information on which macroprudential instruments could be used for reaching the “green structural change” is still quite limited. Moreover, the achievement of climate goals is still affected by the so-called “green finance gap”. The paper addresses these issues by proposing a critical review of existing and novel prudential approaches to incentivizing the decarbonization of banks’ balance sheets and align finance with sustainable growth and development objectives. The analysis carried out in the paper allows understanding under which conditions macroprudential policy could tackle climate change and promote green lending while containing climate-related financial risks.

Poster presented at the FINEXUS Conference (Zurich, January 2018)

Income inequality, consumer debt, and prudential regulation: An agent-based approach to study the emergence of crises and financial instability

2019, Economic Modelling Journal

The paper presents an agent-based model to study the interaction between income inequality and prudential regulations in a macroeconomic framework characterized by consumer debt. Simulation results show that income inequality is detrimental to both macro and financial stability as it leads to higher credit demands, higher unemployment rates, economic volatility, and financial fragility. Besides the importance of consumers’ leveraging, deleveraging externalities are found to be equally important for the emergence of crises and financial fragility because of the liquidity risk they entail. Minsky moments are also observed; they are related to consumers’ prudential behavior and their beliefs about the macroeconomic conditions. Concerning the policy relevance of our investigation, simulations allow us to highlight that the effectiveness of prudential regulation depends on the phase of the business cycle and that there is not a “one-size-fits-all” regulation. This study emphasizes that regulatory constraints should take into account the features of the economic agents, such as the distribution of income and their willingness to borrow, in addition to the features of the financial sector.

The role of finance in environmental innovation diffusion: an evolutionary modeling approach

2018, co-authored with Marco Valente, Journal of Economic Behavior & Organization

The implementation of climate adaptation and mitigation policies depend on the development of green technologies whose diffusion is constrained by a number of barriers which prevent them to spread broadly and at a fast pace. By means of an agent-based computational model, the paper investigates the macro and micro dynamics in presence of a “traditional” commercial bank and the role played by a state investment bank that explicitly supports green investments. Simulation results emphasize that environmental innovation is more diffused in the market when the presence of the public investment bank is combined with strong consumers’ preferences oriented towards environmental quality. The relevance of the paper is twofold. Besides contributing to the literature on the finance-innovation nexus by considering the role of climate finance within a complex systems framework, it provides a model that can be used as a tool to explore policies to foster environmental innovation diffusion.

Keywords: Agent-based computational economics; Climate finance; Public investment banks; Environmental innovation; Industrial dynamics; Innovation diffusion

Do financial constraints hamper environmental innovation diffusion? An agent-based approach

2018, co-authored with Marco Valente, SPRU Working Paper series

We develop a model that combines evolutionary economics concepts and methods with environmental economics concerns. The model is populated by consumers, heterogeneous firms, and a financial sector and is used to investigate the dynamic interactions between the demand and supply side, and the role played by binding financial constraints, in the diffusion of environmental innovations. The aim of the model is to understand how environmental goals can be effectively promoted and achieved in presence of a financial sector whose lending attitude is guided by long-termism rather than short-termism. We show that financial constraints act as a deterring barrier and affect firms’ innovation strategies as well as the evolution of technological paradigms. When financial constraints are less binding, firms do not perceive hindrances to the adoption of eco-innovation and, as a result, the presence of the average green technology in the market increases.

Big Data and Complexity: is Macroeconomics heading towards a new paradigm?

2017, Journal of Economic Methodology

The paper discusses the extent to which the availability of unprecedentedly rich datasets and the need for new approaches – both epistemological and computational – is an emerging issue for Macroeconomics. By adopting an evolutionary approach, we describe the paradigm shifts experienced in the macroeconomic research field and emphasize that the types of data the macroeconomist has to deal with play an important role in the evolutionary process of the development of the discipline. After introducing the current debate over Big Data in the social sciences, the paper presents a detailed discussion of possible and existing interactions between Big Data and Computational Behavioral Macroeconomics. We argue that Big Data applied to economic questions can lead to new styles of thinking and research methods, namely the development of a new research paradigm.