The E-axes Forum on Climate Change,
Macroeconomics, and Finance
The E-axes Forum awards an annual prize to recognize outstanding research conducted by young scholars in macroeconomic policies and sustainability.
Applicants must submit a completed but unpublished paper on:
Climate change poses fundamental challenges for economies, financial systems, and policymakers. We welcome submissions across the full range of topics at the intersection of climate change, macroeconomics, and finance. Topics of particular interest include, but are not restricted to:
The E-axes Forum will assess papers using three selection criteria: i) innovative thinking and scientific merit, ii) implications for policymakers, and iii) relevance to the themes described above.
The prize amount is $5,000 and is intended to support the recipient(s) in their research activities. The total cash award is the same for both single and co-authored papers. Should more than one winning paper be selected, the total cash award will be distributed equally between the authors of the prize-winning papers.
Submission deadline: September 30, 2026
Announcement of the winner: Beginning of December 2026
The prize is intended to support young researchers in their early career development. Eligible candidates must either have completed their PhD in 2019 or later; or are completing their PhD in 2026-2027. Both single and co-authored papers will be considered. However, all authors of a co-authored paper must comply with the eligibility requirement.
Stephen G. Cecchetti (Chair), Brandeis University
Stefano Giglio, Yale University
Galina Hale, University of California, Santa Cruz
Marcin Kacperczyk, Imperial College Business School
Pierre Monnin, Council on Economic Policies
Fernanda Nechio, Federal Reserve Bank of San Francisco
Esteban Rossi-Hansberg, University of Chicago
Abstract
This paper studies the distributional effects of natural disasters and the impact of post-disaster policies. Using flight data and original survey evidence from Puerto Rico after Hurricane Maria, I document that 7% of the population migrated to the mainland U.S. in the aftermath, though many later returned. High migration costs prevented an even larger number from leaving. Those who stayed faced widespread damages to housing, infrastructure, and the local economy. I find that age, wealth, and housing tenure shaped post-disaster choices: many homeowners with severe property damage defaulted on their mortgages, wealthier homeowners rebuilt with government assistance, and younger renters were most likely to leave the island permanently. These empirical findings inform a dynamic equilibrium model of migration, housing, and infrastructure with heterogeneous households. Homeowners with property damage experience significant welfare losses from direct reductions in home equity and housing consumption, while renters and undamaged homeowners also face welfare declines from infrastructure destruction and through general equilibrium price movements. Local infrastructure investment is a cost-effective policy, due to complementarities with both housing consumption and production. In contrast, rebuilding subsidies for homeowners, though effective in preventing mortgage defaults and mitigating housing shortages, are not cost-effective. Homeowners with property damage value these subsidies below cost because they are not guaranteed and do not provide any payout if the home is foreclosed on or sold. More flexible policies could yield large welfare improvements for similar costs.
Abstract
Many emerging markets face high borrowing costs and exposure to natural disasters. How will fiscal constraints affect the adaptation to, and therefore the losses from, climate change in such economies? A sovereign default model augmented with natural disasters and endogenous adaptation predicts that i) climate change increases borrowing costs, ii) adaptation reduces borrowing costs, and iii) default risk constrains adaptation. These economies suffer from an ‘adaptation trap’: high borrowing costs restrict adaptation, leading to higher losses from disasters and higher borrowing costs in the future. To test these predictions I construct a novel measure of adaptation using text analysis to identify adaptation expenditures in government budgets. Consistent with the model, I document a robust positive relationship between sovereign ratings and adaptation as well as a positive causal effect of cyclone strikes on default risk that is attenuated by adaptation. The sovereign risk- adaptation channel is quantitatively important in the estimated model. In the Caribbean 10% of GDP losses from cyclones are due to default risk. This loss increases with climate change but can be mitigated by debt relief policies.
Abstract
We develop a theory of optimal security design for financing green investments in the presence of greenwashing. Green outcomes are uncertain and can be obtained through the implementation of tangible projects and/or intangible effort-based strategies. When manipulation is not possible, the optimal contract takes the form of an outcome-based security design, similar to a sustainability-linked bond (SLB), with a payoff that is contingent on green outcomes. When manipulation is costless, the optimal contract takes the form of a project-based security design, similar to a green bond (GB), with a payoff that depends on the implementation of green projects. When green outcomes can be manipulated at some cost, the optimal contract is a hybrid which incorporates both an outcome-contingency (like an SLBs) and a project-contingency (like a GB). The model rationalizes several empirical facts.
Abstract
Homeowners’ insurance, a $15 trillion market by coverage, provides households financial protection from climate losses. Insurance premiums (rates) are subject to significant regulations at a state level in the United States. Using novel data on filings made by insurers to regulators, we propose a metric to quantify the extent of regulation in individual states. We provide evidence of decoupling of insurance rates from their underlying risks and identify regulation as a driving force behind this pattern. Rates are least reflective of risk in states we classify as “high friction”, i.e. states where regulations appear most restrictive. We identify two sources behind the decoupling. First, in high friction states, rates have not adequately adjusted in response to the growth in losses. Second, insurers have cross-subsidized high friction states by raising rates in low friction states. Our results imply that households in low friction states are disproportionately bearing the risks of households in high friction states. More broadly, our findings question whether insurance rates can play a useful role in steering climate adaptation and whether households will have continued access to insurance.
Abstract
The question of how climate change affects the economy through temperatures is high on the economic research agenda, as the identification of exogenous shocks from weather variations is still an open issue. Using daily county-level data since 1970, we construct a series of temperature shocks for the United States that capture the average surprise effect of relatively high and low temperatures experienced in each season, isolating an unanticipated component at business cycle frequency. Temperature surprise shocks in the US have been a balanced mix of heat and cold surprises and reduced in size in recent times. Estimates made with local projections show a negative impact on the US economy via both consumption and investment, while the effect on prices is more muted and varies over time. The Federal Reserve does react by adjusting its economic projections and cutting interest rates, with effects spreading out through the yield curve.
