The Effect of Party Polarization on Environmental Policy. Evidence from Textual Data (Job Market Paper)
Consensus in the scientific community about the effect of human activity on Earth’s climate is almost unanimous.At the same time, climate change has become one of the most polarizing topics inthe political arena.In this paper, I use textual data from the United States legislatures to measurethe environmental position of states.I estimate the effect of party polarization on climate policies by exploiting regional variation in responses to aggregate trends in the US Congress.I find that partypolarization reduces the amount of climate-related bills and moderates the positions of both Republicanand Democratic legislators. The results are only significant when the seat distribution between the twoparties is tight. To rationalize these findings, I develop a simple model of the legislature incorporatingparty seat distribution. When polarization between parties is high, the legislature can either enter a period of gridlock or approve extremist policies depending on the seat distribution. To understand the longrun implications of polarization on climate change, I embed the legislative bargaining into a neoclassicgrowth model with a climate externality and show that the effects of polarization are mitigated by theexposure of the economy to climate change.
What's on the News? Mass Media and Persistent Slumps
In this paper, I document that mass media become more coordinated in economic reporting when the economy is in a recession. I present a model that incorporates time-varying imperfect common knowledge to study the role of mass media in generating persistent economic slumps. As newspapers become more coordinated, economic conditions become increasingly more common knowledge among firms. During a recession, the decision of firms not to invest is amplified because they are aware that other firms are also not willing to invest. As a result, mass media contribute in turning an otherwise mild recession into a persistent slump.