Welcome! I am a third year PhD student in economics at the University of Copenhagen and a Resident PhD Fellow at the Danish central bank. I work on firm dynamics, financial frictions and heterogeneous-agent macroeconomics. I am currently visiting the Department of Economics at New York University, hosted by Simon Gilchrist.
Before my PhD I worked as a policy economist on EU fiscal policy and sovereign debt at Bruegel and at the United Nations. I am also a Policy Fellow at the European Macro Policy Network.
Research
Work in progress
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Financial Frictions and Firm Growth Abstract
We study how the supply of bank credit at the time of founding affects firm entry and performance. We match credit supply shocks at Danish banks, estimated from within-firm variation in credit growth across lenders following Amiti and Weinstein (2018), to potential entrepreneurs through their pre-existing personal banking relationship. A one standard deviation increase in credit supply raises the rate at which individuals start firms by 3.1%. Firms founded under higher credit supply borrow more in their first years, and their revenue and employment remain higher for most of the following decade. Because easier credit also draws in marginal entrants, cohort-level comparisons combine a scale effect on firms that would have entered anyway with a composition effect from the new entrants. Correcting for entry along the lines of Chodorow-Reich et al. (2026) roughly doubles the estimated revenue effect, so cohort-level estimates understate the intensive margin of credit supply on firm outcomes.
Publications
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Sovereign Debt and Fiscal Integration in the European Union PDFCodeAbstract
This paper examines sovereign debt risks in the European Union, which has centralized monetary policy within the euro area, while fiscal policies remain national. Institutional reforms, including common banking supervision, the European Stability Mechanism, the European Central Bank’s market-stabilisation instruments, and a new set of fiscal rules, have mitigated vulnerabilities arising from the interdependence between banks and sovereigns. Stochastic debt sustainability analysis suggests that debt remains sustainable in most EU countries, although substantial fiscal adjustments will be required in some cases. Fiscal reaction function estimates, however, reveal a weakening policy response to rising debt, signalling increased medium-term risks. The paper argues that further adaptation of fiscal rules is needed to encourage investment and provide greater flexibility for low-risk countries. Expanding the pool of common EU safe assets could also help break the bank-sovereign doom-loop, attract foreign investors, and strengthen fiscal sustainability. -
Demographic change will hit public debt sustainability in European Union countries PDFWorking paperAbstract
Population ageing is increasingly straining the fiscal stability of European Union countries by raising public expenditures and slowing economic growth, which worsens debt-to-GDP ratios. To manage these pressures and comply with EU fiscal rules, member states must maintain strong structural primary balances—the difference between non-cyclical revenues and non-interest spending. The EU requires nations to address the fiscal impacts of ageing from 2025 over a ten-year adjustment period, with the most significant effects occurring in the first four to seven years. After this period, most countries won’t need to further increase their structural primary balances. However, except for Bulgaria, Croatia, Finland, France, Italy, Latvia, and Sweden, other EU nations must continue fiscal adjustments in non-ageing areas. Additionally, demographic risks could increase required primary balances by over one percentage point of GDP, while policies like boosting immigration, fertility, labor participation, and productivity could alleviate pressures by about half a point. -
Export competition between China and Latin America and the Caribbean in the United States market PDFWorking paperAbstract
We investigate export competition between China and Latin America and the Caribbean (LAC) in the United States market between 2002 and 2022. Using a sample of 33 exporters and 10-digit Harmonized Tariff Schedule (HS) level trade data, we estimate a structural gravity model using an instrumental variable constructed from Chinese exports to eight other industrialized nations. We approximate the multilateral price terms (Anderson and Van Wincoop, 2003) with a first-order Taylor expansion (Baier and Bergstrand, 2009a). The results show that the impact of Chinese exports on United States imports from LAC is negative and statistically significant across several specifications, levels of aggregation, and sectors. A percentage increase in imports from China decreased imports from LAC by ca. 0.75 percent. The displacement effect is ca. 0.32 for manufacturing products, 1.01 for resource-based products, 1.33 when estimated only for South America, 0.25 for the Caribbean, and not significant for Central America. -
Debt Sustainability Analysis in Reformed EU Fiscal Rules: The Effect of Fiscal Consolidation on Growth and Public Debt Ratios PDFAbstract
Debt Sustainability Analysis (DSA), which anchors negotiations and surveillance under the reformed EU fiscal rules, relies on macroeconomic and fiscal policy assumptions. While the European Commission assumes a constant short-run fiscal multiplier of 0.75, the literature highlights that there is no single fiscal multiplier for all countries and all times. Furthermore, the European Commission’s DSA framework assumes a fast dissipation of the output effect of fiscal adjustment, and that fiscal consolidation efforts by trading partners do not spill over into domestic economic activity. This article presents DSA simulations that relax the official assumptions by focusing on the four largest euro area economies: Germany, France, Italy and Spain. The results suggest that the debt sustainability framework in reformed EU fiscal rules is sensitive to changes in assumptions and may underestimate the negative growth effects of fiscal adjustment. Hence, public debt ratios may turn out higher than expected.
Under review
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What will it take to stabilise public debt in advanced countries? Revise and resubmit, IMF Economic ReviewPDFCEPR DPAbstract
This paper analyses the prospects for debt stabilization in European Union countries, Japan, the United Kingdom, and the United States using stochastic debt sustainability analysis and estimated fiscal reaction functions. We find that (1) debt-stabilizing primary balances are generally within historical precedent; (2) fiscal adjustment required to reach such balances is very high in several countries, including France, the United Kingdom and the United States; (3) the feedback coefficient from debt to the primary balance has significantly declined since the global financial crisis. These findings imply that debt stabilization is uncertain and countries with exceptionally high adjustment requirements will likely face continued increases in their debt ratios – and will thus be vulnerable to a loss of market confidence – for a protracted period.
Theses
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Wage Flexibility and Household Heterogeneity in a Small Open Economy PDFSSRNCodeAbstract
Structural reforms that increase labour market flexibility are conventionally believed to stabilise employment. This depends on how employment responds to labour costs, which in a standard New Keynesian model works through aggregate demand and the monetary policy response, a channel that is muted in a monetary union. I revisit the effect in a small open-economy HANK model, where changes in the real wage affect demand directly. A temporary payroll tax cut raises employment under both a Taylor rule and a monetary union. Simulating foreign interest rate and demand shocks at varying levels of wage flexibility, I find that: (i) wage flexibility makes employment more responsive to adverse foreign shocks; (ii) in a monetary union, wage flexibility causes substantial relative welfare losses, especially for poorer households, driven by income and multiplier effects; (iii) under both regimes, a one for one increase in price and wage flexibility has minimal welfare effects. -
An Application of Lakatosian Methodology to Traditional and Behavioral Finance Theory PDF
Policy work
Papers and book chapters
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Quantifying the Sensitivity of EU Debt Sustainability Analysis PDFCodeAbstract
The reformed EU fiscal rules derive each country’s required fiscal adjustment from a debt sustainability analysis (DSA). Replicating the European Commission’s 2024 reference trajectories for all 27 member states, this paper quantifies how sensitive the resulting targets are to the DSA’s forecasts, parameters, modelling choices and calibration. When forecasts and parameters are drawn from past forecast errors and published estimates, the target of countries that must adjust rises by 0.65 percentage points of GDP at the 75th percentile and falls by 0.36 points at the 25th, against an average required adjustment of 2.6 points over four years. Crisis-sized fiscal multipliers can make the debt sustainability safeguard implausible to meet. Because deterministic stress tests and the deficit criterion bind for most countries, the stochastic analysis rarely matters. The calibration of the rules, notably the size of the stress tests and the horizon for ageing costs, moves targets about as much as forecast and parameter uncertainty. -
Distributional Effects of Climate Policy Abstract
The climate transition can have distributional impacts with social implications leading to adverse views towards climate policies. These impacts may however differ across climate policies, as well as socio-economic characteristics like gender, income groups or regions, and they thus constitute a subject of high interest for both academics and policy makers. This chapter provides an analytical framework based on Claeys et al (2024) to assess how climate policies affect income and wealth distribution across different channels within a country, across different sectors and socio-economic groups. It also assesses the impact between countries in relation to their climate exposure, fossil fuels reliance or investment needs. The paper also relates the analysis to the literature and contrasts different existing research. It finally concludes with specific policy considerations. -
Making fiscal space policy-responsive PDFAbstract
The EU’s fiscal framework systematically penalises long-term investment by ignoring how policies affect potential output. Current rules, like the Debt Sustainability Analysis (DSA), focus on short-term costs, creating a bias against growth-enhancing reforms and investment. This paper proposes a minimally invasive solution: the Policy-Responsive European Method (PREM). PREM modifies existing methodology to make potential output estimates responsive to structural policies. Simulations using five national plans (AT, FI, FR, DE, IT) confirm that PREM effectively links growth-enhancing policies to expanded fiscal space, and vice versa. This approach allows fiscal sustainability assessments to consider the quality of fiscal measures, not just their cost, aligning incentives with the EU’s strategic investment and climate objectives while maintaining analytical rigour. -
What Germany’s medium-term fiscal plan means for Europe PDFAbstract
Germany’s 2025 fiscal plan illustrates the inherent tension between financing public investment and adhering to the EU’s fiscal rules. The plan’s proposed reconciliation relies on overly optimistic macroeconomic assumptions and significant, backloaded fiscal adjustments. We find that under realistic economic projections, Germany’s debt-to-GDP ratio will continue to rise, failing to comply with the EU fiscal framework’s adjustment path. While German debt sustainability is not threatened, the European Commission’s endorsement of the plan’s optimistic assumptions establishes a precedent that undermines the framework’s credibility. This may incentivise other member states to adopt similarly unsound assumptions. We conclude that the EU fiscal rules require further reform to allow low-risk countries to undertake public investment, thereby aligning the framework with both debt sustainability and macroeconomic needs. -
The longer-term fiscal challenges facing the European Union An earlier version, co-authored with Stavros Zenios, was presented at the 2023 Informal ECOFIN.PDFWorking paperAbstract
The pandemic and the fallout from Russia’s invasion of Ukraine have intensified longer-term fiscal pressures in the European Union, stemming from increased debt, anticipated higher real interest rates, and heightened public investment demands. Firstly, most EU countries will require long-term increases in primary fiscal balances, ranging from 0.5 percent to 1.5 percent of GDP. Secondly, while significant, the additional fiscal adjustment appears manageable, with some countries needing to raise primary balances by over 2 percent of GDP. Thirdly, future real interest rate paths are uncertain, having risen by approximately 2 percentage points post-pandemic but remaining relatively low at around 1 percent in real terms. Lastly, increased public spending demands for defence and climate initiatives, exceeding 1 percent of GDP annually, are not yet factored into fiscal baselines and will compound existing adjustment efforts. Gradual fiscal adjustment, commencing when cyclical conditions permit, is crucial to avoid hampering economic growth. -
Tensiones comerciales entre China y Estados Unidos: ¿Una oportunidad para América Latina y el Caribe en el mercado estadounidense? PDFAbstract
We analyse the impact of the China–United States trade tensions on the displacement of exports from Latin America and the Caribbean by China in the United States market using an augmented gravity model. For products directly involved in the trade dispute, a percentage increase in Chinese exports, on average, led to a decrease of Latin American and Caribbean exports of about 0.24 to 0.42 percent before, and 0.21 and 0.25 percent after the introduction of tariffs. This reduction is statistically significant even after controlling for sector, country, and time specific trends. Reductions in the displacement of products not involved in the trade tensions are not robust to the inclusion of such trends. The results suggest that trade tensions partly offset the displacement of Latin American and Caribbean exports. -
The implications of the European Union’s new fiscal rules PDFAnnexesAbstract
The European Union’s new fiscal framework aims to enforce budget deficit and public debt limits through country-specific debt sustainability analyses (DSA) and a public expenditure indicator as the annual fiscal policy target. This approach is more effective than simple numerical rules, focusing on debt path evolution and avoiding pro-cyclical fiscal policies. However, numerical safeguards in the new framework may undermine DSA-based requirements and hinder public investment. Moreover, ambiguities in the new rules and the excessive deficit procedure (EDP) could impede successful implementation. We compare implications of the old and the new rules and make several recommendations for successful implementation, including aligning EDP adjustments with DSA, quantifying investment impacts, revising DSA methodology, and establishing an EU facility for green public investments if needed. -
Incorporating the impact of social investments and reforms in the EU’s new fiscal framework PDFAbstract
The EU’s new fiscal framework extends the fiscal adjustment period to incentivise public investment and reforms. However, there is no agreed methodology to gauge their impact on fiscal adjustments. This paper assesses the framework’s “investment friendliness” and proposes a methodology to quantify the impact of investments and reforms on debt sustainability. It suggests re-evaluating existing methodologies for projections and illustrates potential impacts through social investment measures. This analysis emphasises the necessity of a standardised approach to evaluate the effects of investments and reforms within the EU’s fiscal framework. -
A quantitative evaluation of the European Commission’s fiscal governance proposal PDFAbstract
The EU’s new fiscal framework (proposed April 2023) uses debt sustainability analysis (DSA), the 3 percent deficit limit, and safeguards to determine fiscal adjustment needs. Disagreement exists over a DSA-based approach versus relying on simple rules. We replicated the DSA methodology to evaluate the proposal, finding ambitious adjustment requirements (averaging over 2 percent of GDP) exceeding current plans for most high-debt countries. While DSA generally drives these requirements, notable exceptions exist. France’s ‘debt safeguard’ mandates much greater adjustment than the DSA. Extending the adjustment period (possible under the framework) would make safeguards binding for several countries. Additionally, the deficit reduction rule could become binding after output shocks. The Commission’s DSA methodology, while reasonable, warrants review by an independent group. We endorse the proposal with modifications: clarify ambiguities, remove or modify safeguards, reform the excessive deficit procedure to prevent procyclicality, and establish a process for reviewing the DSA methodology. -
Internationale Staatsverschuldung, Schuldenrestrukturierungen und mögliche Handlungsoptionen für das BMZ PDF
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An estimate of the European Union’s long-term borrowing cost bill PDFAbstract
The European Union’s budget must cover the costs of interest and principal payments on debt issued to fund the non-repayable portion of the post-pandemic recovery programme. Understanding the evolution of these costs until full reimbursement in 2058 is crucial. Median estimates suggest yearly interest costs borne by the EU budget could peak at €10.8 billion (0.05 percent of EU GDP) in 2030 before gradually decreasing. Total costs over the programme’s lifespan could reach €222 billion (0.6 percent of average EU GDP), potentially reduced by €25 billion if the EU spread normalises to early 2022 levels. Factoring in debt repayment, total annual financial needs may hit €25 billion in 2030, declining to €14 billion by programme end. The EU’s proposed ‘Own Resources’ package could cover these costs if accurate and accepted by member states. However, substantial uncertainty surrounds interest rates over the programme’s duration, emphasising the need for caution. -
The rising cost of European Union borrowing and what to do about it PDFPolicy briefAbstract
The European Commission’s debt issuance for the EU has surged, with approximately €400 billion outstanding as of May 2023, mostly incurred since 2020. Continued borrowing is anticipated until 2026 to fund NextGenerationEU and support for Ukraine. While initial borrowing benefited from historically low interest rates, rates rose notably in 2022. Factors contributing to this rise include broader eurozone interest rate increases and widening yield spreads compared to major European issuers like France and Germany. To address this, the Commission should enhance market infrastructure and refine its issuance strategy. A significant portion of borrowing is allocated to non-repayable support, such as Recovery and Resilience Fund grants, adding pressure on the EU budget due to higher-than-expected interest costs. Consequently, the EU must promptly review its budget and financial framework to accommodate these increased costs and mitigate impacts on important EU programmes already strained by inflation. -
First lessons from the Recovery and Resilience Facility for the EU economic governance framework PDFAbstract
We document the poor track record of implementation of the European Semester country-specific recommendations and discuss the novelties the Recovery and Resilience Facility (RRF) could bring to EU economic governance. While it is too early to evaluate the success of the RRF, this study draws out lessons for the future of the EU economic governance framework from certain aspects of the RRF design and the European Commission’s evaluation of the national recovery and resilience plans.
Short analyses and datasets
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The EU needs a methodology for including reform impacts in fiscal trajectories Link
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European Union countries’ recovery and resilience plans Link
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What will it cost the European Union to pay its economic recovery debt? Link
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The EU Recovery and Resilience Facility falls short against performance-based funding standards Link
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Does inflation hit the poor hardest everywhere? Link
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Is Europe failing on import diversification? Link
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Inflation inequality in the European Union and its drivers Link