This dissertation consists of three chapters that examine the spatial distribution of economic activities. The first chapter examines how disasters as well as individuals’ expectations of what others will do affect the development of cities. The development of cities often involves the rejuvenation or replacement of existing structures. However, history, in the form of the sunk cost of existing durable structures, often serves as an impediment to urban development. In theory, by reducing the opportunity cost of waiting to rebuild to zero, disasters can eliminate these frictions and bring about higher quality structures. In addition, the simultaneous rebuilding after a disaster would allow property owners to experience stronger cross-building spillovers which would encourage further upgrades of nearby buildings. Nevertheless, these are not sufficient to guarantee higher quality buildings. This is because individuals’ investment decisions also depend on their expectations of what others will do. Therefore, in this chapter, we examine both of these issues using the 1666 Great Fire of London as a natural experiment. First, using a difference-in-differences (DiD) strategy, we show evidence that the Fire was able to free parishes within London from the constraints of their existing durable structures and move them to a new equilibrium involving higher quality structures. Second, using DiD and an IV strategy, we find that legal rulings arising from the Fire Court – a court specially set up by the English Parliament to hear rebuilding disputes – were able to anchor expectations and in so doing, helped to facilitate the development of London. Providing causal evidence that legal rulings can be a main driver in the formation of expectations is the main contribution of our paper. The second chapter examines how the quirks of history shape present-day economic outcomes. Building on Bazzi et al. (2020), I study how a particular episode of history – time at the frontier – helps to explain the present-day manufacturing production patterns across American counties. First, I show empirical evidence that there are fewer establishments and lower employment in counties that spent a longer time on the frontier. The same results hold for industries that are more “contractible” (i.e., easier to specify in contracts and hence less susceptible to holdup). Second, using a DiD strategy, I show that firms in high “contractibility” industries sort into producing at counties that spent a longer time on the frontier. I hypothesize that due to “rugged individualism”, individuals in counties that spent a longer time on the frontier are less likely to trust other people. Therefore, anything that is not “contractible” becomes harder and more costly to enforce. Consequently, only the more “contractible” industries locate in counties that spent a longer time on the frontier. The third chapter examines how land use regulations and NIMBY (“not in my back yard”) behavior affect housing prices in the UK. In the UK, developers have to apply to the local planning authority to seek development permission. Applicants who have their plans rejected can appeal to the Secretary of State, via the Planning Inspectorate. The Planning Inspectorate then assigns an inspector to decide whether to overturn the local authority’s decision. We propose a theoretical model which shows that in locations with high levels of NIMBY-ism, developers are better off getting their plans rejected by the local authority and gambling on drawing an inspector who is less sympathetic towards locals’ NIMBY behavior. Our empirical strategy exploits the fact that inspectors are quasi-randomly assigned to the appeals. This allows us to use inspector leniency as an instrument for whether an appeal is successful. We find that overturning the local authority’s decision does not lead to a large fall in housing prices. For some projects, the impact may in fact be positive because they also add to local amenities such as retail shops. This suggests a prevalence of NIMBY-ism, as locals pressure authorities to reject even relatively benign projects.

This dissertation studies the effects that government spending has on the well-being of individuals and on community-level economic outcomes. The first chapter examines federally funded disaster relief with the aim of explicitly quantifying the role that the government has in propping up labor markets after large storms that damage and destroy communities. The next two chapters are about welfare. The second chapter uses administrative data from the state of Michigan to study one of the largest, and most sudden, changes to a cash welfare program in the country's history. The aim of this piece is to quantify the holistic impact of losing welfare on the financial well-being of the affected mothers. The final chapter revisits one of the most consequential welfare-to-work experiments of the late 20th century with modern empirical tools to determine whether work-first retraining programs or remedial coursework benefit the marginal welfare participant more in the long-run. Together these essays highlight the role that the federal government plays in the lives of its citizens when they are at their most vulnerable. It is the hope of the author that economists and policymakers can use the conclusions herein when considering and drafting future programs that aim to assist those at the margin of society or those who will suffer the consequences of catastrophic climate disasters.

This dissertation contains three essays in financial economics. The focus of the dissertation is to study how retail investors and the financial market react to the arrival or the possibility of disastrous events. In the first chapter, I explore the portfolio reaction to evidence of climate change by looking at how retail investors trade when they locally experience abnormal temperature. I test the hypothesis that retail investors will trade out of high emission stocks and trade into low emission stocks when experiencing abnormally high temperature through a channel of climate belief updating. Using detailed administrative records of retail investors’ positions and trading activities from a large financial institution, I construct measures of trading imbalances at the zip code level for various types of stocks and study the impact from abnormal temperature. I do not find evidence that investors trade out of high emission stocks or trade into low emission stocks when experiencing abnormally high temperature. The estimated effects are neither economically nor statistically significant. Moreover, investors are not dynamically adjusting their portfolios in response to abnormal temperature. The nonresults are robust if I implement the estimations in quarterly or annual frequency. Focusing on only trading activities in the energy sector does not change the results. Analyzing subsamples of investors with different levels of beliefs in climate change also produces nonresults. Although past literature has shown that local extreme temperature can induce changes in beliefs about climate change and related behavior, this paper shows that such belief updating does not translate into response in portfolio choice.In the second chapter, we model the contribution of a vaccine to the rebound in corporate earnings the year following the onset of COVID-19 while accounting for the role of fiscal and monetary measures. A vaccine that reopens the economy leads to a jump in earnings, while temporary fis- cal and monetary support for households and businesses leads to higher short-run earnings growth before a vaccine arrives. We show that our model can be consistently estimated using revisions of value-weighted industry-level consensus earnings forecasts. We first present reduced-form evidence that security analysts account for both effects. Our model estimates then suggest that the reopening effect is as important as the short-run growth effect in explaining the rebound in corpo- rate earnings. The third chapter studies the partisan difference in trading behavior at the onset of the COVID-19 pandemic. Partisanship drives disagreement on the severity and persistence of the COVID-19 shock when it hit the US. Republicans were more optimistic than the Democrats when evaluat- ing the potential damage of COVID-19 to the economy. Using detailed administrative records of retail investors’ positions and trading activities from a large financial institution, I find that the partisan disagreement on COVID-19 is reflected in stock trading behavior: Republicans had more net flow into equity than the Democrats from March to May of 2020. Moreover, the difference is concentrated on industries with high face-to-face interactions and highly levered firms, which are expected to be more severely damaged by COVID-19. The results suggest that disagreement rooted in partisanship can have a real impact on household financial decisions and potentially on the overall financial market.

This dissertation consists of three chapters exploring challenges that many developing countries face in augmenting state capacity and accumulating human capital. In particular, I focus on difficulties in developing state capacity and human capital induced by political violence, natural disasters, and over-reliance on income from foreign countries. The first chapter explores the effects of losing local politicians on the fiscal and personnel capacity of local governments using the outcome of the assassination attempts on mayors in Mexico. The second chapter investigates the effects of exposure to natural disasters on birth outcomes in Indonesia, using the Indian Ocean Tsunami as a natural experiment. In the final chapter, I use a cross-country analysis to study the link between reliance on remittances and the capacity of a country to collect taxes efficiently. The first chapter investigates the effects of losing mayors to successful assassinations on the capacity of local governments. By leveraging the randomness in the outcomes of assassination attempts against mayors in Mexico in 2002-21, I find that the loss of mayors negatively affects the fiscal and personnel capacities of the local governments. Municipal tax collection decreases by 29\%. The share of expenditure on primary services falls by 3 percentage points and is crowded out toward investment in construction. Municipal workers at productive stages in their careers leave the position. The back-of-the-envelope calculation shows that wages should increase by 13\% to retain them after assassinations. Organized criminal groups take advantage of the loss of mayors by increasing their presence in municipalities with successful assassinations. The results are not explained by non-political violence, levels of economic activities, or population changes. The results speak to the significance of leaders in maintaining fiscal capacity and retaining capable personnel in the workforce even in a violent environment. In the second chapter, co-authored with Elizabeth Kayoon Hur (Michigan State University), I evaluate the effect of in-utero exposure to the 2004 Indian Ocean Tsunami on short-term childbirth outcomes in Indonesia. Exploiting variation in the timing of exposure, I find that the probability of successful pregnancies drops by 5.9 percentage points (pp), while miscarriages increase by 5.5 pp for those exposed in the earliest stage of pregnancy. I find suggestive evidence that post-disaster health investments by households may have shielded later cohorts from harmful effects. The results suggest the importance of considering fetal loss in developing countries and highlight that facilitating household investment in health through various policies may mitigate negative birth effects in the aftermath of natural disasters. The third chapter investigates the relationship between a country's reliance on remittances from abroad and its ability to collect taxes from various domestic sources. Despite the increasing flow of remittances in volume and proportion, particularly among developing countries, their role in determining the state's capacity to collect taxes has received little attention. This chapter explores the link between remittances and various tax revenue categories using country-level data. Two-way panel regressions suggest that a 1 percentage point (pp) increase in the inflow of remittances explains a 0.12 pp rise in consumption tax revenues. The same estimate derived from IV methods proxying for migrant network strength and openness of borders increases to 0.9 pp. Decomposing this result reveals that the increase in household consumption expenditure explains all of the statistical association, not the efficient tax-collecting mechanisms such as VAT. Subsample regressions by income category suggest that the association between remittances and consumption tax revenue is stronger in countries with lower income.

This study examines the recovery process of businesses in Homestead, Florida after Hurricane Andrew in 1992. The goal of this study was to determine which organizational characteristics were useful in predicting the level of physical damage and the length of time to reopen for affected businesses. The organizational characteristics examined were age, size, pre-disaster gross sales, ownership of the business location, membership in the Chamber of Commerce, and property insurance. Three-hundred and fifty businesses in the area were surveyed. Because of the complexity of the recovery process, the disaster experiences of businesses were examined using three paradigms, organizational ecology, contingency theory, and configuration theory. Models were developed and tested for each paradigm. The models used the contextual variables to explain the outcome variables; level of physical damage and length of time to reopen. The SIC was modified so that it could form the framework for a taxonomic examination of the businesses. The organizations were examined at the level of division, class, subclass, and order. While the taxa and consistent levels of physical damage, the length of time needed to reopen varied greatly. The homogeneous level of damage within the groups is linked to similarity in assets and transformation processes. When examined using the contingency perspective, there were no significant relationships between the level of physical damage and the contextual variables. Only predisaster gross sales and level of physical damage had moderate strength associations with the length of time to reopen. The configuration perspective was applied by identifying clusters of organizations using the contextual variables. Clusters were identified and examined to determine if they had significantly different disaster experiences. The clusters varied significantly only by the length of time to reopen. The disaster experience of businesses is conceptualized as a process of accumulation-deaccumulation-reaccumulation. The level of physical damage is driven by selection while the lenght of time to reopen is determined by both adaptation and selection.

This dissertation consists of three essays in the field of environmental economics and sustainable finance. The first chapter investigates the impact of localized exposure to heat waves and floods on the pricing of U.S. municipal bonds. I identify a significant relationship between the vulnerability of cities to heat waves and flood-related damages and municipal bond yield spreads. In particular, the effects are more pronounced in the case of municipal bonds with extended maturity periods. Cities demonstrating heightened capacities for adaptation exhibit a discernible mitigating impact on the yield spreads of these bonds. Moreover, my paper underscores the variations in political affiliations, climate attitudes, and risk perceptions across different cities, shaping this dynamic relationship. The second chapter presents empirical insights into the economic and financial effects of natural disasters, focusing on wildfires in California. Integrating financial data with historical wildfire records from 2016 to 2020, the study quantifies how wildfire risks influence municipal tax policies, revealing that local governments adjust tax rates in response to these risks. Furthermore, the study examines how municipalities enhance expenditures on public safety, particularly in fire and disaster preparedness, reflecting proactive measures to mitigate wildfire impacts and ensure community resilience. The third chapter, co-authored with Christina Laskaridis, analyzes sovereign green, social, sustainability, and sustainability-linked (GSS+) bonds in emerging and developing countries. This study maps out trends and characteristics of sovereign GSS+ bond issuances, assessing their potential to finance the energy transition and achieve Sustainable Development Goals (SDGs). The research evaluates the risks and limitations of GSS+ bonds, emphasizing the need for longer maturities, longer costs of capital, and increased funding scales to effectively contribute to sustainable development financing. Overall, these essays contribute multifaceted perspectives on the intersection of climate risks, fiscal policies, and sustainable finance, offering valuable implications for policymakers, investors, and stakeholders aiming to navigate the complexities of climate economics.

In my dissertation, I investigate the relationship between household consumption expenditures and transitory income shocks. In the first two essays, I pay particular attention to household expenditures in the aftermath of natural disasters, which are becoming more frequent and costly in the U.S. since 1980. Additionally, I study specialty farm producers' risk attitudes after an income shock due to natural disasters. Although the permanent income hypothesis predicts that households smooth consumption over their lifetimes, credit-constrained households may find consumption smoothing impractical. This dissertation brings forth evidence regarding heterogeneity in the effect of income shocks on household expenditures. First, I find that floods and hurricanes affect food-at-home (FAH) spending in different ways. The average 15-day decrease in FAH spending is about $2 in the 90 days after a flood and about $7 in the 30 days after a hurricane. In other words, floods have a prolonged effect and hurricanes have an immediate effect. I find that floods and hurricanes remain a threat to the FAH expenditures of vulnerable households, for instance, low-income households and households in coastal states. Second, Indiana specialty farm households reduce their monthly expenses of food and miscellaneous categories by about $119 and $280, respectively, after an income loss of 20%-32%. I also find that Indiana specialty producers are less willing to take financial risk after an income loss experience, i.e., they have a decreasing absolute risk aversion. Finally, in the third essay, I show that Australian households exhibit loss aversion in consumption expenditures which also means that they behave asymmetrically in their consumption response to income shocks. However, it is only working-age younger households that show asymmetric consumption behavior as opposed to the symmetric behavior of retirement-age households. The main message of these various findings is clear: after an income shock, the magnitude of change in consumption expenditures and the saliency of certain expenditure categories for adjustment are context- and population-dependent. Hence, income support policies and post-disaster relief programs may benefit from a better understanding of the consumption behavior of beneficiary population, to achieve maximum impact through better targeting.

Indiana University-Purdue University Indianapolis (IUPUI) / In 2008, grassroots NGOs formed 13 alliances in response to the need for emergency relief and post-disaster recovery after the Sichuan Earthquake that occurred in West China and killed approximately 87,000 people. These alliances served to raise and deliver relief materials, train and supervise volunteers, promote information sharing, and assist victims with mental health and livelihood recovery. However, all alliances were terminated within less than four years. Although plenty of scholarship discusses how corporate alliances evolve or fail, few studies focus on interorganizational collaboration among nonprofits. To explore how NGOs developed collective actions in China’s adverse sociopolitical environment, the author performed three years of observation in four coalitions and interviewed 60 alliance leaders, employees, and volunteers. This paper identifies four types of termination these NGO alliances experienced: three of them failed at their very births, five self-disbanded shortly after the end of emergency aid, three dissolved due to failed institutionalization, and the remaining two evolved into independent organizations. Tracking their life cycles, this study finds four main factors accountable for their terminations: political pressure, funding shortage, short-term orientation, and leadership failure. In particular, the repressive NGO regulation regime and limited funding sources fundamentally restricted all alliances’ capacity and sustainability. Further, the transient nature of disaster relief efforts and the conflict between disaster management and planned work areas contributed to the short-term orientation among alliance members and, thus, led to the closure of some alliances shortly after they provided emergency relief. In addition, though generally exempt from internal rivalry that often undermines inter-firm partnerships, NGO alliances of all types were confronted with leadership challenges—partner misfits concerning resources, strategy, and mission; flawed governing structures, and undesired individual leadership. The four factors interplayed and led to alliance dissolution through different combinations. The paper points out that, in addition to environmental uncertainty, leadership failure has become a major challenge for nonprofit collaborations.