Nauru, Central Pacific. My childhood home, and a canonical case of the resource curse.

Published Papers

The Elephant in the Ground: Managing Oil and Sovereign Wealth (2016) with van den Bremer, T. and van der Ploeg, R., European Economic Review, 82:113-131 (working paper)

Resource Funds: Stabilizing Parking and Intergenerational Transfer (2016) with Venables, T., Journal of African Economies, 25 (Supp 2): ii20–ii40 (working paper)

Sovereign Wealth Funds and Natural Resource Management in Africa (2016) with Senbet, L., and Simbanegavi, W., Journal of African Economies, 25 (Supp 2): ii3-ii19

An Empirical Sectoral Model of Unconventional Monetary Policy: The Impact of QE (2015) with Cloyne, J., Thomas, R., and Tuckett, A. The Manchester School, Vol 83: 51-82 (pdf)

  • Written during secondment as the David Walton Scholar at the Bank of England.
  • This model is now part of a suite used to inform Monetary Policy Committee decisions.

Securitization, structuring and pricing of longevity risk (2010) with Sherris, M. Insurance: Mathematics and Economics, Vol 46(1): 173-185 (pdf)

Financial Innovation and the Hedging of Longevity Risk (2008) with Sherris, M., Asia Pacific Journal of Risk and Insurance, Vol 3(1): 1-14

Working Papers

Surfing a wave of economic growth (2017) with McGregor, T., OxCarre Working Paper No. 170, University of Oxford (Ideasslides May 2016)

We investigate whether the geographic determinants of growth extend to natural amenities. We combine data on spatial and temporal variation in the quality of over 5000 surf breaks globally with data on local economic performance, proxied by night-time lights. We document a strong association between natural amenity quality and local economic development. Economic activity grows faster near good surf breaks; following the discovery of new breaks, or the technology needed to ride them; and during El Niño events that generate high-quality waves. The effects are concentrated in nearby towns and emerging economies, and population changes are consistent with tourism.

Left in the Dark? Oil and Rural Poverty (2016) with Smith, B., OxCarre Working Paper No. 164, University of Oxford

Do oil booms reduce poverty and inequality? To study this we propose a new measure of rural poverty: counting people that live in darkness. We do this by combining high-resolution satellite data on night-time lights and population globally from 2000-2013. This measure accurately identifies 83% of households as being above or below the extreme poverty threshold when compared to over 600,000 surveys. We find that both high oil prices and new discoveries increase light intensity and GDP nationally, but promote inequality because the increases are limited to towns and cities with no evidence that they benefit the rural poor.

Optimal Monetary Responses to News of an Oil Discovery (2015) OxCarre Working Paper No. 121, University of Oxford

This paper studies how monetary policy should optimally respond to an oil discovery. Oil discoveries provide news that the natural level of output will increase in the future. Anticipated increases in natural output lower the natural real interest rate. Optimal monetary policy must accommodate these changes, and is well-approximated by a Taylor rule that responds to the natural rate of interest. Failure to accommodate these changes, as in a peg or naive Taylor rule, can cause forward-looking inflation and a recession. To illustrate this I incorporate a government, oil and news into a standard DSGE model of a small open economy that permits an analytical solution for optimal policy. I then use the model to present a novel explanation for UK stagflation in the 1980s after North Sea Oil began production.

Seven Principles for Managing Resource Wealth (2015), OxCarre Working Paper No. 154, University of Oxford

This paper studies how capital-scarce countries should manage volatile resource income. Existing literature recommends that capital-scarce countries invest domestically, but that volatile resource income should be saved in a foreign sovereign wealth fund. I reconcile these by combining a stochastic model of precautionary savings with a deterministic model of a capital-scarce resource exporter. I show that capital-scarce countries should still establish a Volatility Fund, but it should be relatively smaller than in capital-abundant countries. The fund should be built before anticipated windfalls, partially invested domestically, and used as a source of income rather than a buffer against temporary shocks. To do so I develop a parsimonious framework that nests a variety of existing results as special cases, which are presented in seven principles. The first three apply to capital-abundant countries: i) Smooth consumption using a Future Generations Fund; ii) Build a Volatility Fund quickly, then leave it alone; and iii) Invest to stabilise the real exchange rate. The remaining four apply to capital-scarce countries: iv) Finance consumption and investment with oil; v) Use a temporary Parking Fund to improve absorption, vi) Invest part of the Volatility Fund domestically; and vii) Support private investment.

Integrating Financial and Demographic Longevity Risk Models: A Model for Financial Applications (2008) with Sherris, M., UNSW Working paper

  • Awarded Best Paper Prize at 18th International Actuarial Approach for Financial Risks (AFIR) Colloquium, Rome 2008