Research

Working papers

Transition Risk under Capital Misallocation: The Deployment of Solar Power Plants in China, with Zhanhui Chen, 2025

  • Conferences & Seminar: NBER-SAIF Climate Finance and the Sustainable Energy Transition Meeting, 2024 China Financial Research Conference, HKUST Brown Bag*, Southern University of Science and Technology*, Renmin University of China, 2025 World Congress of the Econometric Society, Southwestern Finance Association 2026 Conference

  • Abstract: This paper examines the financial impacts of transition risk on firms and aggregate economy through the deployment of solar power plants (SPP) in China. We found that more SPP were deployed in areas with lower solar radiation and negatively affected the local economy. Cities with SPP experienced a lower local GDP growth of approximately 0.8-1.8%. At the firm level, SPP deployment decreased corporate investment and debt financing, and increased financing costs in other sectors. These effects were more pronounced for private firms, firms relying on external financing or productive firms. The crowding-out effect under capital misallocation drives our findings.

How Does Political Leaning Affect Green Investment Efficiency? Evidence from US Solar Power Plants, with Zhanhui Chen, 2025

  • Conferences & Seminars: HKUST Brown Bag, 2nd HEC-HKUST Sustainable Finance Workshop

  • Abstract: This study uses solar power plants as a laboratory to examine the impact of political leaning on the efficiency of green infrastructure in the US. Using plant-level data and exploiting policy discontinuities at state borders, I find that Democratic-leaning states have more but less efficient solar plants, while Republican-leaning states have fewer but more efficient ones. The efficiency gap is explained by the in-elasticity of solar plant size to installation cost in Democratic-leaning states. Discontinuity and missing mass in size distribution suggest that this inefficiency stems from developers’ self-selection due to policy distortion. I confirm this mechanism through a difference-in-differences design, leveraging an unexpected federal subsidy policy expansion in 2016. The findings highlight how politically-driven climate policies may lead to unintended efficiency loss.

Publications

The Impact of Nuclear Energy on Social Welfare and the Future of Renewable Energy: Episode from South Korea, with Kwangwon Ahn, and Minhyuk Jeong
Accepted in Humanities and Social Sciences Communications, 2026

Effects of Renewable Energy Use in the Energy Mix on Social Welfare,  with Kwangwon Ahn, Daeyong Lee
Published at Energy Economics, 2021

Modeling GDP Fluctuations with Agent-based Model, with Kwangwon Ahn, Changyong Ha, Biao Yang
Published at Physica A: Statistical Mechanics and its Applications, 2018

Work in progress

Political Polarization and Households’ Climate Adoption, with Zhanhui Chen

ES Performance and Voting Premium: Evidence from Option Prices, with Zhanhui Chen