European Central Bank - eurosystem
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Francesca Zucchi

Research

Division

Financial Research

Current Position

Senior Economist

Fields of interest

Financial Economics,Economic Growth

Email

francesca.zucchi@ecb.europa.eu

Other current responsibilities
2022

Editorial Board Member, ECB Working Paper Series

Education
2010-2015

PhD in Finance, EPFL and Swiss Finance Institute, Switzerland

2008-2010

M.Sc. in Statistical, Actuarial, and Financial Sciences, Universita di Firenze, Italy

Professional experience
2022-

Senior Research Economist, Directorate General Research, European Central Bank

2015-2022

Federal Reserve Board of Governors, Division of Research and Statistics (several positions held)

Awards
2020

Pandemic Award, Federal Reserve Board

2011

Premio Morelli-Rotary for outstanding graduate studies

2010

Honors Student at the University of Florence

2010

Swiss Finance Institute Ph.D. Scholarship

Teaching experience
2011-2015

Teaching Assistant, EPFL (Switzerland)

2007-2009

Teaching Assistant, Universita di Bergamo (Italy)

10 January 2024
WORKING PAPER SERIES - No. 2885
Details
Abstract
The control of carbon emissions by policymakers poses the corporate challenge of developing an optimal carbon management policy. We provide a unified model that characterizes how firms should optimally manage emissions through production, green investment, and the trading of carbon credits. We show that carbon pricing reduces firms’ emissions but also induces firms to tilt towards more immediate yet transient types of green investment—such as abatement as opposed to innovation—as it becomes costlier to comply. Green innovation subsidies mitigate this effect and complement carbon pricing in ensuring innovation-driven sustainability. Perhaps surprisingly, we show that carbon regulation need not reduce firm value.
JEL Code
G30 : Financial Economics→Corporate Finance and Governance→General
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting, Fixed Investment and Inventory Studies, Capacity
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
D62 : Microeconomics→Welfare Economics→Externalities
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
1 August 2023
WORKING PAPER SERIES - No. 2835
Details
Abstract
We develop a model to examine how discount rates affect the nature and composition of innovation within an industry. Challenging conventional wisdom, we show that higher discount rates do not discourage firm innovation when accounting for the industry equilibrium. Higher discount rates deter fresh entry—effectively acting as entry barriers—but encourage innovation through the intensive margin, which can lead to a higher industry innovation rate on net. Simultaneously, high discount rates foster explorative over exploitative innovation. The model rationalizes observed patterns of innovation cyclicality, and predicts that lower entry in downturns hedges innovating incumbents against higher discount rates.
JEL Code
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting, Fixed Investment and Inventory Studies, Capacity
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
O31 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Innovation and Invention: Processes and Incentives
17 July 2023
RESEARCH BULLETIN - No. 109
Details
Abstract
Regulation to control carbon emissions challenges firms to develop optimal carbon management policies. We set out a unified approach to study the trade-offs carbon pricing poses for firms and how they should therefore best respond. Our model shows that while carbon pricing curtails firms’ carbon emissions, polluting firms tilt their green investment mix towards more immediate yet short-lived options – such as solely reducing emissions (abatement) instead of investing in green innovation – as it becomes costlier to comply. Under emissions trading systems, larger balances of carbon credits dampen firms’ efforts to reduce their carbon emissions. Our analysis reveals that carbon regulation does not necessarily reduce shareholder value if firms are sufficiently committed to reducing their carbon footprint.
JEL Code
G30 : Financial Economics→Corporate Finance and Governance→General
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting, Fixed Investment and Inventory Studies, Capacity
O30 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→General
D62 : Microeconomics→Welfare Economics→Externalities
9 June 2016
WORKING PAPER SERIES - No. 1919
Details
Abstract
We study optimal liquidity management, innovation, and production decisions for a continuum of firms facing financing frictions and the threat of creative destruction. We show that financing constraints lead firms to decrease production but may spur investment in innovation (R&D). We characterize which firms should substitute production for innovation in the face of constraints and thus display a "gambling" type of behavior. We embed our firm dynamics into a model of endogenous growth and show that financing frictions have offsetting effects on economic growth.
JEL Code
D21 : Microeconomics→Production and Organizations→Firm Behavior: Theory
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting, Fixed Investment and Inventory Studies, Capacity
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
G35 : Financial Economics→Corporate Finance and Governance→Payout Policy
L11 : Industrial Organization→Market Structure, Firm Strategy, and Market Performance→Production, Pricing, and Market Structure, Size Distribution of Firms
Network
ECB Lamfalussy Fellowship Programme
2023
Journal of Financial and Quantitative Analysis
The Real Effects of Financing and Trading Frictions
  • Zucchi, F.
2022
FEDS
  • Warusawitharana, M., and Zucchi, F.
2020
Journal of Financial Economics
  • Della Seta, M., Morellec, E., and Zucchi, F.
2019
Journal of Financial Economics
  • Malamud, S., and Zucchi, F.
2019
Journal of Financial Economics
  • Colonnello, S., Efing, M., and Zucchi, F.