Research
See also my professional page and my Ideas profile.
Working papers:
Aggregation across each nation: aggregator choice and macroeconomic dynamic (joint with S. Lloyd and R. Sajedi)
Bank of England Staff Working Paper No. 982
Banque de France Working Paper No. 894
We study the implications of trade aggregation for macroeconomic dynamics in workhorse open-economy models, deriving sufficient statistics for the impact of the functional form of the trade aggregator on the first-order dynamics of the model. With two countries, for given steady-state trade elasticities and expenditure shares, any aggregator that is homogeneous of degree one is equivalent to the widely used Armington aggregator at first order. Aggregators that are homogeneous of different degree are equivalent to a generalised Armington aggregator. With more countries, alternative aggregators affect macroeconomic dynamics through steady-state differences in bilateral trade elasticities across country-pairs, which Armington rules out.
Climate-Related Scenarios for Financial Stability Assessment: An Application to France (joint with T. Allen, S. Dees, J. Boissinot, M. Caicedo Graciano, V. Chouard, L. Clerc, A. De Gaye, A. Devulder, S. Diot, F. Pegoraro, M. Rabaté, R. Svartzman, L. Vernet)
Banque de France Working Paper No. 774
This paper proposes an analytical framework to quantify the impacts of climate policy and transition narratives on economic and financial variables necessary for financial risk assessment. Focusing on transition risks, the scenarios considered include unexpected increases in carbon prices and productivity shocks to reflect disorderly transition processes. The modelling framework relies on a suite of models, calibrated on the high-level reference scenarios of the Network for Greening the Financial System (NGFS). Relying on this approach, the ACPR has selected a number of quantitative scenarios to be submitted to a group of voluntary banks and insurance companies to conduct the first bottom-up pilot climate-related risk assessment.
Carbon tax in a Production Network: Propagation and Sectoral Incidence (joint with A. Devulder)
Banque de France Working Paper No. 760
Bloc-notes Eco blog post (French version)
We analyse the propagation of carbon taxation through input-output production networks. To do so, we use a static multi-sector general equilibrium model including France, the rest of the European Union and the rest of the world to simulate the impact of carbon tax scenarios on economic activity. We find that a tax increase on sectors' and households' greenhouse gas emissions, corresponding to a carbon price of 100 euros per ton of CO2 equivalent, entails a decrease in French aggregate real value added by 1.2% at a 5-to-10-year horizon when implemented in France only, vs. 1.5% when implemented in the whole EU. Impacts on sectoral real value added range from -20% to negligible. The most affected sectors are generally the most polluting ones, but the tax also propagates across sectors via intermediate inputs. Specifically, the network structure tends to affect comparatively more upstream sectors than downstream ones, given their taxation levels. International financial markets also play an important role by neutralizing the positive response of final demand that would result from the redistribution of the tax proceeds to domestic households.
Alternative Finance and Credit Sector Reforms: The Case of China (submitted)
Bank of England Staff Working Paper No. 694
This paper studies the impact of credit sector reforms in a general equilibrium framework where heterogeneous firms choose their optimal investment and how to finance it. The model can account for the financing patterns observed in Chinese data. Besides retained earnings and bank loans, I focus on the crucial role played by alternative sources of funding, including family, friends, non-listed equity and informal banking institutions. While small young enterprises face important difficulties to finance their investment, these alternative financing sources allow them to partially bypass credit constraints. Despite an increase in non-performing loans by 9%, liberalizing the banking sector increases the steady-state aggregate level of capital by 10% and the steady-state aggregate production by 5%, inducing efficiency gains and a welfare increase of 1.8%. Selectively tightening the regulation of the alternative finance sector, if simultaneous to bank liberalization, may prevent the rise in non-performing loans while preserving most welfare improvements. This remains however detrimental to the development of small, young enterprises and limits efficiency gains.
Work in Progress:
Climate transition and the Macroeconomy (joint with F. Henriet, M. Lemoine, C. Thubin, H. Turunen)
Credit distribution and loan officers
Trade, Exporters and Finance (joint with Ida Hjorstoe)
Research Publications:
Population Ageing and the Macroeconomy (joint with R. Sajedi and G. Thwaites, previously circulated as Demographic trends and the real interest rate)
International Journal of Central Banking, vol. 17(2), June 2021
Banque de France Working Paper No. 745
Bank of England Staff Working Paper No. 701
Bank underground blog post on domestic macro implications
Bloc-notes Eco and Bank underground blog posts on external implications
Bulletin de la Banque de France n°223 (English version)
We quantify the impact of past and future global demographic change on real interest rates, house prices and household debt in an overlapping generations model. Falling birth and death rates can explain a large part of the fall in world real interest rates and the rise in house prices and household debt since the 1980s. These trends will persist as the share of the population in the high-wealth 50+ age bracket continues to rise. As the United States ages relatively slowly, its net foreign liability position will grow. The availability of housing and debt as alternative stores of value attenuates these trends. The increasing monopolisation of the economy has ambiguous effects.
Unveiling the Effects of Foreign Exchange Intervention: A Panel Approach (joint with G. Adler and R. C. Mano)
Emerging Markets Review, vol. 40, September 2019
We study the effect of foreign exchange intervention on the exchange rate relying on an instrumental-variables panel approach. We find robust evidence that intervention affects the level of the exchange rate in an economically meaningful way. A purchase of foreign currency of 1 percentage point of GDP causes a depreciation of the nominal and real exchange rates in the ranges of [1.7-2.0] percent and [1.4-1.7] percent respectively. The effects are found to be quite persistent. The paper also explores possible asymmetric effects, and whether effectiveness depends on the depth of domestic financial markets.
For a Few Dollars More: Reserves and Growth in Times of Crises (joint with M. Bussière, G. Cheng and M. Chinn)
Journal of International Money and Finance, April 2015, vol. 52(C), pages 127-145
Banque de France Working paper 550
Based on a dataset of 112 emerging economies and developing countries, this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008-2009 financial crisis. More specifically, the paper investigates the relation between international reserves and the existence of capital controls. We find that the level of reserves matters: countries with high reserves relative to short-term debt suffered less from the crisis, particularly when associated with a less open capital account. This suggests some degree of complementarity between reserves between reserve accumulation and capital controls.
Policy pieces:
Using short-term scenarios to assess the macroeconomic impacts of climate transition (joint with T. Allen, M. Boullot, S. Dées, A. de Gaye, C. Thubin and O. Wegner)
Banque de France working paper No. 922 (September 2023)
Greenflation: Price Stability and the Decarbonisation of the Economy (joint with S. Dupraz, M. Marx and J. Matheron) (October 2022)
"Too little to late": impacts of a disorderly climate transition (joint with A. de Gaye)
Bloc-notes Eco blog post (French version) (August 2022)
Mind the (current account) gap (joint with M. Joy, S. Lloyd, R. Sajedi, D. Reinhardt and S. Whitaker)
Workshop on Assessing Global Imbalances, proceedings (December 2018)
Financial Stability Paper No. 43 (January 2018)
Bank Underground blog post (October 2017)
Covid-19 and chaînes de valeur (joint with A. Bergeaud, A. Berthou, B. Collès, G. Gaulier, J.-F. Ouvrard)
Banque de France Bulletin No. 230 (July 2020)