Abstract - Public in-kind provision of education, healthcare, or culture accounts for a large share of government spending, even though redistribution can be achieved with cash transfers and externalities addressed with subsidies. We propose a new macroeconomic theory of in-kind provision, grounded in two features: (i) these goods are luxuries, with consumption rising more than proportionally with income; and (ii) they generate externalities that depend not only on the total level of consumption but also on its distribution across households. In a tractable heterogeneous-agent model, we show that these features make direct in-kind provision welfare-improving, even when cash transfers and subsidies are available. Using household- and country-level data, we document that most publicly provided goods are luxuries and present evidence consistent with distribution-sensitive externalities. We then apply the framework to the design of fiscal consolidation, showing in a quantitative model that optimal consolidation falls primarily on goods without private substitutes, while preserving in-kind provision of goods with private substitutes. Finally, our framework yields a welfare-based valuation that reduces the measured equalizing effect of in-kind benefits in France by about one third.

Prizes - Finalist at the 2026 CESifo Public Economics Affiliate Award, Best Paper Award at the 2025 Franco-German Fiscal Policy Seminar

Abstract - What are the effects of central bank balance sheet expansion, and should we worry about central bank losses? Using a Heterogeneous-Agent New Keynesian model incorporating money in utility and an endogenous zero lower bound (ZLB), we study the fiscal-monetary interactions of central bank balance sheet policies. We find that the overall efficiency of asset purchase programs depends on the combination of the expected future size of the balance sheet and the fiscal transmission of central bank losses. First, permanent balance sheet expansions stimulate the economy in the long run and by anticipation, increase inflation and output during the ZLB episode, as they interact with distortionary taxes and imperfect capital markets. Second, upon exiting the ZLB, the central bank incurs losses; issuing securities to offset these losses is more welfare-enhancing than raising taxes. 

Abstract - The distributive effects of carbon taxation are critical for its political acceptability and depend on both income and geographic factors. Using French administrative data, household surveys, and matched employer-employee records, we document that rural households spend 2.8 times more on fossil fuels than urban households and work in firms that emit 2.7 times more greenhouse gases. We incorporate these facts into a spatial heterogeneous-agent model with migration, housing and wealth accumulation, bridging spatial and macroeconomic approaches. Carbon taxes generate 56% larger welfare losses for rural households than for urban households. While uniform or income-based rebates reduce inequality along the income dimension, they leave large spatial disparities that must be offset through location-based transfers. These results suggest that carbon policies should account for spatial differences to improve political feasibility.

Prize - 2023 CEPR Philippe Martin Prize