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Eustache Elina
I am an Economist at Banque de France in the service in structural policies (SEPS). I am also finishing my PhD in macroeconomics at the Paris School of Economics. I am under the supervision of Professors Tobias Broer and Axelle Ferriere. My resume is available here.
My research focuses on the macroeconomic implications of the rise in labor income inequality on macroeconomic aggregates and stabilization policies.
Research
Joint with Raphaël Huleux
We study the impact of an increase in permanent labor income inequality on the transmission of monetary shocks on the real economy. Using a Two-Agent New Keynesian model with non-homothetic preferences, we show that an increase in permanent labor income inequality weakens the direct intertemporal substitution channels, decreasing the strength of monetary policy shocks. In a more realistic Heterogeneous-Agent New-Keynesian model featuring a non-degenerate wealth distribution, this increase in labor income inequality also increases the share of hand-to-mouth households, strengthening the indirect effect of monetary policy and potentially overcoming the decrease of the direct effect.
Joint with Raphaël Huleux
The past 40 years have been characterized by a decrease in the rate of return on safe assets, an increase in the equity premium, an increase in the price of financial assets, and an increase in labor income and wealth inequality. Using a heterogeneous-agent model featuring permanent labor income inequality, a two-asset structure, and non-homothetic preferences, we investigate the impact of an increase in permanent labor income inequality on wealth inequality. As rich households save a higher share of their permanent income than poorer ones, a more skewed permanent labor income distribution increases aggregate savings. With imperfect competition, a higher level of savings leads to a higher valuation of firms and a limited increase in capital stock. The induced capital gains increase wealth inequality due to portfolio heterogeneity.
The Exit Channel of Monetary Policy
Joint with Leonard Bocquet and Raphaël Huleux
Monetary tightening can generate inefficient firms exits, by exacerbating firm illiquidity constraints. New evidence suggest that, contrary to common wisdom, large productive firms can be affected too. In this paper, we study why monetary tightening can lead to large firms going bankrupt, and explore its macroeconomic implications. To do so, we develop a model of endogenous firm exit with financial frictions and partial irreversibility. Financial frictions imply that only productive firms are able to take on debt, making them highly exposed to interest rate changes, as partial irreversibility makes deleveraging costly. The quality of firm selection can therefore endogenously worsen during monetary tightening episodes, highlighting a potential need for support for large firms in distress.
Teaching
Quantitative Macroeconomics, TA, 2021-2024
PSE, M2 APE with Professors Axelle Ferriere and Tobias Broer
Macroeconomics 2, TA 2024
PSE, M1 APE with Professor Gilles Saint-Paul
Macroeconomics 2, TA 2023
PSE, M1 APE with Professor Daniel Cohen
Macroeconomic Policy, TA 2022
PSE, M1 PPD with Thomas Zuber
Monetary Economics, Lecturer, 2021
ESCP, Grande Ecole, L3
International Economics, Lecturer, 2021
ESCP, Grande Ecole, L3
Microeconomics, TA, 2020-2021
ESCP, BSc Program, L1 with Professor Vanessa Strauss-Kahn
Lecture notes
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