Research

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Quantitative Easing in a Heterogeneous Monetary Union

I study how Quantitative Easing (QE) transmits in a heterogeneous monetary union and whether it generates distributional effects. Focusing on the European Monetary Union (EMU), I incorporate two key sources of heterogeneity: cross-country differences in sovereign debt structure (liquidity of long-term bonds, maturity composition, and debt levels) and within-country heterogeneity in households’ access to financial markets. I develop a Two-Country, Two-Agent New Keynesian model with an endogenous bond liquidity constraint and calibrate it to core and peripheral euro area economies during the Global Financial Crisis. The model highlights a central mechanism: QE operates through portfolio rebalancing, but its effectiveness depends on both bond liquidity -- which governs the ability to adjust portfolios -- and household financial participation -- which shapes the transmission to aggregate demand. I find that QE is expansionary and tends to reduce income inequality in the short run. However, its effects are highly heterogeneous across countries. Economies with more liquid sovereign debt and lower reliance on short-term financing experience stronger output responses, while a higher share of hand-to-mouth households amplifies both aggregate and distributional effects. These findings imply that uniform QE policies in a monetary union can generate asymmetric outcomes across member states, highlighting the importance of accounting for structural heterogeneity when designing and evaluating unconventional monetary policy

HMU_HENRY_April2026.pdf

Protectionism, Stability & Inequalities

On the (de)stabilization role of protectionism (with A.Venditti)*- Journal of Mathematical Economics, 2024, vol 113, pp 102993 Link to the paper

To what extent protectionism affects growth and (de)stabilizes the economies? Although the impact of protectionism on growth has been widely explored without reaching a consensus, few has been said on its impact on macroeconomic stability. The present paper attempts to gauge more precisely its implications using a Barro-type (Barro, 1990) endogenous growth model with public debt and credit constraint where tariffs are a proxy of protectionism. Our main result is to show that when the debt level is high, and the share of foreign goods in total consumption is large enough, increasing tariffs may have a destabilizing effect generating some expectation coordination failures between multiple equilibria. We also exhibit some trade-off between tariffs and growth as tariffs are beneficial only to the low growth equilibrium which may only appear when the international interest rate is low enough. Finally, focusing on the local stability property, we show that the high BGP is always characterized by local indeterminacy, while the low BGP is always a saddle point. We then prove that tariffs may be responsible for the existence of large self-fulfilling fluctuations

Heterogeneous Exposure to Trade Shocks

draft under request

This paper studies the macroeconomic and distributional effects of retaliatory tariffs on U.S. goods imposed by thirteen emerging economies between 1996 and 2023. I construct a novel consumption-weighted tariff measure that captures the increase in the cost of the average consumption basket due to tariffs. Using Panel Local Projections combined with a Bartik-style shift-share instrument, I estimate the dynamic effects of tariff exposure on GDP growth, employment, income and wealth inequality. I document three main findings. First, retaliatory tariffs generate an immediate output contraction followed by a U-shaped recovery, consistent with a temporary negative supply shock. Second, unlike evidence for advanced economies, I find a short-run compression of income and wealth inequality, which potentially suggests that high-income and capital-owning households bear a larger share of the adjustment. Third, labor markets remain resilient, consistent with reallocation toward the informal sector. Overall, the results highlight the role of consumption structure in shaping the transmission and distributional consequences of protectionism in emerging economies.

Works in Progress

Financial Fragmentation and Banking Network Formation in the Euro Area

Asymmetric Carbon Pricing in networked electricity - Joined with Cédric Crofils (Universitat de Barcelona)

We investigate the macroeconomic consequences of heterogeneous carbon pricing schemes in the U.S. electricity sector. Within a two-country DSGE-E framework featuring region-specific power generation technologies, incomplete factor mobility, and endogenous emissions, we assess how alternative policy design such as state-level carbon taxes, propagate through production costs, interregional electricity flows, and household welfare. The model enables us to quantify differential transmission channels across states and to analyse the extent to which carbon pricing may exacerbate or mitigate regional disparities.

*Picture: Rabat, Morocco :)

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