Research

Job Market Paper

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_May_2026 (4).pdf

Protectionism, Stability & Inequalities

Heterogeneous Exposure to Retaliatory Tariffs

draft under request

This paper studies the macroeconomic and distributional effects of retaliatory tariffs on US goods, using four major emerging economies as a laboratory. I construct a novel consumption-weighted tariff exposure measure that captures the pass-through of product-level tariff changes to household consumption costs. Using panel localprojections with a Bartik-style shift-share instrument, I estimate the dynamic effects of retaliatory exposure on output, employment, income inequality, and wealth inequality. Three findings emerge. First, retaliation generates an immediate output contraction followed by a gradual V-shaped recovery, consistent with a temporary adverse supply shock amplified by two simultaneous channels: a cost channel operating through imported intermediate inputs, and an export channel operating through compressed foreign demand. Second, I document a short-run compression of income and wealth inequality, suggesting that high-income and capital-owning households bear a disproportionate share of the adjustment. Third, labor markets remain relatively resilient, consistent with reallocation toward the informal sector. The results highlight the central role of consumption structure and intermediate input dependence in shaping the transmission and distributional consequences of protectionism in emerging economies.

On the (de)stabilization role of protectionism (with A.Venditti)

Published in 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

Works in Progress

Financial Fragmentation and Banking Network Formation in the Euro Area

Asymmetric Carbon Pricing in networked electricity (with C.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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