NEW:

• Que peut encore faire la BCE? // What else can the ECB do ?, with Eric Monnet and Xavier Ragot, Note du Conseil d'Analyse Economique, June 2021. VOXEU column

• Pour une refonte du cadre budgétaire européen // Reforming the European fiscal framework, April 2021, with Jean Pisani Ferry and Xavier Ragot, Note du Conseil d'Analyse Economique, VOXEU column

• Will Schumpeter catch COVID-19? February 2021, with Mathieu Cros and Anne Epaulard. CEPR DP 15834. VOXEU column. We estimate the factors predicting firm failures in the COVID crisis based on French data in 2020. Although the number of firms filling for bankruptcy was much below its normal level (- 36% compared to 2019) the same factors that predicted firm failures (primarily productivity and debt) in 2019 are at work in a similar way as in 2020. Hence, the selection process, although much reduced, has not been distorted in 2020. At this stage, partial hibernation rather than zombification characterises the selection into firm survival or failure. We also find that the sectoral heterogeneity of the turnover COVID shock (proxied by the change in credit card transactions) has been largely (but not fully) absorbed by public policy support because it predicts little of the probability of bankruptcy at the firm level. Finally, we sketch some potential scenarios for 2021-2022 for different sectors based on our empirical estimates of predictors of firm failures.

• Trade Imbalances and the Rise of Protectionism, latest version, with Samuel Delpeuch and Etienne Fize, CEPR Discussion Paper DP15742. We investigate the role of trade imbalances in the rise of protectionism on the period 2009-2019. Bilateral as well as multilateral trade imbalances are robust predictors of protectionist attacks. This result is partly but not entirely driven by the US and the Trump years. We also find that countries that experience a bilateral real exchange rate appreciation launch more protectionist attacks. The role of trade imbalances in the rise of protectionism is confirmed when we use the cyclically adjusted budget balances as instrumental variables for trade imbalances. Countries with more expansionary fiscal policies react to the ensuing trade imbalance by a more protectionist trade policy. The role of trade imbalances in the rise of protectionism is quantitatively important: in the G20, a one standard deviation increase in the bilateral and multilateral trade deficits of a country leads respectively to a 9% and 15% rise of protectionist attacks by this country. A one standard deviation increase in fiscal impulse is associated with a 15% rise in protectionist attacks.

• The Economics of Sovereign Debt, Bailouts and the Eurozone, 2020, with Pierre Olivier Gourinchas and Todd Messer, CEPR DP 14891 and NBER No. 27421: Despite a formal ‘no-bailout clause’, we estimate significant transfers from the European Union to Cyprus, Greece, Ireland, Portugal and Spain, ranging from roughly 0% (Ireland) to 43% (Greece) of output during the recent sovereign debt crisis. We propose a model to analyze and understand bailouts in a monetary union, and the large observed differences across countries. Because of collateral damage to the union in case of default, these bailouts are ex-post efficient. Our model embeds a ‘Southern view’ of the crisis (assistance was insufficient) and a ‘Northern view’ (assistance weakens fiscal discipline). Ex-post, bailouts do not improve the welfare of the recipient country, since creditor countries get the entire surplus from avoiding default. Ex-ante, bailouts generate risk shifting with an incentive to over-borrow by fiscally fragile countries.