Research

"Have monetary policies been used for a macroprudential purpose? Comparing Japan, the US, the Eurozone and UK" - JOB MARKET PAPER

The aim of the paper is to empirically investigate the response of the financial cycle to monetary policy using a comparative approach for the period after the GFC. Specifically, we ask whether four major central banks in the world (Bank of Japan, US Fed, European Central Bank, and Bank of England) have used monetary policy to achieve financial stability. First, the UK had a "lean against the wind" strategy at both the low and high points of the financial cycle, whereas Japan, the US, and the Eurozone had "a lean against the wind" policy during bullish phases. Second, the BoJ and the ECB can counter bullish phases by raising interest rates but an accommodative monetary policy feeds the increases in prices and asset values. On the contrary, the US Fed and the BoE can stop a bullish phase by lowering interest rates and fuel bullish phases by raising rates.

"Potential growth and natural yield curve in Japan", (with Gilles Dufrénot & Etienne Vaccaro-Grange) - Journal of International Money and Finance

We estimate the yield curve gap in Japan and examine whether it has contributed to the sustained low growth and low inflation rates observed since the beginning 2000s. We use a semi-structural empirical model that generalizes Laubach and Williams’ approach, considering the entire range of maturities of the interest rates and dealing with the issue of mixed frequency sampling. An important result is that even in the absence of a zero lower bound, monetary and fiscal policies proved ineffective in bringing the Japanese economy out of a situation of prolonged stagnation and low inflation. This happened even when the yield curve moved below its natural level.

"A theoretical model of policy-mix for Abenomics"

Since the financial crisis of 2008, many industrialized countries have suffered from low potential growth, low natural interest rates, and low inflation. These three factors add up to an international phenomenon known as secular stagnation, to which central banks worldwide have reacted by adopting non-conventional monetary policies. In this paper, I evaluate the impact of monetary and fiscal policies on the real economy, using an endogenous growth model in which economic growth interacts with productive public expenditure. I apply this framework to the case of Japan. The findings suggest that low and high balanced growth paths (BGPs) are stable when the money supply is exogenous and unstable otherwise. This result suggests that a policy mix under quantitative easing is optimal in Japan.

"Secular Stagnation: New Challenges for the Industrialized Countries in the 21st Century", (with Gilles Dufrénot) -AMSE Working Paper 2018, Nr 18

This paper attempts to provide an overview of the main challenges facing industrialized in the context of secular stagnation. There is no consensus on the meaning of this concept and various alternative views coexist. We present the key issues in the debates today, accounting for phenomena like the slowdown in factor productivity, liquidity and safety traps, the decline of natural interest rates, the historical downward trend of potential growths, and low inflation rates. We provide a bird’s eye survey of the available literature on the causes of secular stagnation from a historical perspective, the symptoms, the main causes as well as some policies proposed to overcome it. We give some illustrations for the United Kingdom, the United States, the euro area, and Japan.