Economics serving society

January 2022

“On the road to the stock market again?” The impact of the flat tax and the IFI on French investors’ demand for shares

Luc Arrondel* and Jérôme Coffinet

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French households have an abundance of savings, amounting to nearly 16% of gross disposable income, one of the highest savings rates in Europe. Some argue that those savings are misdirected and too concentrated on real estate assets. However, French households’ financial savings, at nearly 6% of gross disposable income, also remain above the euro area average (5%). All recent statistical surveys show that the proportion of individual shareholders has fallen by around 50% between 2008 and 2016. Even if the trend reversed slightly in 2017, the number of shareholders in France today stands at around 7% of the adult population...

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Do firm dynamics provide a rationale for managed exchange rate policies?

Masashige Hamano and Francesco Pappadà*

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In this article, Masashige Hamano and Francesco Pappadà provide a rationale for managed exchange rate policies that protect industries and workers in the export market from external economic shocks.They show that exchange rate movements may lead to fluctuations in the export market and higher uncertainty in the labor demand of exporter firms, providing a rationale for limiting the fluctuations in the nominal exchange rate. The authors examine the exchange rate policy trade-offs in a tractable framework where firm dynamics respond to external demand shocks under incomplete financial markets. The main contribution of their article is to highlight the unexplored role of firm heterogeneity and nominal rigidities...

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On the Permanent Nature of Affirmative Action Policies

Philippe Jehiel* and Matthew Leduc*

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The original rationale for affirmative action was to help underrepresented groups close achievement gaps and it was meant to be temporary. Decades after their inception, affirmative action policies however often remain in place. In this recent article, Philippe Jehiel and Matthew Leduc attempt to provide an explanation to this apparent permanence of affirmative action policies by studying the incentives of successive governments to implement them. They analyze a setting in which governments believe that an affirmative action policy improves the talent distribution of the targeted group in future periods. This belief, held by governments, is in line with popular “role model” theories...

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Should Larger Transfers Be Financed with More Progressive Taxes?

Axelle Ferriere*, Philipp Grübener, Gaston Navarro and Oliko Vardishvili

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High levels of inequality have made redistributive policies a core topic in recent policy debates. Two key components of redistributive policies are targeted transfers and progressive income taxes. Targeted transfers increase disposable income of low-income households and phase out as income levels increase. In contrast, progressive taxes amount to a larger tax burden for high-income households. As such, both policies can significantly alter the income distribution, and their optimal design is thus of paramount importance. A recurring question has been, should transfers be more generous and, if so, should they be financed with more progressive taxes?...

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Does the level of health cover influence medical practices?

Carine Milcent*

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The system of access to health care in France is one of the most particular and complex systems in the world. The reimbursement of expenditure on a given medical service links together a social security system based on deductions that are made independent of the state of health, risk factors and co-morbidities of the individual involved and a complementary insurance system based on the state of health of its subscribers. At the end of 2021, the High Council for the Future of Health Insurance (HCAAM) was asked by the health minister to study the ways in which the system could be made more equally accessible while also making it more transparent...

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* PSE Professors
** PSE Doctoral Students

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