Seminars

Macroeconomics seminar

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Upcoming events

• Thursday 7 December 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  PRATO Marta (Bocconi) : *Career Choice of Entrepreneurs and the Rise of Smart Firms

  Ufuk Akcigit, Harun Alp, and Jeremy Pearce

  Abstract

  New technologies emerge and translate into economic growth through the team effort of inventors, entrepreneurs and production workers. This paper provides a unified life-cycle framework to characterize the population split across these three groups and connects the relationship between entrepreneurs and inventors to economic growth. We proceed by inking detailed micro-data from Denmark on individual entrepreneurs, inventors, workers, and firms to a novel quantitative endogenous growth model with occupational sorting and matching between inventors and entrepreneurs. Empirically, we find that while parental exposure is a key determinant of entrepreneurship, sorting into inventing occupations is primarily determined by education and IQ. Entrepreneurs with higher ability, as proxied by IQ, hire more inventors, hire inventors of higher ability, create more innovative firms and grow faster. Further, entrepreneurs who went to a school that has more high-IQ students hire more and better R&D workers, conditional on their own talent. We build the quantitative model based on this evidence and use it to characterize how entrepreneurs and inventors stimulate economic growth. Individuals self-select into different occupations and entrepreneurship depending on their characteristics (e.g., background, talent, preferences) and entrepreneurs assemble teams in order to innovate and grow firms. The model highlights the importance of assortative matching between talented entrepreneurs and inventors for the rise of successful firms. In addition to matching the data, the model admits various counterfactuals to study the underlying mechanics of entrepreneurs and inventors. We find that the assortative matching between entrepreneurs and R&D workers explains 7% of economic growth and 14% of firm growth, indicating the importance of matching the right team early in the firm.

• Thursday 14 December 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  MITMAN Kurt (IIES) : *

• Thursday 7 March 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BLOMHOFF HOLM Martin (U of Oslo ) : *

• Thursday 14 March 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BHANDARI Anmol (University of Minnesota) : *

• Thursday 21 March 2024

  PSE- 48 boulevard Jourdan, 75014 Paris, salle

  STORESLETTEN kjetil (U of Oslo and U of Minnesota) : International Macroeconomics Chair Lecture

• Thursday 28 March 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  GONZALES-AGUADO Eugenia (TSE) : *

• Thursday 4 April 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  *

• Thursday 25 April 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  GUNER Nezih (UAB, CEMFI) : *

• Thursday 2 May 2024 16:00-17:15

  CANTORE Cristiano (Sapienza University ) : *

• Thursday 16 May 2024

  PSE- 48 boulevard Jourdan, 75014 Paris, salle

  GUVENEN Fatih (University of Minnesota) : International Macroeconomics Chair Lecture

• Thursday 23 May 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  LUETTICKE Ralph (University of Tübingen) : *

• Thursday 30 May 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-09

  RACHEL Lukasz (UCL) : *

• Thursday 13 June 2024 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-15

  BILAL Adrien (Harvard) : *

• Thursday 20 June 2024

  FUCHS-SCHÜNDELN Nicola (Frankfurt) : International Macroeconomics Chair Lecture

Archives

• Thursday 30 November 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-07 (côté ENS)

  BALLEER Almut (RWTH Aachen University) : Biased expectations and labor market outcomes: Evidence from German survey data and implications for the East-West wage gap

  Abstract

  We measure individual bias in labor market expectations in German survey data and find that workers on average significantly overestimate their individual probabilities to separate from their job when employed as well to find a job when unemployed. These biases vary significantly between population groups. Most notably, East Germans are significantly more pessimistic than West Germans. We find a significantly negative relationship between the pessimistic bias in job separation expectations and wages, and a significantly positive relationship between optimistic bias in job finding expectations and reservation incomes. We interpret and quantify the effects of (such) expectation biases on the labor market equilibrium in a search and matching model of the labor market. Removing the biases could substantially increase wages and expected lifetime income in East Germany. The difference in biases in labor market expectations explains part of the East-West German wage gap.

• Thursday 16 November 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  KLEIN Paul (SU) : Innovation-driven growth in a multi-country world

  Abstract

  We develop a multi-country model of endogenous growth through innovation. The key feature of the model is that some ideas are globally applicable, while others are of local use only. Each country consists of a number of locations. There are innovation spillovers across locations and therefore across country borders. We argue that this model is both inherently plausible and consistent with an important set of growth facts. For instance, by computing a transition, we show that the model is capable of replicating a protracted decline in measured research productivity in the rich part of the world.

• Thursday 9 November 2023 14:00-15:30

  REICHLIN Lucrezia (LBS) : International Macroeconomics Chair Lecture

• Thursday 9 November 2023 12:00-13:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-07 (côté ENS)

  JO Yoon (TAMU) : Managing Household Inflation Expectations via Salient Prices: Using State-level Gas Tax Holidays.

  Ben Klopack and Steve Puller

• Thursday 19 October 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  VIOLANTE Gianluca (Princeton) : Job Amenity Shocks and Labor Reallocation

  Sadhika Bagga, Lukas Mann and Aysegul Sahin

• Tuesday 17 October 2023

  PSE- 48 boulevard Jourdan, 75014 Paris, Amphitheater

  PSE Macro Days on Oct 16-17

  Full text [pdf]

• Monday 16 October 2023

  PSE- 48 boulevard Jourdan, 75014 Paris, Amphitheater

  PSE Macro Days on Oct 16-17

  Full text [pdf]

• Thursday 12 October 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-01

  ELSBY Mike (University of Edinburgh) : Spatial Hysteresis

  Abstract

  We devise a tractable model of persistent heterogeneity in the propensity to move. The model admits analytical solutions for household values, migration flows, and the distribution of mobility types across space, a fundamental challenge posed by the environment. Equilibrium mobility is ordered: locations facing adverse (favorable) shocks shrink (grow) via population flows in order of mobility type, starting with the most mobile. Spatial gaps emerge not only in labor market outcomes, but also in the composition of mobility types. Spatial convergence involves closing both gaps, and generically takes longer. Labor market outcomes display endogenous history dependence whereby locations with greater shares of mobile types exhibit greater resilience to adverse shocks. Auspicious locations are heterogeneous and feature high population churn; inauspicious locations become increasingly homogeneous and sclerotic. Confronting the model with data on population flows dating back to the 1960s, we find support for these predictions.

• Thursday 28 September 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  STEPANCHUK Serhiy (University of Southampton) : Till the IRS Do Us Part: (Optimal) Taxation of Households

  Hans A. Holter and Dirk Krueger

  Full text [pdf]

• Thursday 21 September 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  MESTIERI Marti (CREI) : Structural Change in Innovation

  Danial Lashkari and Diego Comin

  Abstract

  We document structural change in innovation using historical patent data starting in the 1850s, and R&D expenditure and TFP growth since 1947. Innovation moved from agricultural sectors to manufacturing, and subsequently to services. To account for this structural change in innovation, we develop a multi-sector endogenous growth model in which the direction of innovation evolves endogenously. The model provides a general equilibrium framework that incorporates the classical demand-pull and technology-push drivers of innovation. Sectors differ in their innovation technologies, and the extent to which they benefit from knowledge spillovers (technology-push). Due to nonhomotheticity in demand, relative sectors’ market sizes move towards income-elastic sectors along the growth process (demand pull). A calibrated version of our model can account for the joint structural change in innovation and sectoral output observed in the US. Our framework can also be used to assess future paths of sectoral productivity (to evaluate the potential extent of Baumol’s disease) and optimal innovation policy.

• Monday 5 June 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-01

  FERNANDEZ Raquel (NYU) : Universal Basic Income: A Dynamic Assessment

  Diego Daruich

  Abstract

  Universal basic income (UBI) is an increasingly popular policy proposal but there is no evidence regarding its longer-term consequences. We find that UBI generates large welfare losses in a general equilibrium model with imperfect capital markets, labor market shocks, and intergenerational linkages via skill formation and transfers. This conclusion is robust to various alternative ways of financing UBI. By using observationally-equivalent models that eliminate different sources of endogenous dynamic linkages (equilibrium capital market and parental investment in child skills) we show that the latter are largely responsible for the negative welfare consequences.

• Thursday 1 June 2023 16:00

  PSE- 48 boulevard Jourdan, 75014 Paris, amphithéâtre

  JEANNE Olivier (John Hopkins) : Macroeconomic Risk Chair Annual Lecture

  Full text [pdf]

• Thursday 25 May 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-01

  FERRANTE Francesco (Federal Reserve Board) : Devaluations, Deposit Dollarization and Household Heterogeneity

  Nils Gornemann

  Abstract

  We study currency devaluation episodes in a small open economy heterogeneous households model with leverage-constrained banks. Our framework captures three stylized facts about liability dollarization in emerging economies: i) banks and firms borrow in foreign currency; ii) households save in dollar-denominated local bank deposits; and iii) such deposits are mainly held by wealthier households. The resulting currency mismatch in our economy causes an erosion of banks' net worth during a devaluation. We show that the subsequent macroeconomic decline is amplified by a strong reduction of consumption among poorer households in response to rising borrowing costs and falling labor income. Richer households are partially insured, as they are holding a larger share of their wealth in foreign currency denominated assets. We show that larger currency hedging by wealthier households deepens the recession and amplifies the negative implications for poorer agents. When deposit dollarization is high welfare gains can arise if monetary policy dampens a depreciation.

• Thursday 11 May 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  ANNICCHIARICO Barbara (University of Rome Tor Vergata) : Climate Policies, Macroprudential Regulation, and the Welfare Cost of Business Cycles

  Abstract

  We compare the performance of a carbon tax and a cap-and-trade scheme in a dynamic stochastic general equilibrium model that includes an environmental externality and agency problems associated with financial intermediation. Heterogeneous polluting firms purchase capital by combining their resources with loans from banks and are hit by idiosyncratic shocks that can lead them to default. We find that financial market distortions strongly affect the performance of climate policy throughout the business cycle. Welfare cost of business cycles are substantially lower under a cap-and-trade system than under a carbon tax if financial frictions are stringent, firm leverage is high, and agents are sufficiently risk-averse. The difference in welfare costs shrinks significantly in the presence of simple macroprudential policy rules, which reduce financial market distortions. These policies can go a long way in smoothing business cycle fluctuations and aligning the performance of price and quantity pollution policies, reducing the uncertainty inherent to the government's chosen climate policy tool.

• Thursday 20 April 2023 16:00-17:15

  On Zoom.

  DEW-BECKER Ian (Northwestern University) : Junior Research Prize Award: Tail Risk in Production Network

  Full text [pdf]

• Thursday 13 April 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-09

  PAVONI Nicola (Bocconi) : Economic Shocks and Populism: The Political Implications of Reference-Dependent Preferences

  Fausto Panunzi and Guido Tabellini

  Abstract

  This paper studies electoral competition over redistributive taxes between a safe incumbent and a risky opponent. With reference-dependent preferences, economi- cally disappointed voters become risk lovers, and hence are attracted by the more risky candidate. We show that, the equilibrium can display policy divergence: the intrinsically more risky candidate proposes lower taxes and is supported by a coali- tion of very rich and very disappointed voters, while the safe candidate proposes higher taxes. This can explain why new populist parties are often supported by eco- nomically dissatisfied voters and yet they run on economic policy platforms of low redistribution. We show that survey data on the German SOEP are consistent with our theoretical predictions on voters’ behavior.

• Thursday 6 April 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  PAZ-PARDO Gonzalo (ECB) : The aggregate and distributional implications of credit shocks on housing and rental markets

  Juan Castellanos and Andrew Hannon

  Abstract

  We propose a joint model of the aggregate housing and rental markets in which both house prices and rents are determined endogenously. Households can choose their housing tenure status (renters, homeowners, or landlords) depending on their age, wealth, and income. We use our model to study the introduction in Ireland in 2015 of macroprudential policies that limited loan-to-value (LTV) and loan-to-income (LTI) ratios of newly originated mortgages. The introduction of stringent LTV and LTI ratios mitigates house price growth, but increases rents and reduces homeownership rates. As a result, middle-income households are negatively affected.

• Thursday 30 March 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BILBIIE Florin (Cambridge) : Inequality and Business Cycles

  Giorgio Primiceri and Andrea Tambalotti

  Full text [pdf]

• Thursday 23 March 2023

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  International Macroeconomics Chair annual workshop

• Thursday 16 March 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  ENGBOM Niklas (New York University) : Misallocative Growth

  Full text [pdf]

• Thursday 9 March 2023 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  DOUENNE Thomas (Sciences Po) : Optimal Fiscal Policy in a Climate-Economy Model with Heterogeneous Households

  Albert Jan Hummel and Marcelo Pedroni

  Abstract

  We study optimal fiscal policy to address climate change and inequality. We theoretically characterize optimal carbon and income taxes, and quantify them for the U.S. economy with the climate model calibrated to DICE. In contrast to the representative-agent setting, we find that (i) the optimal carbon tax is on average equal to the Pigouvian level, and hardly ever deviates from it; (ii) inequality reduces the Pigouvian level, by 4% in our baseline calibration; (iii) the revenue from carbon taxes is optimally split halfway between reducing tax distortions and increasing transfers. Introducing optimal carbon taxation has progressive welfare effects and low-income households benefit even in the short run.

• Wednesday 22 February 2023 12:00-13:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-09

  BARNICHON Régis (San Francisco FED) : Evaluating 150 Years of US Monetary Policy

  Geert Mesters

  Abstract

  How can we evaluate the performance of a policy institution? An evaluation based on realized outcomes over time is flawed, since different time periods witness different economic environments and different economic or geopolitical shocks. In this work, we show that it is possible to quantitatively evaluate and rank policy performance using only two estimable statistics: (i) the impulse responses of the policy objectives to policy shocks, and (ii) the impulse responses of the same policy objectives to non-policy shocks, e.g., aggregate demand shocks, energy price shocks, productivity shocks, or war shocks. For a large class of models, the correlation between these two sets of impulse responses directly captures the performance of the policy institution: A correlation of zero indicates best performance ---the policy institution could not have reacted any better to the non-policy shocks that affected the economy---, while a correlation of one (in absolute value) indicates worst performance ---the institution could have (but did not) perfectly met its objectives by undoing the effects of the non-policy shocks---. We use our methodology to evaluate US monetary policy over the past 150 years; from the Gold standard period, the early Fed years and the Great Depression to the post World War II period and the post-Volcker regime.

  Full text [pdf]

• Thursday 15 December 2022

  Macroeconomics Risk Chair Annual Workshop: Housing

• Thursday 8 December 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  TAMON Asonuma (IMF) : Expenditure Consolidation and Sovereign Debt Restructurings: Front- or Back-loaded

  Abstract

  Sovereigns implement expenditure consolidation prior to debt crisis—“front-loaded”. We compile data on strategies of expenditure consolidation and restructurings in 1975–2020. We find that (i) expenditure consolidation precedes—front-loaded—preemptive restructuring, while occurs upon post-default restructurings—back-loaded—; and (ii) public investment and restructuring duration differ between preemptive and post-default restructurings. We construct a theoretical sovereign debt model that embeds endogenous choice of preemptive and post-default renegotiations, public capital accumulation, and expenditure composition. The model quantitatively shows the sovereign’s choice of front-loaded expenditure consolidation and preemptive restructuring results in quick debt settlement and public investment recovery. Data support theoretical predictions.

• Tuesday 29 November 2022

  International Macroeconomics Chair Workshop: Historical Macroeconomics

• Monday 28 November 2022

  International Macroeconomics Chair Workshop: Historical Macroeconomics

• Thursday 24 November 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-07 (côté ENS)

  MULLINS Joseph (Minnesota) : Designing Cash Transfers in the Presence of Children’s Human Capital Formation

  Abstract

  This paper finds that accounting for the human capital development of children has a quanti- tatively large effect on the true costs and benefits of providing cash assistance to single mothers in the United States. A dynamic model of work, welfare participation, and parental investment in children introduces a formal apparatus for calculating costs and benefits when individuals respond to incentives. The model provides a tractable outcome equation in which a policy’s effect on child skills can be understood through its impact on two economic resources in the household – time and money – and the share of each resource as factors in the production of skills. These key causal parameters are cleanly identified by policy variation through the 1990s. The model also admits simple and interpretable formulae for optimal nonlinear transfers in the style of Mirrlees (1971), with novel features arising when child skill formation is accounted for. Using a broadly conservative empirical strategy, estimates imply that optimal transfers are about 20% more generous than the US benchmark, and shaped very differently. In contrast to current policies, the optimal policy dis- courages labor supply at the bottom of the income distribution due to the costly estimated impacts of work on child development. The finding underscores the importance of reconciling results in the literature on the developmental effects of maternal employment. Finally, a counterfactual model exercise suggests that changes to the welfare and tax environment after 1996 had negative average effects both on maternal welfare and child skill outcomes, with a significant degree of redistribution across latent dimensions.

  Full text [pdf]

• Thursday 17 November 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-01

  PORZIO Tommaso (Columbia Business School) : Transforming Institutions: Labor Reallocation and Wage growth in a Reunified Germany

  Abstract

  How do institutions affect economic performance? We exploit a unique historical episode,the German Reunification, to investigate how this radical change transformed East Ger-many’s labor market allocation, igniting wage growth in the early years after reunification.Using matched employer-employee data constructed from the universe of German socialsecurity records, we show that the sharp growth in East German wages strongly correlateswith a rapid reallocation of workers across plantswithinEast Germany. Moreover, reallo-cation was disproportionately larger among older cohorts, suggesting that longer exposureto communist institutions led to more severe misallocation: In a competitive market, theseolder workers would have switched jobs or been fired at a younger age. By the same token,only East German plants that already existed at the time of reunification display different re-allocation patterns compared to their Western counterparts: Large plants downsize, indicat-ing that they had previously been inefficiently large, while all plants experience significantlevels of worker turnover. We find that plants with larger levels of reallocation experiencelarger wage growth. This provides rare, direct empirical evidence that the reallocation ofworkers — both within and across plants— spurred by new labor market institutions, wasconsequential for wage growth.

• Thursday 10 November 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  JAROSCH Gregor (Duke) : Granular Search, Market Structure, and Wages

  Jan Sebastian Nimczik and Isaac Sorkin

  Abstract

  We develop a model where labor market structure affects the division of surplus between firms and workers. In a model of random search and large employers, workers might apply to another job controlled by the same employer in the future. This possibility endows firms with size-based market power. The reason is that outside options are truly outside the firm: firms do not compete with their own vacancies. Hence, a worker’s outside option is worse when bargaining with a larger firm, and wages depend on market structure. We calibrate the model to Austrian data and find that such size-based market power depresses wages.

• Thursday 20 October 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  DEBORTOLI Davide (UPF) : Idiosyncratic Income Risk and Aggregate Fluctuations

  J. Galí

  Abstract

  We study the role of idiosyncratic income shocks for aggregate fluctuations within a simple heterogeneous household framework with no binding borrowing constraints. We show that the presence of idiosyncratic income shocks affects the economy’s response to an aggregate shock in a way that can be captured by a consumption weighted average of the changes in uncertainty generated by the shock. We apply this framework to two example economies —an endowment economy and a New Keynesian economy— and show that under plausible calibrations the impact of idiosyncratic income shocks on aggregate fluctuations is quantitatively small, since most of the changes in uncertainty are concentrated among poorer (low consumption) households.

• Thursday 13 October 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-01

  CHALLE Edouard (European University Institute) : Inequality and optimal exchange-rate policy

  Sushant Acharya

  Abstract

  We study optimal exchange rate stabilization in a tractable Small Open HANK Economy with endogenous consumption risk and rich cross-sectional inequalities. Besides the closed-economy channels, aggregate demand management operates through the real exchange rate, which affects both GDP (through expenditure switching) and national income (through the relative price of foreign goods) and ultimately feeds back to domestic cross-sectional heterogeneity. We show that these open-economy channels require stabilizing the exchange rate substantially more in HANK than in RANK after aggregate productivity shocks; this is because stabilizing the exchange rate mitigates expenditure switching and the implied fluctuations in domestic inequalities. The same is true in response to capital-flow shocks, provided that agents are sufficiently risk averse.

• Thursday 6 October 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-14

  BOYER Pierre (CREST) : The taxation of couples

  Felix Bierbrauer, Andreas Peichl, Daniel Weishaar

  Abstract

  This paper studies the tax treatment of singles and couples. We use two different approaches. One is tailored to the analysis of systems that stick to the principle that the tax base for couples is the sum of their incomes. One is tailored to the analysis of reforms towards individual taxation. We study the US federal income tax since the 1960s through the lens of this framework. We find that, for the recent past, realizing efficiency gains requires to lower marginal tax rates for secondary earners. We also find that revenue-neutral reforms towards individual taxation are in the interest of couples with high secondary earnings while couples with low secondary earnings are worse off. The support for such a reform recently passed the majority threshold. It is rejected, however, by a Rawlsian social welfare function. Thus, there is a tension between Rawlsian and Feminist notions of social welfare.

• Thursday 29 September 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-14

  RANCIÈRE Romain (USC) : International Diversification, Reallocation, and the Labor Share

  Joel M. David, David Zeke

  Abstract

  How does increasing international financial diversification affect firm-level and aggre- gate labor shares? We answer this question using a novel framework of firm labor choice under uncertainty. The theory predicts that international risk sharing leads to a realloca- tion of labor towards riskier/low labor share firms and a rise in the median (or within-firm) labor share, matching key micro-level facts. We use firm-level and cross-country data to document a number of empirical patterns consistent with the theory, namely: (i) riskier firms have lower labor shares, (ii) international diversification is associated with reallo- cation towards risky firms and declines in the aggregate labor share, and (iii) industries with greater heterogeneity have higher sensitivity of their labor share to international diversification.

  Full text [pdf]

• Thursday 22 September 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BALEY Isaac (UPF) : Cancelled

  Andrés Blanco

  Abstract

  The Macroeconomics of Partial Irreversibility We investigate the macroeconomic effects of partially irreversible investment arising from a wedge between the buying and selling price of capital. We derive sufficient statistics that characterize the implications of irreversibility for three long-run macroeconomic outcomes— capital allocation, capital valuation, and capital fluctuations. Measuring these statistics with investment microdata, we find that irreversibility distorts the allocation of capital, lowers capital valuation, and increases the persistence of capital fluctuations. Corporate income tax cuts, by lowering the deductibility of capital losses due to the price wedge, effectively increase irreversibility and structurally change long-run capital behavior.

  Full text [pdf]

• Thursday 30 June 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-02 (côté ENS)

  FAVERO Carlo (Bocconi University) : Creating a Safe Asset without Debt Mutualization: the Opportunity of a European Debt Agency

  Massimo Amato, Everardo Belloni and Lucio Gobbi

  Full text [pdf]

• Thursday 23 June 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-15

  GABAIX Xavier (Harvard) : The Complexity of Economic Decisions: Theory and Evidence

  Thomas Graeber

  Abstract

  We propose a tractable theory of the complexity of economic decisions, and validate its main features experimentally. The primitives are the complexity of basic cognitive operations, such as simple mental algebra. The complexity of richer decision tasks is determined by their composition of basic operations. We apply these notions to a few prototypical economic decisions, such as an intertemporal consumption problem and a tax optimization problem. We delineate other applications to macroeconomics.

• Friday 10 June 2022

  ROGOFF Ken (Harvard) : With Lecture Chaire Banque de France

• Thursday 9 June 2022 11:00-12:00

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-15

  KURUSCU Burhan (University of Toronto) : Taxing Wealth and Capital Income when Returns are Heterogeneous

  Fatih Guvenen, Gueorgui Kambourov, and Sergio Ocampo Diaz

  Abstract

  When is a wealth tax preferable to a capital income tax? We study this question theoretically in an infinite-horizon model with entrepreneurs and workers, in which entrepreneurial firms are subject to idiosyncratic productivity shocks and collateral constraints. There are two types of steady-state equilibria. The first one—which emerges under a wide set of plausible parameter values—is inefficient and exhibits capital misallocation and heterogeneous returns. The second one is efficient and exhibits homogeneous returns, but requires implausibly lax borrowing limits. In the heterogeneous returns equilibrium, replacing a capital income tax with a wealth tax increases steady-state aggregate productivity and output if (and only if) entrepreneurial productivity is positively auto-correlated. The gains result from the “use-it-or-lose-it” effect, which causes a reallocation of capital from entrepreneurs with low productivity to those with high productivity. We provide necessary and sufficient conditions for a switch to wealth taxes to imply higher average welfare, which amount to a lower bound on the capital-elasticity of output,?—around 1/3 for most parameter combinations. We then study the optimal mix when both tax instruments can be used jointly to maximize welfare. Optimal policy depends on two thresholds. When ? is sufficiently high, optimal policy involves a positive wealth taxand a negative capital income tax (a subsidy); the sign flips when ? is sufficiently low, and both taxes are positive between these two thresholds. Finally, we consider extensions that introduce a corporate sector, rent-seeking behavior, and endogenous entrepreneurial effort.

  Full text [pdf]

• Tuesday 7 June 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  PAPPA Evi (university carlos III) : The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery

  Morteza Ghomi, Isabel Micó-Millán,

  Full text [pdf]

• Thursday 2 June 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-09

  RUHL Kim (Wisconsin Madison) : The Aggregate Effects of Supply Chain Disruptions

  Abstract

  We study the aggregate effects of domestic and international supply chain disruptions similar to those in the post-Pandemic period in a two-country heterogeneous firm model with a rich set of supply chain frictions: shipping delays, fixed order costs, storage costs, uncertain delivery and uncertain demand. These frictions lead firms to hold inventories that depend on the source of supply, domestic or imported, and these inventories influence price setting. We show that transitory increases to aggregate shipping times similar to those in 2021 can be quite contractionary and raise prices, particularly for goods intensive in delayed inputs. These effects are larger when inventories are already at low levels, as in the U.S. and the World in 2021. The short-run effects on output are mitigated if they coincide with stimulus, but these lead to longer term contractions in consumption as more future production goes to rebuilding stocks. The aggregate effects on employment and production are much larger when there is an input-output structure as delays constrain production. The restocking cycle induced by these shocks is a source of endogenous persistence.

• Wednesday 25 May 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  TELES Pedro (Catolica Lisboa) : Self Fulfilling Debt Crises with Long Stagnations

• Thursday 19 May 2022 17:30-18:30

  Using Zoom

  VELDKAMP Laura (Columbia) : Macroeconomic Risk Chair, SCOR-PSE Annual Lecture

• Thursday 19 May 2022 12:30-13:30

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-09

  ZIDAR Owen (Princeton) : America's Missing Entrepreneurs

  Raj Chetty, John Van Reenen, and Eric Zwick

  Abstract

  joint with Labor and Public Economics We use de-identified tax returns to characterize entrepreneurship across the American population since the late 1990s. Our longitudinal data permit an analysis of which new firms end up being highly successful, allowing us to distinguish startups that are destined to remain as small businesses from star job creators. We develop a novel measure of the returns to founding owners using a high-dimensional matching strategy, which tracks total income in the decade following entrepreneurial entry relative to that for a similar matched worker. In the first part of the paper, we document new facts on the lifecycle of star entrepreneurs, including their family backgrounds, where they grew up, and their labor market trajectories prior to entry. Star entrepreneurs are disproportionately white, male, and drawn from high-income families. Entrepreneurship pays at the median and mean for those who choose to enter, though under-represented groups (URGs) consistently earn lower returns than their over-represented counterparts. Higher variance in entrepreneurial returns comes primarily through the outside option in the right tail of the earnings distribution. In the second part of the paper, we develop three research designs to evaluate the role of alternative mechanisms that might account for different entry rates and returns for URGs. First, using a sample of early employees at highly successful startups, we estimate a substantial causal effect of liquid wealth on subsequent entry. However, liquidity appears insufficient to close entry gaps. Second, using local shocks to labor demand early in a person's career, we estimate the causal effect of experience in entrepreneurial industries on subsequent entry. Finally, using a movers research design, we find that children exposed to more entrepreneurs while they are growing up are more likely to start businesses themselves. We use these multiple research designs to decompose the reduced form effects. For example, the effect of labor market experience can be separated into a direct effect and an effect operating through accumulated savings. Our results support the class of explanations that highlight pipeline factors as the key supply-side constraints on the number of star URG entrepreneurs. Such factors limit the number of potential entrepreneurs who might be responsive to later-stage interventions. For example, policies that target the point of entry, such as liquidity support or tax incentives, are unlikely to close entry gaps and narrow return differences.

• Thursday 12 May 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BRONER Fernando (CREI Barcelona) : Bilateral International Investments: The Big Sur?

  Abstract

  Using country-to-country data, this paper documents a set of novel stylized facts about the rise of the South in global finance. The paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment in debt and equity, foreign direct investment, and international reserves. The main findings are that between 2001 and 2018 investments involving the South, and especially within the South, have grown faster than those within the North. By 2018, the South was involved in 34% of total international investments. The largest increases occurred in portfolio investment and international reserves, the smallest in banking. The growth of financial investments involving the South is often faster than that of GDP. These developments are observed across subregions of the South, beyond China and independently of offshore financial centers. The intensive margin contributed more than the extensive margin to the increasing weight of the South in international investments.

• Thursday 5 May 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-09

  HAGEDORN Marcus (University of Oslo) : A Nominal Demand Augmented Phillips Curve

  Abstract

  The New Keynesian Phillips curve (NKPC) explains inflation through current and future marginal costs and inflation expectations based on a time-dependent pricing model. I show that state-dependent menu cost pricing models give rise to a nominal demand augmented Phillips curve (NDPC), which adds nominal demand as an additional explanatory variable of inflation. I then estimate the NDPC using cross-sectional data for U.S. states. My estimates indicate that nominal demand is a significant determinant of inflation, that nominal demand is not a proxy for real marginal costs, and that nominal demand cannot be replaced with real demand. Instead, from an empirical NKPC perspective nominal demand maps into cost-push shocks. My findings on the role of nominal demand thus offer a new perspective on explaining inflation during several historical U.S. episodes and across countries. The conclusion offers some thoughts on policy implications.

• Thursday 21 April 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  NISTICO Salvatore (Sapienza University) : The Economics of Helicopter Money

  Pierpaolo Benigno

  Abstract

  An economy plagued by a slump and in a liquidity trap has some options to exit the crisis. We discuss helicopter money and other equivalent policies that can reflate the economy and boost consumption. Traditional helicopter money, via the joint coopera- tion between the treasury and the central bank, depends critically on the central bank fully guaranteeing treasury’s debt. We show that the central bank can do helicopter money on its own, without any treasury’s involvement.

• Thursday 14 April 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  ZANETTI Francesco (University of Oxford) : STATE DEPENDENCE OF FISCAL MULTIPLIERS: THE SOURCE OF FLUCTUATIONS MATTERS

  Mishel Ghassibe

  Full text [pdf]

• Thursday 7 April 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-14

  IOVINO luigi (Bocconi University) : Corporate Taxation and Carbon Emissions

  Thorsten Martin and Julien Sauvagnat

  Abstract

  We study the relationship between corporate taxation and carbon emissions in the U.S. We find that dirty firms pay lower profit taxes – the opposite of what optimal taxation of negative externalities prescribes. This relationship is driven by dirty firms benefiting disproportionately more from the tax shield of debt due to their higher leverage. In turn, we show that the higher leverage of dirty firms is explained by their higher asset tangibility. We embed our estimates into a general equilibrium framework and show that eliminating the tax-advantage of debt reduces carbon emissions by about 3.9%, while aggregate output falls by roughly 2.2%.

• Thursday 31 March 2022

  LANE Philip (ECB) : With Lecture Chaire Banque de France

• Thursday 24 March 2022 17:30-18:30

  Zoom

  EDOUARD SCHAAL AND Mathieu Taschereau-Dumouchel : Macroeconomic Risk Chair, SCOR-PSE Junior Research Prize 2022

• Thursday 24 March 2022 16:00-17:15

  Using Zoom

  SCHMITT-GROHE Stéphanie (Columbia) : Optimal Bank Reserve Remuneration and Capital Control Policy

  Chun-Che Chi and Martin Uribe

  Abstract

  A central prediction of open economy models with a pecuniary externality due to a collateral constraint is that the unregulated economy overborrows relative to what occurs under optimal capital controls. A maintained assumption in this literature is that households borrow directly from foreign lenders. This paper shows that in a more realistic setting in which foreign lending to households is intermediated by domestic banks and in which the government has access to capital controls and interest on bank reserves, the unregulated economy underborrows. Under optimal policy, the central bank injects reserves during recessions. In this way, when the collateral constraint binds, the central bank uncouples household deleveraging from economy-wide delever- aging, which results in a higher average level of external debt. The paper documents that during the 2007-2009 global financial crisis the lending spread in emerging and developed economies displayed a muted response. This fact is consistent with a decline in the demand rather than in the supply of loans and gives credence to models in which the collateral constraint is placed at the level of the nonfinancial sector as opposed to at the level of the bank.

  Full text [pdf]

• Thursday 17 March 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  LEVCHENKO Andrei (University of Michigan) : News Media and International Fluctuations

  Ha Bui, University of Texas at Austin and Zhen Huo, Yale University

  Abstract

  We develop a multi-country multi-sector model with global value chains and informational frictions. Producers in a sector do not perfectly observe shocks to other countries and sectors, and their output decisions respond to beliefs about the productivity innovations worldwide. To discipline the agents’ information sets, we collect a novel quarterly dataset of the frequencies of industry-specific economic news reports by leading newspapers in the G7 plus Spain. Newspapers in each country publish articles on select events in both domestic and partner-country sectors, and not every event is reported worldwide. We show in reduced-form regressions that (i) greater news coverage is associated with smaller GDP forecast errors; and (ii) sectors more covered in the news exhibit greater business cycle comovement, even controlling for their trade intensity. We then use the news coverage data to discipline the key parameters in the quantitative model, namely the precision of the public signals about country-sector productivities. Noise shocks about TFP throughout the global value chain can be a quantitatively important source of international GDP comovement. Furthermore, these shocks would appear as labor wedges in standard models without dispersed information.

  Full text [pdf]

• Thursday 10 March 2022 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-01

  RENNE Jean-Paul (HEC Lausanne) : FISCAL LIMITS AND THE PRICING OF EUROBONDS

  KEVIN PALLARA

  Abstract

  This paper proposes a methodology to price bonds jointly issued by a group of countries—Eurobonds in the euro-area context. We consider two types of bonds: the first is backed by several and joint (SJG) guarantees, the second features several but not joint (SNJG) guarantees. The pricing of SJG and SNJG bonds reflects different assumptions regarding the pooling of debtors’ fiscal resources. We estimate fiscal limits for the four largest euro-area economies over 2008-2021 and deduce counterfactual Eurobond prices. Amid the euro-debt crisis, 5-year SNJG bond yield spreads would have been about three times larger than SJG ones. Hence, issuing SJG bonds would result in gains at the ag-gregate level. We finally show that (i) the gains stemming from the issuance of SJG bonds could be shared among countries through post-issuance redistribu- tion schemes and that (ii) these schemes may alleviate the reduction in market discipline resulting from common bonds issuances.

  Full text [pdf]

• Thursday 3 March 2022

  PANIZZA Ugo (Graduate Institute Geneva) : With Lecture Chaire Banque de France

  Full text [pdf]

• Thursday 4 November 2021 16:00-17:15

  Using Zoom

  ZEIRA Joseph (Hebrew University Jerusalem) : The Israeli Economy: Interesting Lessons from a Country Hit by Large Shocks

  Full text [pdf]

• Thursday 7 October 2021 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R2-21

  PIGUILLEM Facundo (Einaudi Institute for Economics and Finance) : Sticky Spending, Sequestration, and Government Debt

  Alessandro Riboni

  Abstract

  Once established, government spending programs tend to continue. Spending inertia can lead to unsustainable debt levels that require fiscal stabilization, such as “sequestration.” We develop a political economy model of debt with sticky spending by assuming that the government must maintain a fraction of past spending. We show that inertia insures against the risk of political turnover, which may reduce politicians’ incentives to accumulate debt. However, if preexisting commitments are large, as in the current U.S. context, inertia exacerbates incentives to increase debt; faced with the prospect of stabilization, the government overspends to “dilute” the spending commitments of past administrations.

  Full text [pdf]

• Thursday 30 September 2021 16:00-17:15

  PSE- 48 boulevard Jourdan, 75014 Paris, salle R1-14

  CROWLEY Meredith (University of Cambridge) : Dominant Currency Dynamics: Evidence on Dollar-invoicing from UK Exporters

  Han, L. and Son, M

  Abstract

  How do the choices of individual firms contribute to the dominance of a currency in global trade? Using export transactions data from the UK over 2010-2016, we document strong evidence of two mechanisms that promote the use of a dominant currency: (1) prior experience: the probability that a firm invoices its exports to a new market in a dominant currency is increasing in the number of years the firm has used the dominant currency in its existing markets; (2) strategic complementarity: a firm is more likely to invoice its exports in the currency chosen by the majority of its competitors in a foreign destination market in order to stabilize its residual demand in that market. We show that the introduction of a fixed cost of currency management into a model of invoicing currency choice yields dynamic paths of currency choice that match our empirical findings.

  Full text [pdf]

• Thursday 10 June 2021 16:00-17:30

  Using Zoom

  WANG Zheng (Aix-Marseille School Of Economics) : Dynamic Oligopoly and Price Stickiness

  Iván Werning

  Abstract

  How does market concentration affect the potency of monetary policy? To tackle this question we build a model with oligopolistic sectors. We provide a formula for the response of aggregate output to monetary shocks in terms of demand elasticities, concentration, and markups. We calibrate our model to the evidence on pass-through, and find that higher concentration significantly am- plifies non-neutrality. To isolate the strategic effects of oligopoly, we compare our model to one with monopolistic firms and modified consumer preferences that ensure firms face comparable residual demands. Finally, the Phillips curve for our model displays inflation persistence and endogenous cost-push shocks.

  Full text [pdf]

• Monday 7 June 2021 16:00-17:40

  ZINGALES Luigi (The University of Chicago Booth School of Business) : Can Democracy Survive a Concentrated Economy?

  Abstract

  Annual Lecture of the SCOR-PSE Chair

  Full text [pdf]

• Thursday 3 June 2021 16:00-17:30

  Using Zoom

  WALLENIUS Johanna (Stockholm School of Economics) : Can Wealth Buy Health? A Model of Pecuniary and Non-Pecuniary Investments in Health

  Panos Margaris

  Abstract

  In this paper we develop and estimate a life cycle model that features pecuniary and non-pecuniary investments in health, along with a cognitive ability gradient associated with said investments, in order to rationalize the socioeconomic gradients in health and life expectancy in the United States. Agents accumulate health capital, which affects the level of utility, labor productivity, the distribution of medical spending shocks and life expectancy. We find that the cognitive ability gradient to health investments and the differences in lifetime income account for the lion's share of the observed life expectancy gap. Providing universal health insurance coverage has heterogeneous effects, depending on the progressivity of the financing mechanism, and at best results in a modest decrease in the life expectancy gap.

• Thursday 20 May 2021 16:00-17:30

  Using Zoom

  OSOTIMEHIN Sophie (Université du Quebec à Montreal) : Misallocation and Intersectoral linkages

  Latchezar Popov

  Abstract

  We analytically characterize the aggregate productivity loss from distortions in the presence of sectoral production linkages. We find that accounting for low input substitutability reduces the productivity loss and the impact of intermediate-input suppliers. Moreover, with elasticities below one (i.e. below Cobb-Douglas), sectoral linkages do not systematically amplify the productivity loss. We quantify these effects in the context of the distortions caused by market power, using industry- level data for 35 countries. With our benchmark calibration, the median aggregate productivity loss from industry-level markups is 1.2; assuming Cobb-Douglas elasticities would lead to overestimating the productivity loss by a factor of 1.8.

• Thursday 6 May 2021 16:00-17:30

  Using Zoom

  NDIAYE Abdoulaye (NYU Stern) : Redistribution with Performance Pay

  Paweª Doligalski, Nicolas Werquin

  Abstract

  Half of the jobs in the U.S. feature pay-for-performance. We study nonlinear in-come taxation in a model where such labor contracts arise as a result of moral hazardfrictions within rms. We derive novel formulas for the incidence of arbitrarily nonlin-ear reforms of a given tax code on both average earnings and their sensitivity to outputrisk. We show theoretically and quantitatively that, following an increase in tax pro-gressivity, the higher sensitivity of earnings to performance caused by the crowding-outof private insurance is almost fully oset by a countervailing performance-pay eectdriven by labor supply responses. As a result, earnings risk is hardly aected by pol-icy. We then turn to the normative analysis of a government that levies taxes andtransfers to redistribute income across workers with dierent levels of uninsurable pro-ductivity. We nd that setting taxes without accounting for the endogeneity of privateinsurance is close to optimal. Thus, the common concern that standard models of tax-ation underestimate the cost of redistribution is, in the context of performance-basedcompensation, overblown.

  Full text [pdf]

• Friday 23 April 2021 17:30-19:00

  Online

  ITSKHOKI Oleg (UCLA) : Dominant currencies: How firms choose currency invoicing and why it matters. Joint with Lecture Chaire Banque de France

  Mary Amiti, Jozef Konings

  Abstract

  The currency of invoicing in international trade is central for the international transmissionof shocks and macroeconomic policies. Using a new dataset on currency invoicing for Belgian firms, we analyze how firms make their currency choice, for both exports and imports, and the implications of this choice for exchange rate pass-through into prices and quantities. We derive our estimating equations from a theoretical framework that features variable markups, international input sourcing, and staggered price setting with endogenous currency choice, and also allowingfor the dominant currency choice. Our structural specification provides a new test of the allocativeconsequences of nominal rigidities, by estimating the treatment effect of foreign-currency pricestickiness on the dynamic response of prices and quantities to exchange rate changes, controlling for the endogeneity of the firm’s currency choice. We show that flexible-price determinants of exchange rate pass-through are also the key firm characteristics that determine currency choice.In particular, small non-importing firms tend to price their exports in euros (producer currency) and exhibit close to complete exchange-rate pass-through into destination prices at all horizons. Incontrast, large import-intensive firms tend to denominate their exports in foreign currencies, and especially in the US dollar, exhibiting a lower pass-through of the euro-destination exchange rate and a pronounced sensitivity to the dollar-destination exchange rate. Finally, the effects of foreign-currency price stickiness are still significant beyond the one-year horizon, but gradually dissipate in the long run, consistent with sticky price models of currency choice.

  Full text [pdf]

• Thursday 8 April 2021 16:00-17:30

  Using Zoom

  SUÁREZ SERRATO Juan Carlos (Duke University) : Regulating Conglomerates: Evidence from an Energy Conservation Program in China

  Abstract

  How does energy regulation affect production and energy use within conglomerates? We study the effects of a prominent program aimed at reducing the energy use of large Chinese companies. Difference-in-differences analyses show that regulated firms significantly reduced their energy consumption and output but did not increase their energy efficiency. Using detailed business registration data, we link regulated firms to non-regulated firms that are part of the same conglomerate. We estimate large spillovers on cross-owned non-regulated firms, which increased both output and energy use. We then specify and calibrate a model of conglomerate production that fits our setting and the estimated effects of the regulation. The model quantifies the importance of conglomerate reallocation for aggregate outcomes, the shadow cost of the regulation, and the efficiency gains from using public information on business networks to improve the design of energy regulation.

• Thursday 1 April 2021 16:00-17:30

  Using Zoom

  PACIELLO Luigi (EIEF) : Firm Adjustment in Worker Flows and Prices

• Thursday 25 March 2021 17:00-18:15

  Using Zoom

  PETERMAN William (Federal Reserve Board) : Macroeconomic Implications of Inequality and Income Risk

  Abstract

  We explore the relationship between measured income and wealth inequality, income risk, and the macroeconomy in a nonlinear overlapping-generations model in which households face uncertain streams of labor income and returns on their savings. To manage those risks, households can apportion their savings to a bond, whose return is safe and identical across households, and a productive asset, whose return is uncertain and can differ persistently across households. We find that greater inequality in households' labor income and the return on their savings is generally associated with higher measured wealth inequality, a lower risk-free rate, and higher risk premiums. These findings suggest that the factors behind the observed rise in inequality over the past few decades might also have contributed to the observed fall in the risk-free rate and widening gap between the risk-free rate and the rate of return on capital. We discuss how these and other macroeconomic effects depend on the nature of income risk and portfolio choices.

• Thursday 18 March 2021 10:00-11:30

  REIS Ricardo (London School of Economics) : The constraint on public debt when r is smaller than g but g is smaller than m: joint with Lecture Chaire Banque de France

  Full text [pdf]

• Thursday 11 March 2021 16:00-17:30

  Using Zoom

  LACAVA Chiara ( Goethe University Frankfurt) : Why are some regions so much more productive than others?

  Full text [pdf]

• Thursday 4 March 2021 16:00-17:30

  Using Zoom

  PARODI Francesca (Collegio Carlo Alberto) : Consumption Tax Cuts in a Recession

  Abstract

  Consumption taxes are often used across OECD countries as fiscal stimulus tools during recessions. In this paper, I use an estimated structural life-cycle model featuring multiple consumption categories to assess the effectiveness of temporary cuts to the Value Added Tax (VAT) rates on non-durable luxuries and durables as stimulus instruments. I find a 5% increase in consumption of non-durable luxuries in response to a temporary reduction of their VAT rate by 60% and an 80% increase in purchases of durables in response to a temporary cut of their VAT rate by 30%. The larger effect on durable purchases is due to intertemporal substitution and is driven by young and wealthy households bringing forward future durable purchases. Due to the partial irreversibility feature of durables, this effect is dampened if households anticipate higher future aggregate uncertainty.

• Thursday 19 November 2020 16:00-17:15

  USING ZOOM

  RAVN Morten (UCL) : Financial Frictions: Macro vs Micro Volatility

  Seungcheol Lee and Ralph Luetticke

  Full text [pdf]

• Thursday 12 November 2020 16:00-17:15

  Using Zoom

  OTTONELLO Pablo (Columbia) : THE MICRO ANATOMY OF MACRO CONSUMPTION ADJUSTMENTS

  Rafael Guntin and Diego Perez

  Full text [pdf]

• Thursday 5 November 2020 16:00-17:15

  USING ZOOM

  LIPPI Francesco (EIEF) : The Macroeconomics of Sticky Prices with Generalized Hazard Functions

  Fernando Alvarez and Aleksei Oskolkov

  Abstract

  We give a thorough analytic characterization of a large class of sticky-price models where the firm's price setting behavior is described by a generalized hazard function. Such a function provides a tractable description of the firm's price setting behavior and allows for a vast variety of empirical hazards to be fitted. This setup is microfounded by random menu costs as in Caballero and Engel (1993) or, alternatively, by information frictions as in Woodford (2009). We establish two main results. First, we show how to identify all the primitives of the model, including the distribution of the fundamental adjustment costs and the implied generalized hazard function, using the distribution of price changes or the distribution of spell durations. Second, we derive a sufficient statistic for the aggregate effect of a monetary shock: given an arbitrary generalized hazard function, the cumulative impulse response of output to a once-and-for-all monetary shock is proportional to the ratio of the kurtosis of the steady-state distribution of price changes over the frequency of price adjustment. We prove that Calvo's model yields the upper bound and Golosov and Lucas's model the lower bound on this measure within the class of random menu cost models.

  Full text [pdf]

• Thursday 15 October 2020 16:00-17:30

  Using zoom

  IOVINO luigi (Bocconi) : Social Insurance, Information Revelation, and Lack of Commitment

  Mikhail Golosov (University of Chicago)

  Abstract

  We consider optimal public provision of unemployment insurance when governmentís ability to commit is imperfect. Unemployed persons privately observe arrivals of job opportunities and choose probabilities of communicating this information to the government. Imperfect commitment implies that full information revelation is generally suboptimal. We define anotion of the social value of information and show that, due to the incentive constraints, it is a convex function of the information revealed. In the optimum each person is provided with an incentive to either reveal his private information fully or not reveal any of it, but the allocation of these incentives may be stochastic. In dynamic economies unemployed persons who enter a period with higher continuation utilities reveal their private information with lower probabilities. The optimal contract can be decentralized by a joint system of unemployment and disability benefits in a way that resembles how these systems are used in practice in developed countries.

  Full text [pdf]

• Thursday 8 October 2020 16:00-17:30

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-14

  GABALLO Gaetano (HEC) : Learning by Shopping: Consumers' Expectations and Monetary Shocks

  Luigi Paciello (HEC, EIEF and CEPR)

  Abstract

  New micro-evidence shows that households’ inflation expectations are influenced by the prices they see while shopping. This paper studies the implications of the signaling power of prices for the optimal pricing of firms, the propagation of monetary shocks and the effectiveness of communication policies. In our theory, consumers see the prices posted in their local markets and then choose whether to exert effort to buy at the cheapest price in a competitive market. Upon a rise in local prices, consumers are confused about the aggregate or local nature of the shock, and so on whether switching is worth. Because of this confusion, an otherwise-neutral money shock coordinates consumers’ switching away from high-markup firms and increases aggregate consumption. We demonstrate the generality of this result when consumers’ demand has standard properties and firms’ pricing is friction-less. Thus, the model is able to replicate the empirical correlation of inflation and economic activity overturning the standard New Keynesian logic based on firms’ sticky prices. We embed this mechanism in a fully micro-founded general equilibrium model to show that nominal price level stabilization has first-order impact on Welfare. For realistic calibrations, providing more precise information about aggregate inflation is more valuable when mostly consumers, rather than firms, absorb it, whereas it could even be counter-productive otherwise.

• Thursday 1 October 2020 16:00-17:30

  Using Zoom

  MUELLER Gernot (Tuebingen) : The exchange-rate insulation puzzle

  Giancarlo Corsetti, Keith Kuester and Sebastian Schmidt

  Abstract

  According to the received wisdom, flexible exchange rates insulate a country from foreign shocks. This notion is well grounded in theory, from the classics (Meade 1951, Friedman 1953) to the more recent dominant currency paradigm (Gopinath et al 2020). We confront it with new evidence from Europe. Specifically, we study how monetary and financial shocks that originate the euro area spill over to its neighbor countries. We exploit the variation of the exchange rate regime across time and countries to assess whether it alters the spillovers: it does not – flexible exchange rates fail to provide insulation against euro area shocks. This result is robust across a number of specifications and holds up once we control for global financial conditions. Based on standard theory, we offer a simple explanation for the lack of insulation: if central banks pursue a inflation targeting strategy based on consumer prices, the response of the exchange rate to foreign shock is muted and there is hardly any more insulation than under an exchange rate peg.

• Thursday 11 June 2020 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  WIEDERHOLT Mirko (Sciences Po) : POSTPONED

• Thursday 4 June 2020 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  WANG Olivier (NYU Stern) : POSTPONED

• Thursday 14 May 2020 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BLANCO Julio Andres (Michigan) : POSTPONED Devaluations, Inflation, and Labor Income Dynamics.

  Andrés Drenik, Emilio Zaratiegui

  Abstract

  We study labor income dynamics during large devaluations in Argentina, using a novel monthly administrative employer-employee matched dataset covering the universe of formal workers in the 1994-2019 period. After the 2002 devaluation, real labor income decreases due to a sluggish nominal income adjustment relative to a massive increase in inflation. In the recovery, inequality decreases due to slower recovery of income at the top of the income distribution. Between-firm heterogeneity is the main contributor to the heterogeneous speed of recovery. Labor market mobility and unionization are the driving mechanisms for the heterogeneous recovery. Facts are robust across other devaluations.

  Full text [pdf]

• Thursday 7 May 2020 15:45-17:00

  PSE - Using ZOOM https://zoom.us/j/98487882758?pwd=eWxMT2NIdDBaZjNXUW4wdkVCbVBjUT09

  SCHILLING Linda (Polytechnique) : Cryptocurrencies, Currency Competition, and the Impossible Trinity

  Abstract

  We analyze a two-country economy with complete markets, featuring two national currencies as well as a global (crypto)currency. If the global currency is used in both countries, the national nominal interest rates must be equal and the exchange rate between the national currencies is a risk- adjusted martingale. We call this result 'Crypto-Enforced Monetary Policy Synchronization (CEMPS)'. Deviating from interest equality risks approaching the zero lower bound or the abandonment of the national currency. If the global currency is backed by interest-bearing assets, additional and tight restrictions on monetary policy arise. Thus, the classic Impossible Trinity becomes even less reconcilable.

• Thursday 23 April 2020 15:45-17:00

  PSE - using ZOOM

  BRAUN Thomas (Columbia) : Revisiting Unemployment with an Intensive Margin - Using ZOOM

  Abstract

  The unemployment rate is the most used single indicator of labor market conditions, but its measure is black and white, lacking any notion of intensity. This paper introduces a continuous unemployment rate; a measure in which people are weighted by their relative search effort. The measure of relative search effort is a monthly probability of exerting search effort, estimated from the American Time Use Survey. The paper delivers a continuous unemployment rate, as well as adjusted labor market flows, for the United States from 1980 onward. On average, the continuous unemployment rate is 4.8 percentage points higher than the standard unemployment rate and recovers slower after every recession since 1990. While the standard unemployment rate has a downward trend over time, the continuous unemployment rate does not, suggesting no decrease in the natural rate of unemployment. Further, the continuous unemployment rate accounts for more of the variation in nominal wages than standard unemployment rate or unemployment gap.

• Thursday 9 April 2020 15:45-17:00

  PSE - ZOOM https://zoom.us/j/270544774?pwd=ekZXTTlieDhvS3FWQ1FFOFoweHo3Zz09

  ALTOMONTE Carlo (Bocconi) : Markups, Intangible Capital , and Heterogeneous Financial Frictions

  D. Favoino (Tinbergen Institute), M. Morlacco (USC) and T. Sonno (U. Bologna & LSE_CEP)

  Abstract

  We study the importance of financial frictions for markups heterogeneity. Heterogeneous credit constraints distort the decision of firms to invest in a cost-reducing technology (akin, but not limited to, intangible capital). The resulting dispersion in marginal costs interact with variable demand elasticity to generate endogenous dispersion in markups. Financial variables operate both at the extensive margin, by acting as a barrier to entry into investment, and at the intensive margin, by distorting the level of investment of individual firms. We test the model predictions in the context of a quasi-natural experiment in France, using balance-sheet data from 2002 to 2013 for a representative sample of French manufacturing firms. Our results shed light on the sources of markup heterogeneity and misallocation.

• Thursday 12 March 2020 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  IOVINO Luigi (Bocconi) : POSTPONED

  Mikhail Golosov University of Chicago

  Abstract

  We consider optimal public provision of unemployment insurance when government's ability to commit is imperfect. Unemployed persons privately observe arrivals of job opportunities and choose probabilities of communicating this information to the government. Imperfect commitment implies that full information revelation is generally suboptimal. We define a notion of the social value of information and show that, due to the incentive constraints, it is a convex function of the information revealed. In the optimum each person is provided with an incentive to either reveal his private information fully or not reveal any of it, but the allocation of these incentives may be stochastic. In dynamic economies unemployed persons who enter a period with higher continuation utilities reveal their private information with lower probabilities. The optimal contract can be decentralized by a joint system of unemployment and disability benefits in a way that resembles how these systems are used in practice in developed countries.

  Full text [pdf]

• Thursday 5 March 2020 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  PATTERSON Christina (Northwestern University) : The Matching Multiplier and the Amplification of Recessions

  Abstract

  This paper shows that the unequal incidence of recessions in the labor market amplifies aggregate shocks. I define the Matching Multiplier as the increase in the output multiplier stemming from the matching of high marginal propensity to consume (MPC) workers to cyclical jobs. Using administrative data from the United States, I document a positive covariance between worker MPCs and their elasticity of earnings to GDP. This covariance is large enough to increase shock amplification by 40 percent over an equal exposure benchmark. I provide additional evidence for this mechanism using local labor market variation and a dynamic incomplete-markets model.

  Full text [pdf]

• Thursday 12 December 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  GEEROLF François (UCLA) : The Macroeconomic Effects of Lump-Sum Taxes

  Thomas Grjebine, CEPII

  Abstract

  This paper measures tax multipliers using the property tax, which is the closest real-world counterpart to a lump-sum tax. This allows us to test for Ricardian equivalence and to isolate the demand-side component of tax multipliers. For identification, we use more than 100 exogenous property tax changes in advanced economies isolated through the narrative record, as well as structural VAR approaches that include more than 1,000 tax changes. We find, using both types of methods—independently—that tax multipliers are between 2 and 3, in line with a growing consensus in the literature. This contradicts Ricardian equivalence, and questions models that predict large tax multipliers only for distortionary tax changes. The effects are persistent, which implies that aggregate demand shocks can have long-term effects.

  Full text [pdf]

• Thursday 21 November 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  ZANETTI Francesco (Oxford) : Search Complementarities, Aggregate Fluctuations, and Fiscal Policy

  Jesus Fernandez-Villaverde, Federico Mandelman, and Yang Yu

  Abstract

  We develop a quantitative business cycle model with search complementarities in the inter-firm matching process that entails a multiplicity of equilibria. An active static equilibrium with strong joint venture formation, large output, and low unemployment can coexist with a passive static equilibrium with low joint venture formation, low output, and high unemployment. Changes in fundamentals move the system between the two static equilibria, generating large and persistent business cycle fluctuations. The volatility of shocks is important for the selection and duration of each static equilibrium. Sufficiently adverse shocks in periods of low macroeconomic volatility trigger severe and protracted downturns. The magnitude of government intervention is critical to foster economic recovery in the passive static equilibrium, while it plays a limited role in the active static equilibrium.

  Full text [pdf]

• Thursday 14 November 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  REPULLO Rafael (CEMFI) : Interest Rates, Market Power, and Financial Stability

  David Martinez-Miera

  Abstract

  This paper analyzes the effects of safe rates on financial intermediaries' risk-taking decisions. We consider an economy where (i) intermediaries have market power in granting loans, (ii) intermediaries monitor borrowers which lowers their probability of default, and (iii) monitoring is not observable which creates a moral hazard problem. We show that lower safe rates lead to lower intermediation margins and higher risk-taking when intermediaries have low market power, but the result reverses for high market power. We examine the robustness of this result to introducing non-monitored market finance, heterogeneity in monitoring costs, and entry and exit of intermediaries. We also consider replacing uninsured by insured deposits, market power in raising deposits, and funding with both deposits and capital.

• Thursday 7 November 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  RAZIN Assaf : Welfare State vs. Market Forces in a Globalization Era

  Efraim Sadka and Alexander Schwemmer

  Abstract

  Globalization radically changes income distribution and triggers intense international tax competition, and, consequently, entails the extensive restructuring of the welfare state. We analyze a parsimonious model of an open economy, in its trade and finance transactions with the rest of the world, governed by voter-majority-controlled welfare state. The paper highlights key trade-related and finance-related mechanisms, linking forces of globalization to the welfare-state fiscal structure. The Welfare state, which provides social benefit that are financed by levying labor and capital taxes, is governed by the majority of the voter population; thus reflecting their economic interests At the root cause of the interactions between the welfare state and globalization lies the world markets, which inflict intense pressures on the welfare state. Globalization pressures force significant fiscal changes for the economy to be able to compete in trade and capital markets internationally. Furthermore, they radically affect incomes from capital investments and and from labor sevices of various classes. Income-based olitical cleavages are shown to be grounded on trade-related and macro-related fundamentals, familiar from a standard open-economy model. They are: (i) The degree of trade border frictions, (ii) The degree of international finance frictions, (iii) The relative factor abundance that determines the capital intensity of the country’s exports; and, (iv) The domestic savings and productivity of domestic investment, which determines whether the country is a financial capital exporter or importer. We find that when the country is capital-abundant relative to the rest of the world, or when it exhibits strong saving propensity, a welfare state governed by the skilled-rich magnifies the intensity of globalization. In contrast, when the country is labor abundant relative to the rest of the world, or it exhibits slow saving propensity, a welfare state governed by the unskilled-poor would tends to magnify the intensity of globalization. The welfare state boost the utility of the losers from globalization, regardless whether the skilled-rich or the unskilled poor govern its policies , or the factor supply and the saving propensity are the economy’s fundamentals.

  Full text [pdf]

• Thursday 24 October 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  KOLLMANN Robert (Université de Bruxelles) : Stationary Rational Bubbles in Non-Linear Business Cycle Models

  Abstract

  This paper shows that stationary sunspot equilibria can exist in standard non-linear DSGE models, even when the linearized versions of those models have a unique solution. Thus, those non-linear models can exhibit stationary fluctuations, even if there are no shocks to productivity, preferences of other ‘fundamentals’. In the sunspot equilibria considered here, the economy may temporarily diverge from the no-sunspots trajectory, before abruptly reverting towards that trajectory. In contrast to rational bubbles in linear models (Blanchard (1979)), the rational bubbles considered here are stationary--their path does not explode. Numerical simulations suggest that non-linear DSGE models driven solely by stationary bubbles can generate persistent fluctuations of real activity and capture key business cycle stylized facts.

  Full text [pdf]

• Thursday 17 October 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-02

  GUNER Nezih (UAB, CEMFI) : Training, Offshoring and the Job Ladder

  Alessandro Ruggieri and James Tybout

  Abstract

  Over the past 30 years, skill premiums have grown, jobs in the middle of the skill distribution have become relatively scarce, and job and worker turnover rates have declined. At the same time, the fraction of the population attending college has grown, much of the manufacturing work force has shifted into services, and employers' investments in on-the-job training have increasingly favored high-skilled workers. This paper interprets these patterns through the lens of a dynamic structural model that explains workers' human capital accumulation, unemployment spells, and earnings trajectories over their life cycles. Offshoring and import competition shift job creation away from trade-exposed occupations, thereby changing job offer arrival rates for each worker type, increasing incentives to invest in college degrees, and shifting patterns of employers' investments in on-the-job training. A quantitative example shows the model can replicate observed changes in U.S. labor markets.

• Thursday 10 October 2019

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• Thursday 3 October 2019

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• Thursday 19 September 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  ROULLEAU-PASDELOUP Jordan (NU of Singapore) : Understanding (Linear) Rational Expectations Models

  Abstract

  A Rational expectations model is a system of dynamic equations that is used for policy experiments. For a given policy experiment, we want to answer the following question: what is the relative contribution of each equation? In this paper, I develop tools to answer this question. The method revolves around using arbitrary small auxiliary shocks. I show analytically that in the standard linear New Keynesian model GDP and inflation are mostly driven by the Aggregate Supply relationship, unless the economy is at the Zero Lower Bound. I also show that a non-linear version of the model features different relative contributions of Aggregate Supply versus Aggregate Demand relationships depending on whether the economy is in a recession/expansion.

• Thursday 12 September 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  VIOLANTE Gianluca (Princeton) : Firm and Worker Dynamics in a Frictional Labor Market

  Adrien Bilal, Niklas Engbom, and Simon Mongey

  Abstract

  This paper develops a continuous-time random-matching model of a frictional labor market with firm and worker dynamics. Multi-worker firms choose whether to shrink or expand their employment in response to productivity shocks to their decreasing returns to scale technology. Growing entails posting costly vacancies, which are filled either by the unemployed or by employees poached from other firms. Firms also choose optimally when to enter and exit the market. Tractability is obtained by proving that, under a parsimonious set of assumptions, all worker and firm decisions can be characterized by comparisons between marginal surpluses which only depend on firm’s productivity and size. As frictions vanish, the model converges to a standard competitive model of firm dynamics. A parameterized version of the model yields longitudinal and cross-sectional patterns of net poaching in response to productivity shocks that are in line with the data. The model also generates a drop in job-to-job transitions as firm entry declines, offering an interpretation to U.S. labor market dynamics around the Great Recession. All these outcomes are a reflection of the job ladder in marginal surplus that emerges in equilibrium.

• Thursday 5 September 2019

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BOEHM Christoph (UT Austin) : Convex Supply Curves

  Nitya Pandalai-Nayar

  Abstract

  We provide evidence that industries' supply curves are convex. To guide our empirical analysis we develop a putty-clay model in which the capacity utilization rate is a sufficient statistic for the slope of the supply curve. Using data on capacity utilization, we estimate the supply curve using three different instruments |foreign demand shocks, demand shocks from downstream industries, and exchange rate shocks and find robust evidence for convexity. Supply curves are essentially at low levels of capacity utilization but increasing at higher levels. Further, industries with low initial capacity utilization rates expand production more after demand shocks than industries that are producing close to their capacity limit. The nonlinearity we identify has implications for a number of applications in macro and international economics, including that responses to shocks are state-dependent and that the Phillips curve is convex.

  Full text [pdf]

• Thursday 20 June 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-01

  STORESLETTEN Kjetil (University of Oslo) : Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective

  Bo Zhao, Fabrizio Zilibotti

  Abstract

  We document that the nature of business cycles evolves over the process of development and structural change. In countries with large declining agricultural sectors, aggregate employment is uncorrelated with GDP. During booms, employment in agriculture declines while labor productivity increases in agriculture more than in other sectors. We construct a unified theory of business cycles and structural change consistent with the stylized facts. The focal point of the theory is the simultaneous decline and modernization of agriculture. As capital accumulates, agriculture becomes increasingly capital intensive as modern agriculture crowds out traditional agriculture. Structural change accelerates in booms and slows down in recessions. We estimate the model and show that it accounts well for both the structural transformation and the business cycle fluctuations of China.

  Full text [pdf]

• Thursday 13 June 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  PEYDRO JOSE-LUIS (UPF) : From Finance to Fascism:The Real Effectof Germany’s 1931 Banking Crisis

  Sebastian Doerr, Stefan Gissler and Hans-Joachim Voth

  Abstract

  Do financial crises radicalize voters? We analyze a canonical case –Germanyduring the Great Depression. After a severebanking crisis in 1931, caused by foreign shocks and political inaction, radical voting increased sharply in the following year. Democracy collapsed six months later. We collect new data on pre-crisis bank-firm connections and show that banking distress led to markedly more radical voting, both through economic and non-economic channels. Firms linked totwo large banks that failed experienced a bank-driven fall in lending, which caused reductions in their wage bill and a fall in city-level incomes. This in turn increased Nazi Party support between 1930 and 1932/33, especially in cities with a history of anti-Semitism. While both failingbanks had alarge negative economic impact, only exposure to the bank led by aJewish chairman strongly predicts Nazi voting. Local exposure to the banking crisis simultaneously led to a decline in Jewish-gentile marriagesand isassociated withmore deportations and attacks on synagoguesafter 1933.

  Full text [pdf]

• Thursday 6 June 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  WAUGH Michael (New York University, Stern School of Business) : Quantifying the Losses from International Trade

  Spencer G. Lyon New York University

  Abstract

  Did trade with China harm the US economy in the 2000s? A popular narrative suggests so—that the rapid rise in Chinese import penetration lead to an expanding trade deficit and negative impacts on wages and employment within narrowly defined labor markets. We provide an alternative interpretation of this evidence by developing a dynamic, standard incomplete market model with Ricardian trade and frictional labor markets and calibrated to match local-labor-market evidence. Despite being consistent with the evidence of Autor, Dorn, and Hanson (2013), a rising trade exposure induces a boom: a increase in GDP and employment, a modest increase in consumption, and an improving trade deficit. Much heterogeneity in the gains from trade underlays the aggregate effects; however, very few actually lose from trade.

  Full text [pdf]

• Thursday 23 May 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  SCHAAL Edouard (CREI) : Herding Cycles

  Mathieu Taschereau-Dumouchel

  Abstract

  We embed a theory of rational herding into a business-cycle framework. In the model, technological innovations arrive randomly over time. New innovations are not immediately productive, and there is uncertainty about how productive the technology will be. Investors receive private signals about the future productivity and decide whether to invest in the technology or not. Macroeconomic variables and prices partially aggregate private information but do not reveal the true fundamentals as the agents ignore the degree of correlation in their information sets. Herd-driven boom-bust cycles may arise in this environment when the technology is unproductive but investors' initial signals are optimistic and highly correlated. When the technology appears, investors mistakenly attribute the observed high investment rates to high fundamentals, leading to a pattern of increasing optimism and investment until the economy reaches a peak, followed by a quick collapse, as agents ultimately learn their mistake. As such, the theory can shed light on bubble-like episodes in which excessive optimism about uncertain technology fueled overinvestment, and were followed by sudden recessions. We calibrate the model to the U.S. economy and show that the theory can rationalize various patterns observed during technology-driven cycles like the IT-led boom and bust of 1995-2001. Finally, we show that leaning-against-the-wind policies can be welfare improving as they can increase the amount of private information that becomes public.

• Thursday 16 May 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  HERKENHOFF Kyle (University of Minnesota) : Production and Learning in Teams

  Jeremy Lise University of Minnesota and FRB Minneapolis, Guido Menzio NYU and NBER, Gordon Phillips Dartmouth College and NBER

  Abstract

  The effect of coworkers on the learning and the productivity of an individual is measured combining theory and data. The theory is a frictional equilibrium model of the labor market in which production and the accumulation of human capital of an individual are allowed to depend on the human capital of coworkers. The data is a matched employer-employee dataset of US firms and workers. The measured production function is supermodular. The measured human capital function is non-linear: Workers catch-up to more knowledgeable coworkers, but are not dragged-down by less knowledgeable ones. The market equilibrium features a pattern of sorting of coworkers across teams that is inefficiently positive. This inefficiency results in low human capital individuals having too few chances to learn from more knowledgeable coworkers and, in turn, in a stock of human capital and a ow of output that are inefficiently low.

  Full text [pdf]

• Thursday 18 April 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  ZHENG Yu (QMUL) : Innovate to Lead or Innovate to Prevail: When do Monopolistic Rents Induce Growth?

  Roberto Piazza

  Abstract

  This paper embeds in a Schumpeterian endogenous growth model a previously overlooked insight that the cost of innovation to the followers increases in their technological distance to the leader. This new assumption introduces an incentive for the leader to innovate to increase his technological distance from the followers, reducing the risk of being leapfrogged and thus prevailing in the leadership game. In addition to the High Growth steady state in which only followers innovate as in Grossman and Helpman (1991), there now exist two other steady states: a Medium Growth (a source) and a Low Growth (a saddle) steady state, that feature both leaders and followers innovating. With an initial condition of the economy that sees many industries having leaders prevailing – a situation characterized by low dynamism - the economy eventually converges to a Low Growth steady state. We illustrate in the model how an increase in monopolistic rents to the leaders, depending on the initial condition, can increase or reduce aggregate growth in the long run.

• Thursday 11 April 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  FARIA-E-CASTRO Miguel (Federal Reserve Bank of St Louis) : Fiscal Multipliers and Financial Crises

  Abstract

  I study the macroeconomic effects of the US fiscal policy response to the Great Recession, accounting not only for standard tools such as government purchases and transfers but also for financial sector interventions such as bank recapitalizations and credit guarantees. A global solution to a quantitative model calibrated to the US allows me to study the state-dependent effects of different types of fiscal policies. I combine the model with data on the US fiscal policy response to find that the fall in aggregate consumption would have been twice as worse in the absence of that response with a cumulative loss of 14.5%. Transfers and bank recapitalizations yielded the largest fiscal multipliers at the height of the crisis through new transmission channels that arise from linkages between household and bank balance sheets.

  Full text [pdf]

• Thursday 4 April 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  KEHRIG Matthias (Duke University) : Good dispersion, bad dispersion

  Nicolas Vincent

  Abstract

  Dispersion of marginal revenue products of inputs across firms are commonly thought to reflect misallocation. Consistent with that view, aggregate output monotonically declines in dispersion. We show that non-convex distortions to a firm’s problem may break this monotonicity such that dispersion and efficiency are related in an inverted U-shaped fashion. Eliminating distortions may thus increase dispersion of marginal revenue products while improving the allocation and raising output. In a quantitative model of the U.S. manufacturing sector, we find that one quarter of dispersion reflects “good” allocations while only the remaining three quarters may reflect inefficient distortions. An important implication of this insight is that the welfare effects of eliminating distortions in emerging economies are larger than previously thought.

• Thursday 28 March 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-01

  MONGEY Simon (University of Chicago) : Labor Market Power

  David Berger, Kyle Herkenhoff

  Abstract

  What are the welfare implications of labor market power? We provide an answer to this question in two steps: (1) develop a tractable quantitative, general equilibrium, oligopsony model of the labor market, (2) estimate key parameters using within-firm-states, acrossmarket differences in wage and employment responses to state corporate tax changes in U.S. Census data. We validate the model against recent evidence on productivity-wage passthrough, and new measurements of the distribution of market concentration. The model implies welfare losses from labor market power range from 2.9 to 8.0 percent of lifetime consumption. However, despite large contemporaneous losses, labor market power has not contributed to the declining labor share. Finally, we show that minimum wages can deliver moderate welfare gains by reallocating workers from smaller to larger, more productive firms.

  Full text [pdf]

• Thursday 21 March 2019 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-01

  MATSUYAMA Kiminori (Northwestern university) : Engel’s Law in the Global Economy: Demand-Induced Patterns of Structural Change, Innovation, and Trade

  Abstract

  Endogenous demand composition across sectors due to income elasticity differences, or Engel’s Law for the brevity, affects i) sectoral compositions in employment and in value-added, ii) variations in innovation rates and in productivity change across sectors, iii) intersectoral patterns of trade across countries; and iv) product cycles from rich to poor countries. Using a two-country model of directed technical change with a continuum of sectors under nonhomothetic preferences, which is rich enough to capture all these effects as well as their interactions, this paper offers a unifying perspective on how economic growth and globalization affects the patterns of structural change, innovation and trade across countries and across sectors in the presence of Engel’s Law. Among the main messages is that globalization amplifies, instead of reducing, the power of endogenous domestic demand composition differences as a driver of structural change.

  Full text [pdf]

• Thursday 14 March 2019 09:30-10:45

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BROER Tobias : Heterogenous Information Choice in General Equilibrium

  Alexandre Kohlhas, Kurt Mitman, Kathrin Schlafmann

• Tuesday 12 February 2019 14:00-15:15

  PSE - 48 boulevard Jourdan, 75014 Paris - Room R2-21

  BENIGNO Pierpaolo (LUISS and EIEF) : Private Money Creation, Liquidity Crises, and Government Interventions

  Roberto Robatto University of Wisconsin-Madison

  Full text [pdf]

• Monday 17 December 2018

  Joint French Macro Workshop

  Full text [pdf]

• Thursday 6 December 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  GIOVANNI Ricco (Warwick) : A Model of the Fed’s View on Inflation

  Thomas Hasenzagl, Filippo Pellegrino, Lucrezia Reichlin,

  Full text [pdf]

• Thursday 29 November 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-14

  BARANY Zsofia (sciences Po) : The engines of sectoral labor productivity growth

  Christian Siegel

• Thursday 22 November 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  MALHERBE Frederic (UCL) : Financial sector origins of economic growth delusion

  Michael McMahon

  Full text [pdf]

• Thursday 15 November 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  BALEY Isaac (CREI) : Aggregate Dynamics in Lumpy Economies

  Andres Blanco

  Abstract

  We develop a new framework to analyze the aggregate implications of lumpiness in microeconomic adjustment, which is pervasive in many economic environments. We derive structural relationships between the steady state moments and the business cycle dynamics of lumpy economies, and we show how to discipline these relationships using panel microdata. As an application, we study capital misallocation and investment dynamics by implementing our tools on establishment-level data from Chile and Colombia. Our framework is very flexible and can accommodate a large set of inaction models, stochastic processes, and higher order dynamics.

  Full text [pdf]

• Thursday 25 October 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  GIORDANO Claire (Bank of Italy) : *Real exchange rate misalignments in the euro area

  Michael Fidora and Martin Schmitz (ECB)

  Abstract

  Building upon a behavioural equilibrium exchange rate (BEER) model, estimated at a quarterly frequency since 1999 on a broad sample of 57 countries, this paper assesses whether both the size and persistence of real effective exchange rate misalignments from the levels implied by economic fundamentals have been affected by the adoption of a single currency. A comparison of real misalignments across different country groupings (euro area, non-euro area advanced and emerging economies) in the post-1999 period shows they are smaller in the euro area than in its main trading partners. However, in the euro area real disequilibria are more persistent, although not anymore after the global financial crisis. An improvement in the quality of regulation and institutions is found to reduce the persistence of real exchange rate misalignments, plausibly by removing real rigidities.

  Full text [pdf]

• Thursday 18 October 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  JEAN FLEMMING (Oxford University) : *Costly Commuting and the Job Ladder

  Abstract

  Households in the UK spent over £1,000 per worker on commuting in 2017. The total cost of commuting may greatly exceed the monetary cost because commuting and the associated congestion affect workers’ incentives for job search and acceptance. At the same time, workers’ decisions about where to work determine congestion. Policies targeting congestion can thus affect employment and inequality through their interaction with workers’ process of job search. Using UK data on commuting and employment outcomes, I find a strong positive relationship between commuting time and job mobility. To understand the empirical patterns and quantify the aggregate implications, I build a novel model featuring a frictional labor market in which commuting gives rise to congestion as workers travel similar paths to work. I consider the previously unexplored interaction between congestion, employment, aggregate productivity, and housing rents as workers move from job to job and across space. Since it takes time to find a close and productive job, and because moving house is costly, many workers commute to distant jobs. In doing so, they contribute to congestion and affect the incentives of other workers to accept job offers. The quantitative model suggests that a significant share of the welfare gains from remote working policies are due to decreases in congestion.

• Thursday 11 October 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  WEI Shang-Jin (Columbia Graduate School of Business) : *Understanding the divergence between PPI and CPI: the role of global value chains.

  Abstract

  This paper starts by documenting a new fact that consumer price index (CPI) and producer price index (PPI) used to move in tandem within a given country around the world, but start to diverge after 2000. Understanding the source of divergence is important as it potentially affects optimal monetary policies. We propose an explanation via the lens of global value chains. With increased length of production chains, the baskets of CPI and PPI have become more different. We build a model with multi-stage production, and derive tractable analytical solutions to show this point. Moreover, in the model, as production becomes longer, both CPI and PPI become less responsive to a given shock to the first stage of production, and the reduction in responsiveness is greater for CPI. We show that the key predictions of the model are confirmed in the data. Furthermore, we compare model predictions at the country level using calibrations and empirical patterns, and find that the two line up well as well.

  Full text [pdf]

• Thursday 12 July 2018 11:00

  PSE, 48 boulevard Jourdan, 75014 Paris, salle R2-21

  PIGUILLEM Facundo (Einaudi Institute for Economics and Finance) : *

• Thursday 28 June 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  BERKA Martin (Massey University) : *

• Thursday 14 June 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R2-21

  VIOLANTE Gianluca (Princeton) : *

• Thursday 17 May 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  IOVINO Luigi (Bocconi) : Central Bank Balance Sheet Policies without Rational Expectations

  Dmitriy Sergeyev

• Thursday 12 April 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  KARADI Peter (European Central Bank) : *

• Thursday 5 April 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  DEL NEGRO Marco (NY Fed) : *The conquest of Inflation credibility - Bayesian inference for probabilistic surveys

  Full text [pdf]

• Thursday 29 March 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  MICHELACCI Claudio (Einaudi Institute) : *

• Thursday 22 March 2018 15:45-17:00

  The session was canceled.

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-13

  JAIMOVICH Nir (University of Zurich) : *

• Thursday 8 March 2018 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris, salle R1-09

  DELACROIX David (UC Louvain) : *

• Thursday 7 December 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R2-21

  BANERJEE Abhijit (MIT) : *Trade, Capital Markets and Inequality

• Thursday 30 November 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R2-21.

  BILBIIE Florin (Cambridge) : The New Keynesian Cross: Understanding Macro Policies with Hand-to-Mouth Households

• Thursday 23 November 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R1-09

  KEISTER Todd (Rutgers University) : Bailouts, Bail-ins and Banking Crises

  Yuliyan Mitkov (Rutgers University)

  Full text [pdf]

• Thursday 16 November 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R2-21

  OIKONOMOU Rigas (UC Louvain) : *

• Thursday 9 November 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R2-21

  CHALLE EDOUARD (polytechnique) : *

• Thursday 26 October 2017 15:30-16:45

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R2-21

  AGHION Philippe (Collège de France) : *Missing Growth from Creative Destruction

  Antonin Bergeaud, Timo Boppar,t Peter J. Klenow, Huiyu Li

  Full text [pdf]

• Thursday 12 October 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - salle R1-09

  DEBORTOLI Davide (CREI) : Monetary Policy with Heterogeneous Agents: Insights from TANK models

  Jordi Gali

  Full text [pdf]

• Thursday 5 October 2017 15:45-17:00

  PSE - 48 boulevard Jourdan, 75014 Paris - Amphithéâtre

  GIAVAZZI Francesco (Bocconi) : The macroeconomic effects of fiscal adjustment plans

  Full text [pdf]

• Thursday 18 May 2017 15:45-17:00

  Salle R2-21, Campus Jourdan, 48 boulevard Jourdan 75014 Paris

  GALO Nuno : “Optimal Monetary Policy with Heterogeneous Agents.”

  Full text [pdf]

• Thursday 20 April 2017 15:45-17:00

  The session was canceled.

  Campus Jourdan, 48 boulevard Jourdan 75014 Paris, salle R2-21

  GEEROLF François (UCLA) : *

• Thursday 6 April 2017 15:45-17:00

  Campus Jourdan, 48 boulevard Jourdan 75014 Paris, salle A2

  FARMER Roger (UCLA) : *Animal Spirits in a Monetary Model

  Full text [pdf]

• Thursday 16 March 2017 15:45-17:00

  Campus Jourdan, 48 boulevard Jourdan 75014 Paris, salle R2-20

  KARADI Peter (European Central Bank) : *Rescheduled to a date yet to be confirmed

• Thursday 9 March 2017 16:30-17:45

  Campus Jourdan, 48 boulevard Jourdan 75014 Paris, salle R1-09

  REIS Ricardo (London School of Economics) : *

• Thursday 2 March 2017 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  BOCOLA Luigi : *A Model of Financial Crises in Open Economies

  Full text [pdf]

• Thursday 15 December 2016 16:30-17:45

  Maison des Sciences Économiques106-112 Boulevard de l'Hôpital75013 Paris --Salle 116

  PINTUS Patrick (Banque de France) : *The Inverted Leading Indicator Property and Redistribution Effect of the Interest Rate

  Yi Wen (Federal Reserve Bank of St. Louis & Tsinghua University) and Xiaochuan Xing (Yale University)

  Full text [pdf]

• Thursday 1 December 2016 16:30-17:45

  MSE(106, Blv de l'Hôpital) 75013 Paris, salle du 6ème étage

  FORNARO Luca (CREI ) : *Aggregate Demand Externalities in a Global Liquidity Trap

  Federica Romei

• Thursday 13 October 2016 16:30-17:45

  Maison des Sciences Économiques106-112 Boulevard de l'Hôpital75013 Paris --Salle du 6ème

  LIPPI Francesco (EIEF) : Price plans and the real effects of monetary policy

  Full text [pdf]

• Thursday 6 October 2016 16:30-17:45

  The session was canceled.

  Maison des Sciences Économiques106-112 Boulevard de l'Hôpital75013 Paris ---Salle du 6ème

  *Séance annulée

• Thursday 22 September 2016 16:30-17:45

  Maison des Sciences Économiques 106-112 Boulevard de l'Hôpital 75013 Paris -- Salle 116

  PANIZZA Ugo (Graduate Institute Geneva) : *

  Full text [pdf]

• Thursday 10 December 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  MERTENS Karel (Cornell)

• Thursday 26 November 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  BOPPART Timo (IIES)

• Thursday 19 November 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  PACIELLO Luigi (EIEF)

• Thursday 12 November 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  VELDKAMP Laura (NYU Stern)

  Full text [pdf]

• Thursday 5 November 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  BACCHETTA Philippe (HEC Lausanne)

  Full text [pdf]

• Thursday 15 October 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  TELES Pedro (Banco de Portugal and UCP)

• Thursday 1 October 2015 16:30-17:45

  Maison des Sciences Economiques, 6th floor conference room

  VENTURA Jaume : Taxing Capital in Representative Agent Economies

• Thursday 19 December 2013 17:45-16:30

  Maison des Sciences Economiques, Salle S17

  FARHI Emmanuel (Harvard) : TBA

• Thursday 12 December 2013 17:45-16:30

  Maison des Sciences Economiques

  GALI Jordi (CREI, Pompeu Fabra University) : TBA

• Thursday 5 December 2013 16:30-17:45

  Maison des Sciences Economiques, Salle S17

  SCHULARICK Moritz (University of Bonn) : Sovereigns Versus Banks: Credit, Crises, and Consequences

  Co-author(s) : Òscar Jordà & Alan M. Taylor

  Abstract

  Two separate narratives have emerged in the wake of the Global Financial Crisis. One speaks of private financial excess and the key role of the banking system in leveraging and deleveraging the economy. The other emphasizes the public sector balance sheet over the private and worries about the risks of lax fiscal policies. However, the two may interact in important and understudied ways. This paper studies the co-evolution of public and private sector debt in advanced countries since 1870. We find that in advanced economies financial stability risks have come from private sector credit booms and not from the expansion of public debt. However, we find evidence that high levels of public debt have tended to exacerbate the effects of private sector deleveraging after crises, leading to more prolonged periods of economic depression. Fiscal space appears to be a constraint in the aftermath of a crisis, then and now.

  Full text [pdf]

• Thursday 28 November 2013 16:30-17:45

  Maison des Sciences Economiques, Salle S17

  ENGEL Eduardo (Yale University & Universidad de Chile) : *

• Thursday 21 November 2013 16:30-17:45

  Maison des Sciences Economiques, Salle 114

  DEN HAAN Wouter (London School of Econmics) : Inventories and the Role of Goods-Market Frictions for Business Cycles

  Full text [pdf]

• Thursday 14 November 2013 16:30-17:45

  Maison des Sciences Economiques, Salle S17

  KUBLER Felix (University of Zurich) : TBA

• Thursday 17 October 2013 16:30-17:45

  Maison des Sciences Economiques, Salle S17

  GABALLO Gaetano (Banque de France) : Price Dispersion and Private Uncertainty

  Abstract

  This paper shows that the introduction of an arbitrarily small degree of price dispersion, in an otherwise fully-revealing system of prices, can originate large departures from the perfect-information benchmark. The main result is presented within a fully microfounded model where agents learn from prices and all disturbances are fundamental in nature. When the system of prices is fully revealing the economy has a unique equilibrium. Nevertheless, the introduction of vanishing idiosyncratic disturbances, which blur the informativeness of local prices, generates two equilibrium outcomes. Only one inherits by continuity the properties of the perfect-information benchmark, whereas the other features sizeable heterogeneity of beliefs due to the amplification of private uncertainty through price feedbacks. The two dramatically differ in the impact of shocks at both aggregate and cross-sectional levels. Moreover, when higher-order belief dynamics is used as a selection criterion, the perfectinformation limit scenario is discarded whereas the dispersed-information limit outcome prevails.

  Full text [pdf]

• Thursday 10 October 2013 16:30-17:45

  Maison des Sciences Economiques, Salle de Conférences (6e ét

  MCGRATTAN Ellen (University of Minnesota, Minneapolis Fed) : On Financing Retirement with an Aging Population

  Co-author(s) : Edward C. Prescott (Arizona State University and Federal Reserve Bank of Minneapolis)

• Thursday 3 October 2013 16:30-17:45

  Maison des Sciences Economiques, Salle 114

  JIN Keyu (LSE) : The One-Child Policy and Household Savings

  Co-auteur(s) : Taha Choukhmane (SciencesPo Paris) and Nicolas Coeurdacier (SciencesPo Paris and CEPR)

  Abstract

  We ask how much the advent of the `one-child policy' can explain the sharp rise in China's household saving rate. In a life-cycle model with endogenous fertility, intergenerational transfers and human capital accumulation, we show a macroeconomic and a microeconomic channel through which restrictions in fertility raise aggregate saving. The macro-channel operates through a shift in the composition of demographics and income across generations. The micro-channel alters saving behavior and education decisions at the individual level. A main objective is to quantify these various channels in the data. Exploiting the birth of twins as an identication strategy, we provide direct empirical evidence on the micro-channel and show its importance in accounting for the rise in the household saving rate since the enforcement of the policy in the early eighties. Our quantitative OLG model can explain from a third to at most 60% of the rise in aggregate saving rate; equally important is its implied shift in the level and shape of the age-saving prole consistent with micro-level estimates from the data.

• Thursday 26 September 2013 16:30-17:45

  Maison des Sciences Economiques, Salle de Conférences (6e ét

  WEILL Pierre-Olivier (UCLA) : The Market for OTC Derivatives

  Co-auteur(s) : Andrew G. Atkeson and Andrea L. Eisfeldt

  Abstract

  We develop a model of equilibrium entry, trade, and price formation in over-the-counter (OTC) markets. Banks trade derivatives to share an aggregate risk subject to two trading frictions: they must pay a xed entry cost, and they must limit the size of the positions taken by their traders because of risk-management concerns. Although all banks in our model are endowed with access to the same trading technology, some large banks endogenously arise as \dealers," trading mainly to provide intermediation services, while medium sized banks endogenously participate as \customers" mainly to share risks. We use the model to address positive questions regarding the growth in OTC markets as trading frictions decline, and normative questions of how regulation of entry impacts welfare.

• Thursday 6 June 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  BEAUDRY Paul (University of British Columbia) : Understanding Non-In ationary Demand Driven Business Cycles

  Co-author(s): Franck Portier

  Full text [pdf]

• Thursday 30 May 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  UHLIG Harald (The University of Chicago) : The Dynamics of Sovereign Debt Crises and Bailouts

  Co-author(s): Francisco Roch

  Full text [pdf]

• Thursday 23 May 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  MICHAILLAT Pascal (London School of Economics) : A Theory of Aggregate Supply and Aggregate Demand as Functions of Market Tightness with Prices as Parameters

  Full text [pdf]

• Thursday 16 May 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  CHRISTIANO Lawrence (Northwestern University) : Unemployment and Business Cycles

  Co-author(s): Martin S. Eichenbaum & Mathias Trabandt EXCEPTIONAL SEMINAR: BANQUE DE FRANCE CHAIR AT PARIS SCHOOL OF ECONOMICS LECTURE

  Full text [pdf]

• Thursday 25 April 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  LOPEZ Jose Ignacio (HEC Paris) : Financial Shocks and the Cyclical Behavior of Skilled and Unskilled Unemployment

  Co-author(s): Virginia Olivella

  Full text [pdf]

• Thursday 18 April 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  BARNICHON Régis (CREi & Universitat Pompeu Fabra) : Why did the U.S. unemployment rate used to be so low? (and why it can be very low again)

  Co-author(s): Andrew Figura

  Full text [pdf]

• Thursday 4 April 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  MACKOWIAK Bartosz (European Central Bank) : Business Cycle Dynamics under Rational Inattention

  Co-author(s): Mirko Wiederholt

  Full text [pdf]

• Thursday 28 March 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  BROER Tobias (IIES) : Great Moderation or Great Mistake: Can rising confidence in low macro-risk explain the boom in asset prices?

  Co-author(s): Afroditi Kero

  Full text [pdf]

• Thursday 21 March 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  BENHABIB Jess (New York University) : Uncertainty and Sentiment-Driven Equilibria

  Co-author(s): Pengfei Wang & Yi Wen

  Full text [pdf]

• Thursday 17 January 2013 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  COLLARD Fabrice (University of Bern) : Booms and Systematic Banking Crisis

  Co-author(s): F. Boissay & F. Smets

  Full text [pdf]

• Thursday 10 January 2013 16:30-18:00

  SAINT-PAUL Gilles (TSE & PSE) : How Darwinian should an economy be?

• Thursday 13 December 2012 16:30-18:00

  LUBIK Thomas (Federal Reserve Bank of Richmond) : Sales, Inventories, and Real Interest Rates: A Century of Stylized Facts

  Co-author(s): Luca Benati

  Full text [pdf]

• Thursday 6 December 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  DEDOLA Luca (European Central Bank) : The Mystery of the Printing Press: Self-fulfilling debt crises and monetary sovereignty

  Co-author(s): Giancarlo Corsetti

  Full text [pdf]

• Thursday 22 November 2012 16:30-18:00

  PINTUS Patrick (Aix-Marseille School of Economics) : Learning Leverage Shocks and the Great Recession

  Co-author(s): Jacek Suda

  Full text [pdf]

• Thursday 15 November 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  RAVN Morten O. (University College London) : Job Uncertainty and Deep Recessions

  Co-author(s): Vincent Sterk

  Full text [pdf]

• Thursday 25 October 2012 16:30-18:00

  OBSTFELD Maurice (University of California) : Rethinking the Euro

  Exceptional Seminar: Banque de France Chair at Paris School of Economics Lecture. Introduced by Pierre Jaillet (Banque de France, Special Adviser to the Governor) and Romain Ranciere (Paris School of Economics, Scientific Coordinator of the Chair Banque de France)

• Thursday 18 October 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  PASTEN Ernesto (Central Bank of Chile) : Rational Inattention, Multi-Product Firms and the Neutrality of Money

  Co-author(s): Raphael Schoenle

  Full text [pdf]

• Thursday 11 October 2012 16:30-18:00

  MURTIN Fabrice (OECD) : Labor Market Reforms and Unemployment Dynamics

  Co-author(s): Jean-Marc Robin

  Full text [pdf]

• Thursday 4 October 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  KUMHOF Michael (International Monetary Fund) : The Future of Oil: Geology versus Technology

  Co-author(s): Jaromir Benes, Marcelle Chauvet, Ondra Kamenik, Douglas Laxton, Susanna Mursula, Jack Selody, Discutant(s): Jean-Charles HOURCADE Text1 Text2 Seminar organized by CIRED and PSE, with support of Chaire PSE - Ministère du développement durable

  Full text [pdf]

• Thursday 28 June 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  MAGILL Michael (University of Southern California) : Interest Rate Policy and Expectations of Inflation

  Co-author(s): Martine Quinzii

  Abstract

  This paper studies a simple monetary model with a Ricardian fiscal policy in which equilibria are indeterminate if monetary policy consists solely of a rule for fixing the short-term interest rate. We introduce explicitly into the model the agents’ expectations of inflation which create the indeterminacy and show that there are two types of policies—a term-structure rule or a forward-guidance rule for the short rate—which can lead to determinacy. The first consists in fixing the interest rates on a family of bonds of different maturities as function of realized inflation; the second consists in fixing the short-term interest rate and the expected values of the short term interest rate for a sequence of periods into the future as a function of realized inflation. If the monetary authority chooses an inflation process which satisfies conditions derived in the paper and applies one of these rules, it can anchor agents’ expectations to this process, in the sense that it is the unique inflation process compatible with equilibrium when the interest rates or expected future values of the short rate are those specified by the term-structure or forward-guidance rule.

  Full text [pdf]

• Wednesday 27 June 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  *

• Thursday 21 June 2012 14:30-16:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  KRUEGER Dirk (University of Pennsylvania) : Intergenerational Redistribution in the Great Recession

  Full text [pdf]

• Tuesday 19 June 2012 16:30-17:30

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  UEDA Kenichi (International Monetary Fund) : Tail-Risk Dumping: Bank Bailouts as Optimal Fiscal Operation

  Full text [pdf]

• Thursday 14 June 2012 17:00-18:30

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  RAPPOPORT Veronica (Columbia Business School) : Dissecting the Eect of Credit Supply on Trade: Evidence from Matched Credit-Export Data

  Co-author(s): Daniel PARAVISINI (Columbia GSB), Philip SCHNABL (NYU Stern) and Daniel WOLFENZON (Columbia GSB)

  Full text [pdf]

• Monday 11 June 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  JUSTINIANO Alejandro (Federal Reserve Bank of Chicago) : Macroeconomic Effects of Monetary Policy Forward Guidance

  Full text [pdf]

• Thursday 7 June 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  VENTURA Jaume (CREI) : Bubbly Collateral and Economic Activity

  Co-author: Alberto MARTIN (CREI)

• Tuesday 5 June 2012 11:30-12:30

  Banque de France-New Auditorium, entrance via 31 rue Croix-d

  WOODFORD Michael (Columbia University) : Robustly Optimal Monetary Policy in a Microfounded New Keynesian model

  Co-auteurs : Klaus ADAM (Mannheim U) Exceptional Seminar: Chair Banque de France at Paris School of Economics Lecture

  Full text [pdf]

• Thursday 31 May 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  KHARROUBI Enisse (Banque de France) : MONETARY POLICY, LIQUIDITY, AND GROWTH

  Co-author(s): Philippe Aghion & Emmanuel Farhi

  Full text [pdf]

• Thursday 24 May 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  JEANNE Olivier (Johns Hopkins University) : Monetary Dominance and Government Default

  Full text [pdf]

• Tuesday 15 May 2012 14:30-16:00

  Sciences-Po - 56 rue des saints Pères – 7ème (Salle Goguel)

  MENDOZA Enrique (University of Maryland) : Macro-prudential Policy in a Fisherian Model of Financial Innovation

  Co-author(s): Javier Bianchi & Emine Boz Seminar exceptionally joint with Paris Trade Seminar

  Abstract

  The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification mechanism to study the effects of macro-prudential policy. Financial innovation enhances the ability of agents to collateralize assets into debt, but the riskiness of this new regime can only be learned over time. Beliefs about transition probabilities across states with high and low ability to borrow change as agents learn from observed realizations of financial conditions. At the same time, the collateral constraint introduces a pecuniary externality, because agents fail to internalize the effect of their borrowing decisions on asset prices. Quantitative analysis shows that the effectiveness of macro-prudential policy in this environment depends on the government's information set, the tightness of credit constraints and the pace at which optimism surges in the early stages of financial innovation. The policy is least effective when the government is as uninformed as private agents, credit constraints are tight, and optimism builds quickly. Keywords: Financial crises, financial innovation, macro-prudential regulation, Bayesian learning JEL Codes: D62, D82, E32, E44, F32, F41

  Full text [pdf]

• Thursday 10 May 2012 16:30-18:00

  BRONER Fernando (CREI and Universitat Pompeu Fabra) : Gross Capital Flows: Dynamics and Crises

  Co-author(s): Tatiana Didier, Aitor Erce & Sergio L. Schmukler

  Abstract

  This paper analyzes the behavior of international capital flows by foreign and domestic agents, dubbed gross capital flows, over the business cycle and during financial crises. We show that gross capital flows are very large and volatile, especially relative to net capital flows. When foreigners invest in a country, domestic agents tend to invest abroad, and vice versa. Gross capital flows are also pro-cyclical, with foreigners investing more in the country and domestic agents investing more abroad during expansions. During crises, especially during severe ones, there is a collapse in total gross flows and retrenchment, that is, a reduction in both capital inflows by foreigners and capital outflows by domestic agents. This evidence sheds light on the nature of shocks driving capital flows and helps discriminate among existing theories. Our findings seem consistent with shocks that affect foreign and domestic agents asymmetrically, such as sovereign risk and asymmetric information. Keywords: gross capital flows, net capital flows, domestic investors, foreign investors, crises JEL Classification: F21, F30, F32, G01

  Full text [pdf]

• Thursday 3 May 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 1s

  GOURINCHAS Pierre-Olivier (University of California) : The Financial Crisis and The Geography of Wealth Transfers

  Co-author(s): Hélène Rey & Kai Truempler

  Abstract

  This paper studies the geography of wealth transfers between 2007Q4 and 2008Q4, at the height of the global financial crisis. We construct valuation changes on bilateral external positions in equity, direct investment and portfolio debt to measure who benefited and who lost on their external exposure. We find a very diverse set of fortunes governed by the structure of countries' external portfolios. In particular, we are able to relate the gains and losses on debt portfolios to the country's exposure to ABS, ABCP conduits and the extent of dollar shortage.

  Full text [pdf]

• Thursday 12 April 2012 17:00-18:30

  DEL NEGRO Marco (Federal Reserve Bank of New York) : The Great Escape? A Quantitative Evaluation of the Fed's Liquidity Facilities

  Co-author(s): Andrea Ferrero, Gauti Eggertsson & Nobuhiro Kiyotaki

  Abstract

  We introduce liquidity frictions into an otherwise standard DSGE model with nominal and real rigidities, explicitly incorporating the zero bound on the shortterm nominal interest rate. Within this framework we ask: Can a shock to the liquidity of private paper lead to a collapse in short-term nominal interest rates and a recession like the one associated with the 2008 U.S. financial crisis? Once the nominal interest rate reaches the zero bound, what are the effects of interventions in which the government exchanges liquid government assets for illiquid private paper? We find that the effects of the liquidity shock can be large, and show some numerical examples in which the liquidity facilities prevented a repeat of the Great Depression in 2008-2009. JEL Classification: E44, E58 Key Words: Financial crisis, liquidity shocks, financing constraints, liquidity facilities, zero lower bound

  Full text [pdf]

• Thursday 5 April 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  KITAO Sagiri (City University of New York) : Sustainable Social Security: Four Options

  Abstract

  Four policy options to make the social security sustainable under the coming demographic shift are presented; increase payroll taxes by 6 percentage points, reduce replacement rates by one-third, raise the normal retirement age to 73, or means-test the benefits and reduce them in income. While the four policies all achieve the same goal, economic outcomes differ significantly. Options to curtail benefits encourage own savings and capital accumulation. The payroll tax increase discourages work effort, but the means-test gives the worst labor disincentives. Future generations prefer options to reduce benefits, but current generations prefer to finance the transition with payroll taxes. Keywords: Social security reform and sustainability, general equilibrium, labor force participation, retirement age, demographic shift, overlapping generations, transition and welfare effects J.E.L. classication codes: E2, E6, H55, J2

  Full text [pdf]

• Thursday 29 March 2012 16:30-18:00

  KRUSELL Per (IIES) : Is Labor Supply Important for Business Cycles?

  Co-author(s): Toshihiko Mukoyama, Richard Rogerson & Aysegül Sahin

  Abstract

  We build a general equilibrium model that features uninsurable idiosyncratic shocks, search frictions and an operative labor supply choice along the extensive margin. The model is calibrated to match the average levels of gross flows across the three labor market states: employment, unemployment, and non-participation. We use it to study the implications of two kinds of aggregate shocks for the cyclical behavior of labor market aggregates and flows: shocks to search frictions (the rates of job finding and job loss) and shocks to the return on the market activity (any factors affecting aggregate productivity). We find that both kinds of shocks are needed to explain the labor market data, and that an active labor supply channel is key. A model with friction shocks only, calibrated to match unemployment fluctuations, accounts for only a small fraction of employment fluctuations and has counterfactual cyclical predictions for participation. Keywords: Labor Supply, Labor Market Frictions, Business Cycles JEL Classifications: E24, J22, J64

  Full text [pdf]

• Monday 26 March 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  REIS Ricardo (Columbia University) : when should policymakers make announcements?

  Abstract

  If a policymaker learns today that there will be a regime change in the future that affects everyone, at what time between now and then should he/she announce it to the public? This paper presents a dynamic model where agents have a limited amount of attention to allocate between learning about the new regime and everything else. They trade off the benefit of being better informed and making better decisions when the new regime arrives against the cost of paying less attention to current events and making worse decisions now. By choosing when to make the announcement, the policymaker can affect this decision. The policymaker also takes into account that later announcements are more precise, and that agents may inefficiently put too much weight on public signals due to strategic complementarities. I solve for the optimal timing of announcements and the conditions under which it is preferable to keep mum in spite of public interest. As a by-product, I characterize the life-cycle of attention following an announcement, before and after the regime changes.

  Full text [pdf]

• Thursday 15 March 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  LEVCHENKO Andrei (University of Michigan) : The Evolution of Comparative Advantage: Measurement and Welfare Implications

  Co-author(s): Jing Zhang Le Macroeconomics seminar & Paris trade seminar seront exceptionnellement joints.

  Full text [pdf]

• Thursday 8 March 2012 16:30-18:00

  YUE Vivian (Federal Reserve Board) : Export Dynamics in Large Devaluations

  Co-author(s): George Alessandria & Sangeeta Pratap

  Abstract

  This paper studies export dynamics in emerging markets following large devaluations. We document two main features of exports that are puzzling for standard trade models. First, given the change in relative prices, exports tend to grow gradually following a devaluation. Second, high interest rates tend to suppress exports. To address these features of export dynamics, we embed a model of endogenous export participation due to sunk and per period export costs into an otherwise standard small open economy. In response to shocks to productivity, interest rates, and the terms of trade, we find the model can capture the salient features of export dynamics documented. At the aggregate level, these features of export dynamics affect the net export and debt dynamics and thus have an impact on intertemporal borrowing and lending. JEL classifications: E31, F12. Keywords: Export Dynamics, Devaluation, Net Exports.

  Full text [pdf]

• Thursday 16 February 2012 16:30-18:00

  ROSSI Barbara (Duke University) : Can Oil Prices Forecast Exchange Rates?

  Co-author(s): Domenico Ferraro & Ken Rogoff

  Abstract

  This paper investigates whether oil prices have a reliable and stable out-of-sample relationship with the Canadian/U.S dollar nominal exchange rate. Despite state-of-the-art methodologies, we ?find little systematic relation between oil prices and the exchange rate at the monthly and quarterly frequencies. In contrast, the main contribution is to show the existence of a very short-term relationship at the daily frequency, which is rather robust and holds no matter whether we use contemporaneous (realized) or lagged oil prices in our regression. However, in the latter case the predictive ability is ephemeral, mostly appearing after instabilities have been appropriately taken into account. J.E.L. Codes: F31, F37, C22, C53.

  Full text [pdf]

• Thursday 19 January 2012 16:30-18:00

  BENIGNO Gianluca (LSE) : Reserve Accumulation, Growth and Crises

  Co-author(s): Luca Fornaro

• Thursday 12 January 2012 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  HAU Harald (University of Geneva & Swiss Finance Institute) : Real Effects of Stock Underpricing

  Co-author(s) : Sandy LAI

  Abstract

  This paper provides evidence for a causal effect of equity prices on corporate investment and employment. We use ?fire sales by distressed equity funds during the 2007-2009 ?financial crisis to identify substantial exogenous underpricing. Firms whose stocks are most underpriced have considerably lower investment and employment than industry peers not subject to any ?fire sale discount. The causal effect of underpricing on investment is found to be largely concentrated on the most ?financially constrained ?firms. JEL Classi?fication: G11, G14, G23 Keywords: Market Inefficiency, Fire Sales, Mutual Funds, Investment, Employment

  Full text [pdf]

• Thursday 15 December 2011 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 1s

  GARETTO Stefania (Boston University) : Risk, Returns, and Multinational Production

  Co-author(s) : Jose L. Fillat

• Thursday 1 December 2011 16:30-18:00

  SCHABERT Andreas (University of Dortmund) : A Monetary Analysis of Balance Sheet Policies

  Co-author(s) : Markus Hörmann

  Abstract

  We augment a standard macroeconomic model to analyze the effects and limitations of balance sheet policies. We show that the central bank can stimulate real activity by changing the size or the composition of its balance sheet, when interest rate policy reaches its limits. Increased lending against eligible collateral allows implementing optimal discretionary policy at the zero lower bound, while changing the balance sheet composition can neutralize increases in firms’ borrowing costs. These policies are non-neutral if collateral is scarce, which is reflected by a liquidity premium. We further examine long-term bond purchases and quantify limits of balance sheet policies. JEL classification: E32; E52; E58. Keywords: Unconventional monetary policy, collateralized lending, quantitative easing, liquidity premium, zero lower bound.

  Full text [pdf]

• Thursday 17 November 2011 16:30-18:00

  RAVENNA Federico (HEC Montréal) : Business Cycles and Labor Market Flows with Skill Heterogeneity in a Monetary Policy Model

  Co-auteur(s) : Carl E. Walsh

  Abstract

  We construct a model in which screening of heterogeneous workers by employers plays a central role in determining both the flows into and out of unemployment. Following a negative productivity shock, the share of low-skill workers in the pool of unemployed rises, and this composition effect reduces the incentive of firms to post vacancy falls, lowering job opportunities for all workers. Skill heterogeneity amplifies unemployment fluctuations in economies with small gross labor flows, or during a persistent fall in demand. The model provides a rich environment to study the implications of labor market structure for real and monetary disturbances. JEL: E52, E58, J64

  Full text [pdf]

• Thursday 10 November 2011 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  LICANDRO Omar (Institut d'Anàlisi Econòmica) : Endogenous Growth and Wave-Like Business Fluctuations

  Co-auteur(s) : Mauro Bambi

  Abstract

  Schumpeter stated that “wave-like fluctuations in business...are the form economic development takes in the era of capitalism.” This paper argues that observed long lags in the implementation of innovations make modern economies to behave consistently with Schumpeter’s statement. In a simple endogenous growth model with implementation delays, the paper finds that: First, the equilibrium path admits a Hopf bifurcation where consumption, R&D and output permanently fluctuate. Innovations arrive en masse, moving the economy to a boom; the associated increase in purchasing power all over the business sphere induces research activities to flourish again; but, innovations will take a while to develop; when the new wave of innovations is eventually implemented, new products enter the market producing a second boom; a third will follow, then a forth and so on and so for. Second, this mechanism is quantitatively consistent with US aggregate data. Finally, a procyclical R&D subsidy rate moving around 10% and designed to half consumption fluctuations increases the growth rate from 2.4% to 3.4% with a 9.6% increase in welfare, 6.3% of the welfare gains due to consumption smoothing. JEL Classification O3, E32 Keywords Endogenous growth; endogenous fluctuations; innovation implementation; time delays; medium term cycles; Hopf bifurcation

  Full text [pdf]

• Thursday 20 October 2011 16:30-18:00

  TELES Pedro (Universidade Catolica Portuguesa, Banco de Portugal) : Unconventional Fiscal Policy at the Zero Bound

  Co-auteur(s) : Isabel Correia, Emmanuel Farhi & Juan Pablo Nicolini

  Abstract

  When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as wasteful public spending or future commitments to low interest rates. Key words: Zero Bound; Fiscal policy; Monetary policy; Sticky prices. JEL classification: E31; E40; E52; E58; E62; E63.

  Full text [pdf]

• Thursday 13 October 2011 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), 6t

  BROER Tobias (Institute for International Economic Studies) : Domestic or global imbalances? Rising inequality and the fall in the US current account

  Abstract

  This paper shows how the rise in individual income risk in the US since the 1980s could help explain the fall in its foreign asset position. The key to this result is endogenous - nancial deepening in an open economy where individuals can default on contracts, at the price of exclusion from nancial trade. More volatile income makes default less attractive, and thus allows higher borrowing against future income. In a closed economy, this im- proves consumption smoothing across volatile income realisations (Krueger and Perri 2006). I show analytically how, in an open economy, relaxed default constraints from higher risk can decrease stationary asset demand with potentially no eect on consumption insurance, determined by world interest rates. In a quantitative two country general equilibrium anal- ysis, the observed rise in individual risk in the US strongly lowers its foreign asset demand. This is reinforced by a precautionary \savings glut" from increased income volatility in an emerging economy, calibrated to the evolution of individual inequality in China, where the absence of insurance markets leaves no room for nancial deepening. JEL Classication Codes: D31, D52, E21, F21, F41 Keywords: Current Account, Global Imbalances, Heterogeneous Agents, Inequality, Incom- plete Markets, Participation Constraints, Default

  Full text [pdf]

• Thursday 6 October 2011 16:30-18:00

  RAMCHARAN Rodney (Federal Reserve Board) : The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s

  Co-auteur(s) : Raghuram Rajan

  Abstract

  How important is the role of credit availability in inflating asset prices? And does greater credit availability make the economy more sensitive to changes in sentiment or fundamentals? In this paper we address these questions by examining the rise (and fall) of farm land prices in the United States in the early twentieth century, attempting to identify the separate effects of changes in fundamentals and changes in the availability of credit on land prices. We find that credit availability likely had a direct effect on inflating land prices. Credit availability may have also amplified the relationship between the perceived improvement in fundamentals and land prices. When fundamentals turned down, however, areas with higher ex ante credit availability suffered a greater fall in land prices, and experienced higher bank failure rates. We draw lessons for regulatory policy.

  Full text [pdf]

• Monday 19 September 2011 16:30-18:00

  MSE Campus (106-112 boulevard de l'Hôpital, 75013 Paris), Ro

  VIOLANTE Gianluca (New York University) : Measuring Mismatch in the US Labor Market

  Co-auteur(s) : Aysegül Sahin, Joseph Song & Giorgio Topa

  Full text [pdf]

• Thursday 8 September 2011 16:30-18:00

  HOPENHAYN Hugo (UCLA) : Equilibrium Default

  Co-auteur(s) : Ivan WERNING

  Full text [pdf]

• Thursday 30 June 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  WOODFORD Michael (Columbia University) : Monetary Policy and Financial Stability

• Monday 27 June 2011 12:30-13:30

  MSE - Salle 115 - 106 boulevard de l'Hôpital 75013 Paris

  LOUNGANI Prakash (FMI) : New Evidence on Cyclical and Structural Sources of Unemployment

  Co-auteur(s) : Jinzhu Chen, Prakash Kannan & Bharat Trehan Macro Seminar & Macro Workshop joints

  Full text [pdf]

• Thursday 23 June 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  PORTIER Franck (Toulouse School of Economics) : Explicit Gains from Trade and Macroeconomic Fluctuations

  Co-auteur(s) : Paul Beaudry

  Abstract

  Business cycles reflect changes over time in the amount of trade between individuals. In this paper we illustrate how incorporating explicitly intra-temporal gains from trade between individuals into a macroeconomic model can provide new insight into the potential mechanisms driving economic fluctuations as well as modify key policy implications. In particular, we show how a "gains from trade" approach can easily explain why changes in perceptions about the future can cause booms and bust, and we discuss under what conditions government spending can have a similar effect. While much of our analysis is conducted in a flexible price environment,we also present implications of our model for a sticky price environments. The source of the explicit gains from trade in our setup derive from assuming that in the short run workers are not perfectly mobile across all sectors of the economy. We provide evidence from the PSID in support of this modeling assumption.

• Thursday 16 June 2011 16:30-18:00

  MSE - Salle 117 (1er étage) - 106 boulevard de l'Hôpital 750

  HELLERSTEIN Rebecca (Federal Reserve Bank of New York) : Global Bond Risk Premiums

  Full text [pdf]

• Thursday 9 June 2011 16:30-18:00

  MSE - Salle 117 - 106 boulevard de l'Hôpital 75013 Paris

  PAPELL David (University of Houston) : Phoenix Taylor Rule Exchange Rate Forecasting During the Financial Crisis

  Co-auteur(s) : Tanya Molodtsova

  Full text [pdf]

• Thursday 26 May 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  LAGOS Ricardo (New York University) : Trade Dynamics in the Market for Federal Funds

  Co-auteur(s) : Gara M. Afonso

  Full text [pdf]

• Thursday 12 May 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  EICHENBAUM Marty (Northwestern University) : Understanding Booms and Busts in Housing Markets

  Co-auteur(s) : Craig Burnside & Sergio Rebelo

  Full text [pdf]

• Thursday 5 May 2011 16:30-18:00

  GALI Jordi (CREI) : Unemployment in an Estimated New Keynesian Model

  Co-auteur(s) : Frank Smets & Rafael Wouters

  Full text [pdf]

• Thursday 28 April 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  KIYOTAKI Nobuhiro (LSE) : Financial Crises, Bank Risk Exposure and Government Financial Policy

  Co-auteur(s) : Mark Gertler & Albert Queralto

  Full text [pdf]

• Thursday 7 April 2011 16:30-18:00

  BOUAKEZ Hafedh (HEC Montréal) : Measuring the Effects of Fiscal Policy

  Co-auteur(s) : Foued Chihi & Michel Normandin

  Full text [pdf]

• Thursday 31 March 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  ADAM Klaus (University of Mannheim) : House Price Booms and the Current Account

  Co-auteur(s) : Albert Marcet & Pei Kuang

  Full text [pdf]

• Thursday 24 March 2011 10:30-12:00

  POUZO Demian (University of California) : Sovereign Default Risk and Uncertainty Premia

  Co-auteur(s) : Ignacio Presno

  Full text [pdf]

• Thursday 17 March 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  DEN HAAN Wouter (University of Amsterdam) : The Role of Debt and Equity Finance over the Business Cycle

  Co-auteur(s) : Francisco Covas

  Full text [pdf]

• Thursday 3 March 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  SCHMID Lukas (Duke University) : Innovation, Growth and Asset Pricing

  Co-auteur(s) : Howard Kung

  Full text [pdf]

• Thursday 10 February 2011 16:30-18:00

  SHIMER Robert (University of Chicago) : Wage Rigidities and Jobless Recoveries

  Full text [pdf]

• Thursday 27 January 2011 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  RIBONI Alessandro (University de Montréal) : Legal Institutions, Innovation and Growth

  Co-auteur(s) : Luca Anderlini, Leonardo Felli & Giovanni Immordino

  Full text [pdf]

• Thursday 20 January 2011 11:00-12:00

  MSE - Salle 114 - 106 boulevard de l'Hôpital 75013 Paris

  LOISEL Olivier (Banque de France) : Monetary policy and herd behavior in new-tech investment

  Co-auteur(s) : Aude Pommeret & Franck Portier Joint with a CNRS RECRUITMENT SEMINAR

  Full text [pdf]

• Thursday 13 January 2011 11:00-12:30

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  BENATI Luca (Banque de France) : Are Policy Counterfactuals Based on Structural VARs Reliable?

  Full text [pdf]

• Friday 17 December 2010 10:30-12:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  GOURIO François (Boston University) : Credit Risk and Disaster Risk

  SEANCE EXCEPTIONNELLE

  Full text [pdf]

• Thursday 16 December 2010 16:30-18:00

  LEON-LEDESMA Miguel (University of Kent) : Shocking Stuff: Technology, Hours, and Factor Substitution

  Co-auteur(s) : Cristiano Cantore, Peter McAdam & Alpo Willman

  Full text [pdf]

• Friday 10 December 2010 10:30-12:00

  FARMER Roger (University of California) : Animal Spirits, Persistent Unemployment and the Belief Function

  SEANCE EXCEPTIONNELLE

  Full text [pdf]

• Thursday 9 December 2010 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  KARADI Peter (Central Bank of Hungary) : A Model of Unconventional Monetary Policy

  Co-auteur(s) : Mark Gertler

  Full text [pdf]

• Tuesday 7 December 2010 12:00-13:00

  MSE - Salle 19 - 106 boulevard de l'Hôpital 75013 Paris

  VAN RENS Thijs (CREI and Universitat Pompeu Fabra) : The Vanishing Procyclicality of Labor Productivity

  Co-auteur(s) : Jordi Galí

  Full text [pdf]

• Thursday 2 December 2010 16:30-18:00

  THOENIG Mathias (HEC Lausanne) : War Signals: A Theory of Trade, Trust and Conflict

  Co-auteur(s) : Dominic Rohnery & Fabrizio Zilibottix

  Full text [pdf]

• Thursday 25 November 2010 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  NIMARK Kristoffer (CREI) : Speculative Dynamics in the Term Structure of Interest Rates

  JOINT WITH INSEAD

  Full text [pdf]

• Thursday 18 November 2010 16:30-18:00

  GIANNONI Marc (Columbia University) : Optimal Target Criteria for Stabilization Policy

  Co-auteur(s) : Mike Woodford

  Full text [pdf]

• Thursday 21 October 2010 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  POILLY Céline (Université Catholique de Louvain, IRES) : On the Recovery Path during a Liquidity Trap: Do Financial Frictions Matter for Fiscal Multipliers?

  Co-auteur(s) : Julio Carrillo

  Full text [pdf]

• Thursday 14 October 2010 16:30-18:00

  GÜRKAYNAK Refet S. (Bilkent University) : How Useful are Estimated DSGE Model Forecasts for Central Bankers?

  Co-auteur(s) : Rochelle Edge

  Full text [pdf]

• Thursday 7 October 2010 16:30-18:00

  MSE - Salle du 6ème - 106 boulevard de l'Hôpital 75013 Paris

  MOJON Benoît (Banque de France) : Fuzzy Capital Requirements, Risk-Shifting and the Risk Taking Channel of Monetary Policy

  Co-auteur(s) : Xavier Ragot & Simon Dubecq

  Full text [pdf]

• Thursday 8 July 2010 16:30-18:00

  CHAMPONNOIS Sylvain (University of California) : What determines the distibution of firm sizes?

• Thursday 1 July 2010 16:30-18:00

  GOURINCHAS Pierre-Olivier (University of California) : *

  SEMINAIRE REPORTE AU 30 JUIN (joint avec le lunch séminaire d'économie appliquée)

• Friday 25 June 2010 12:30-14:00

  MSE - 6th Floor Conference Room

  GOPINATH Gita (Harvard University) : Trade Adjustment in Large Crises

  Joint Seminar PSE/Sc Po Co-autheur(s) : Brent Neiman

  Full text [pdf]

• Thursday 17 June 2010 16:30-18:00

  FARHI Emmanuel (Harvard University) : The Political Economy of Nonlinear Capital Taxation

  Co-auteur(s) : Ivan Werning

  Full text [pdf]

• Thursday 3 June 2010 15:30-17:00

  CARVALHO Vasco (CREI) : The Great Diversification and its Undoing

  Co-auteur (s) : Xavier Gabaix

• Thursday 27 May 2010 16:30-18:00

  The session was canceled.

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris - salle 114

  VERDELHAN Adrien (Boston University ) : *

• Thursday 20 May 2010 16:30-18:00

  GUIMARAES Bernardo (London School of Economics) : A model of equilibrium institutions

• Thursday 6 May 2010 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  TRIGARI Antonella (Bocconi University) : *

• Thursday 29 April 2010 16:30-18:00

  CICCONE Antonio (Universitat Pompeu Fabra) : Rain and the Democratic Window of Opportunity

  Co-auteur(s) : Markus Brückner

  Full text [pdf]

• Thursday 22 April 2010 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  LAUBACH Thomas (Federal Reserve Board) : Fiscal policy and interest rates in normal times and times of stress

• Thursday 15 April 2010 16:30-18:00

  COIBION Olivier (College of William & Mary) : What Can Survey Forecasts Tell Us About Informational Rigidities?

  Co-auteur(s) : Yuriy Gorodnichenke

  Full text [pdf]

• Tuesday 13 April 2010 17:00-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris - salle S18

  HALE Galina (Federal Reserve Bank of San Francisco) : Do banks propagate debt market shocks?

  Co-auteur(s) : Joao A. C. Santos MACRO WORKSHOP

  Full text [pdf]

• Thursday 8 April 2010 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris - salle 114

  PANAGEAS Stavros (The University of Chicago) : Optimal retirement benefit guarantees

  Full text [pdf]

• Friday 2 April 2010 14:30-16:00

  HALL Robert (Stanford University) : *

  Joint Seminar PSE/Sc Po

• Thursday 1 April 2010 16:30-18:00

  HALL Robert (Stanford University) : Diagnosing Consumer Confusion and Sub-Optimal Shopping Effort: Theory and Mortgage-Market Evidence

  Co-auteur(s) : Susan E. Woodward

  Full text [pdf]

• Monday 29 March 2010 17:30-19:00

  Sciences Po - Salle H402, 28 rue des Saints Pères

  LORENZONI Guido (MIT) : Beauty Contests and Irrational Exuberance: A Neoclassical Approach

  Co-auteur(s) : George-Marios Angeletos & Alessandro Pavan Joint Seminar PSE/Sc Po

  Full text [pdf]

• Thursday 18 March 2010 16:30-18:00

  ORDONEZ Guillermo (Yale University) : Optimal Regulation in the Presence of Reputation Concerns

  Co-auteur(s) : Andrew Atkesony & Christian Hellwig

  Full text [pdf]

• Thursday 11 March 2010 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  PAVONI Nicola (University College London) : Ramsey Asset Taxation Under Asymmetric Information

  co-auteur(s) : Piero Gottardi

  Abstract

  This paper aim at creating a bridge between the classical Ramsey capital taxation literature and the more recent Mirrleesian approach to optimal wealth or asset taxation in general equilibrium. We consider environments with competitive markets for insurance in the presence of asymmetric information of the moral hazard (hidden effort) type. Insurance firms are able to observe the realization of the idiosyncratic shocks affecting agents' income but cannot observe the effort level undertaken by agents, which affects the likelihood of the individual shocks, nor the trades made by agents in the market; the contracts traded in the insurance markets are thus non exclusive. In such environments we may still have state contingent claims been traded (e.g. Arrow securities), provided only there is a different price for buying and selling such claims (i.e. a bid ask spread is allowed), and prices are otherwise linear in trades. Markets can hence potentially provide insurance and we consider the case where a complete set of Arrow securities contingent on each individual shocks are available for trade. In this set-up the market outcome is typically inefficient, even when the incentive constraints are taken into account. We study the optimal taxation in this environment. The limited information over agents' trades - in particular the anonymity of trades in the markets implies the government can only resort to linear taxes on asset trades (purchases). The government can also impose lump sum taxes or transfers. The specific form of these taxes depends in turn on the information available over agents' income shock realizations. In this regard we consider both the case where the government has the same information as insurance firms have and the case where the government can only impose deterministic lump-sum taxes. In all cases, taxes on asset trades are linear and - unlike Kocherlakota (2005) - they cannot be contingent on the ex-post realization of the individual shock. This is in accordance to the anonymity of the insurance and credit markets. The main finding is that tax on capital is typically positive and that the second best can be achieved if and only if agent's joint deviations are irrelevant (i.e., if and only if the so called 'first order approach' is valid). The idea is simple. Ex-ante taxes can be used to make the agent indifferent between not deviating and deviating only in the level of his trades (not effort). The lump-sum taxes are designed so as to induce the efficient allocation where the agent is indifferent between at least two effort levels (with no deviation in trades).

• Thursday 11 March 2010 13:00-14:30

  YOUNG Alwyn (LSE) : Real Consumption Measures for the Poorer Regions of the World

  Abstract

  Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing about 3.5 percent per annum, i.e. three and half to four times the rate indicated in international data sets.

  Full text [pdf]

• Thursday 4 March 2010 16:30-18:00

  MAYORAL Laura (Universitat Pompeu Fabra) : Aggregate real exchange rate persistence through the lens of sectoral data

  Co-auteur : Maria Dolores Gadea

  Full text [pdf]

• Thursday 25 February 2010 16:30-18:00

  The session was canceled.

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  *

• Thursday 18 February 2010 16:30-18:00

  BACCHETTA Philippe (Université de Lausanne) : On the Dynamics of Leverage, Liquidity, and Risk

  Co-auteur(s) : Cédric Tille & Eric van Wincoop

  Full text [pdf]

• Friday 5 February 2010 12:00-13:30

  COEURDACIER Nicolas (London Business School ) : When Bonds Matter: Home Bias in Goods and Assets

  Joint with Banque de France Co-auteur(s) : Pierre-Olivier Gourinchas

  Full text [pdf]

• Thursday 4 February 2010 16:00-17:30

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  RENDAHL Pontus (University of California) : Recursive Bargaining with Endogenous Threats

  Co-auteur(s) : Ramon Marimon

  Full text [pdf]

• Thursday 28 January 2010

  Conference BdF-PSE-IMF les 28 et 29 janvier 2010

• Thursday 21 January 2010 16:30-18:00

  MICHAILLAT Pascal (University of California) : Do matching frictions explain unemployment? Not in bad time

  Full text [pdf]

• Thursday 14 January 2010 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  KREBS Tom (University of Mannheim) : *

• Monday 11 January 2010 17:30-19:00

  Département d'économie de sciences po, 28 rue des Saints-Pér

  MANOVSKII Iourii (University of Pennsylvania) : *

  Joint Seminar PSE/Sc Po

• Thursday 10 December 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  MARTIN Philippe (Sciences Po) : How do different exporters react to exchange rate changes? Theory, empirics and aggregate implications

  Co-auteur(s) : Nicolas Berman & Thierry Mayer

  Abstract

  This paper analyzes the reaction of exporters to exchange rate changes. We present a model where, in the presence of distribution costs in the export market, high and low productivity firms react differently to a depreciation . Whereas high productivity firms optimally raise their markup rather than the volume they export, low productivity firms choose the opposite strategy. Hence, pricing to market is both endogenous and heterogenous. This heterogeneity has important consequences for the aggregate impact of exchange rate movements. The presence of fixed costs to export means that only high productivity firms can export, firms which precisely react to an exchange rate depreciation by increasing their export price rather than their sales. We show that this selection effect can explain the weak impact of exchange rate movements on aggregate export volumes. We then test the main predictions of the model on a very rich French firm level data set with destination-specific export values and volumes on the period 1995-2005. Our results confirm that high performance firms react to a depreciation by increasing their export price rather than their export volume. The reverse is true for low productivity exporters. Pricing to market by exporters is also more pervasive in sectors and destination countries with higher distribution costs. Consistent with our theoretical framework, we show that the probability of firms to enter the export market following a depreciation increases. The extensive margin response to exchange rate changes is modest at the aggregate level because firms that enter, following a depreciation, are smaller relative to existing firms. JEL Classification: F12 and F41 Keywords: distribution costs, exchange rates, exports, heterogeneity, pricing to market and productivity

  Full text [pdf]

• Thursday 3 December 2009 16:30-18:00

  The session was canceled.

  COSTAIN James (Bank of Spain) : *

• Thursday 26 November 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  KUBLER Félix (University of Zurich) : Regulating Collateral-requirements when markets are incomplete

  Co-auteur(s) : Aloisio Araujo & Susan Schommer

  Abstract

  In this paper we examine the effects of default and scarcity of collateralizable durable goods on risk-sharing. We assume that there is a large set of assets which all promise a risk-less payoff but which distinguish themselves by the collateral requirement. In equilibrium agents default and the assets have different payoffs. Assets with very low collateral requirements can be interpreted as sub-prime loans and these assets are often traded actively in the competitive equilibrium. If there is an abundance of commodities that can be used as collateral and if each agent owns a large fraction of these commodities, markets are complete and competitive equilibrium allocations Pareto optimal. If, on the other hand, the collateralizable durable good is scarce or if some agents do not own enough of the collateralizable durable good in the first period, markets can be endogenously incomplete, not all of the available assets are traded in the competitive equilibrium and allocations are not Pareto optimal. We give examples that show that welfare losses can be quantitatively large. We also examine the scope for government intervention. In particular we ask who in the economy gains and who loses if collateral requirements are regulated exogenously. In our examples, regulation never leads to a Pareto-improvement. Often, the rich and the poor agents gain if trade is restricted to subprime contracts and lose if trade in these contracts is not allowed.

• Thursday 19 November 2009 16:30-18:00

  SANDLERIS Guido (Johns Hopkins University) : The Costs of Emerging Market Financial Crises: Output, Productivity and Welfare

  Co-auteur(s) : Mark L. J. Wright

  Full text [pdf]

• Thursday 12 November 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  PASTEN Ernesto (Toulouse School of Economics) : Coordination of Expectations and the Informational Role of Policy

  Co-auteur(s) : Yang K. Luy

  Abstract

  An informational role of policy arises in economies where large fluctuations are triggered by self-fulfilling expectation switches between efficient "optimism" and inefficient "pessimism," a feature that is common in many dynamic economies with coordination failures. Policy affects the information about underlying fundamentals contained in aggregate outcomes, and thus affects the timing of switches and expectations of future switches. We use a problem of optimal taxation on labor income as a laboratory to study this role of policy from a positive and a normative perspective. Our main result is that a stabilization policy is ineffective after an expectation switch. Instead, policy should anticipate switches with small permanent tax cuts to extend "optimism" and severe transitory tax cuts to break "pessimism." These tax cuts should be reverted once a switch is triggered, when policy must focus on its short run objectives. JEL codes: D8, E6, H2, H3 Keywords: optimal policy, expectation switches, coordination failures, equilibrium selection.

  Full text [pdf]

• Thursday 5 November 2009 16:30-18:00

  JIN Keyu (London School of Economics) : International Business Cycles with Heterogeneous Sectors

  Abstract

  The `quantity anomalies' that arise from standard international business cycle models are cross-country correlations in consumption being higher than output, and negative comovement in aggregate investment and employment. This paper shows that incorporating multiple sectors with heterogeneous factor intensities into an otherwise standard two-country stochastic growth model can resolve these anomalies. Endogenous intratemporal trade creates an additional channel for the propagation of productivity shocks across countries, competing with the standard, `resource allocation effect'. Moreover, a country-specific technology shock can induce reallocation of resources both across industries and countries. These reallocations alter the composition of goods produced in countries over the business cycle, and can generate `procyclical' and `countercylical' sectors. An important prediction is that sectoral inputs and outputs tend to be more correlated across countries for more labor-intensive sectors. Predictions of sectoral dynamics is shown to be broadly consistent with the data. JEL Classification: F21, F32, F41 Key Words: International Business Cycles, Multiple Sectors, Factor Proportions

  Full text [pdf]

• Thursday 29 October 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  QUADRINI Vincenzo (University of Southern California) : Macroeconomic Effects of Financial Shocks

  Co-auteur(s) : Urban Jermann

  Abstract

  We document the cyclical properties of U.S. firms' financial ows. Equity payouts are procyclical and debt payouts are countercyclical. We develop a model with explicit roles for debt and equity financing and explore how the observed dynamics of real and financial variables are affected by `financial shocks'. Standard productivity shocks can only partially explain the movements in real and financial variables. The addition of financial shocks brings the model much closer to the data. The recent events in the financial sector show up clearly as a tightening of firms' financing conditions causing the GDP decline in 2008-09.

  Full text [pdf]

• Thursday 29 October 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  QUADRINI Vincenzo (University of Southern California) : Macroeconomic Effects of Financial Shocks

  Co-auteur(s) : Urban Jermann

  Abstract

  We document the cyclical properties of U.S. firms' financial ows. Equity payouts are procyclical and debt payouts are countercyclical. We develop a model with explicit roles for debt and equity financing and explore how the observed dynamics of real and financial variables are affected by `financial shocks'. Standard productivity shocks can only partially explain the movements in real and financial variables. The addition of financial shocks brings the model much closer to the data. The recent events in the financial sector show up clearly as a tightening of firms' financing conditions causing the GDP decline in 2008-09.

  Full text [pdf]

• Thursday 22 October 2009 16:30-18:00

  GUILLARD Michel (Université d’Evry) : A Simple Public Debt-DeflationTheory: Leeper revisited

  Co-auteur(s) : Rym Aloui

  Abstract

  In this paper, we study the interaction between monetary and ?scal policies from the perspective of global analysis in a non-Ricardian economy with capital and a zero bound on the nominal interest rate. We demonstrate in this framework the possible coexistence of four steady state equilibria, each having the properties of one of the equilibria described by Leeper (1991). But whereas in Leeper (1991), an equilibrium corresponds to a particular configuration of fiscal and monetary policy-active or passive-, we obtain these four equilibria for a unique set of the policy parameter space. We show in particular that a liquidity trap-deflationary- equilibrium, which is also characterized by a high public debt-to-GDP ratio, a low capital stock and a low consumption level, owns the usually required properties for local determinacy, as well as the more traditional equilibrium targeted by the monetary and fiscal authorities. The model is calibrated based on European annual data and simulated in order to qualitatively asses the implications of a self-fulfilling expectation shock. JEL Codes : E63; E52 Keywords : Wealth Effects, Monetary and Fiscal Rules, Public Debt, Liquidity Trap, Deflation.

  Full text [pdf]

• Thursday 22 October 2009 16:30-18:00

  GUILLARD Michel (Université d’Evry) : A Simple Public Debt-DeflationTheory: Leeper revisited

  Co-auteur(s) : Rym Aloui

  Abstract

  In this paper, we study the interaction between monetary and ?scal policies from the perspective of global analysis in a non-Ricardian economy with capital and a zero bound on the nominal interest rate. We demonstrate in this framework the possible coexistence of four steady state equilibria, each having the properties of one of the equilibria described by Leeper (1991). But whereas in Leeper (1991), an equilibrium corresponds to a particular configuration of fiscal and monetary policy-active or passive-, we obtain these four equilibria for a unique set of the policy parameter space. We show in particular that a liquidity trap-deflationary- equilibrium, which is also characterized by a high public debt-to-GDP ratio, a low capital stock and a low consumption level, owns the usually required properties for local determinacy, as well as the more traditional equilibrium targeted by the monetary and fiscal authorities. The model is calibrated based on European annual data and simulated in order to qualitatively asses the implications of a self-fulfilling expectation shock. JEL Codes : E63; E52 Keywords : Wealth Effects, Monetary and Fiscal Rules, Public Debt, Liquidity Trap, Deflation.

  Full text [pdf]

• Thursday 15 October 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  D'ALBIS Hippolyte (Toulouse School of Economics) : Continuous-Time Overlapping Generations Models

  Co-auteur(s) : Emmanuelle Augeraud-Véron Le prix Philippe Michel du jeune chercheur en dynamique économique sera remis dans le cadre du séminaire de macroéconomie à Hippolyte d’Albis et Emmanuelle Augeraud-Véron.

  Abstract

  Age structured populations are studied in economics through overlapping generations models. These models allow for a realistic characterization of life-cycle behaviors and display intertemporal equilibrium that are not necessarily efficient. This article uses the latest developments in continuous time overlapping generations models to show the influence of the vintage structure of the population on the volatility of intertemporal prices. Permanent cycles can be found on the neighborhood of steady-states while the transitional dynamics are generically governed by short run fluctuations. JEL Classification: D5, D9, E2. Keywords: overlapping generations, continuous time, life-cycle, intertemporal prices.

  Full text [pdf]

• Thursday 15 October 2009 16:30-18:00

  Paris I - 106-112 Bd de l'Hôpital - 75013 Paris (6ème étage)

  D'ALBIS Hippolyte (Toulouse School of Economics) : Continuous-Time Overlapping Generations Models

  Co-auteur(s) : Emmanuelle Augeraud-Véron Le prix Philippe Michel du jeune chercheur en dynamique économique sera remis dans le cadre du séminaire de macroéconomie à Hippolyte d’Albis et Emmanuelle Augeraud-Véron.

  Abstract

  Age structured populations are studied in economics through overlapping generations models. These models allow for a realistic characterization of life-cycle behaviors and display intertemporal equilibrium that are not necessarily efficient. This article uses the latest developments in continuous time overlapping generations models to show the influence of the vintage structure of the population on the volatility of intertemporal prices. Permanent cycles can be found on the neighborhood of steady-states while the transitional dynamics are generically governed by short run fluctuations. JEL Classification: D5, D9, E2. Keywords: overlapping generations, continuous time, life-cycle, intertemporal prices.

  Full text [pdf]

• Thursday 25 June 2009 16:30-18:00

  BENHABIB J. (New York University) : The distribution of wealth and fiscal policy in economies with finitely lived agents

  Co-auteur(s) : A. Bisin

  Abstract

  We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and inter-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor income and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth, of wealth inequality in particular, on various fiscal policy instruments like capital income taxes and estate taxes. We show that capital income and estate taxes can significantly reduce wealth inequality. Finally, we study the effects of different degrees of social mobility on the wealth distribution.

  Full text [pdf]

• Thursday 25 June 2009 16:30-18:00

  BENHABIB J. (New York University) : The distribution of wealth and fiscal policy in economies with finitely lived agents

  Co-auteur(s) : A. Bisin

  Abstract

  We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and inter-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor income and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth, of wealth inequality in particular, on various fiscal policy instruments like capital income taxes and estate taxes. We show that capital income and estate taxes can significantly reduce wealth inequality. Finally, we study the effects of different degrees of social mobility on the wealth distribution.

  Full text [pdf]

• Thursday 25 June 2009 16:30-18:00

  BENHABIB J. (New York University) : The distribution of wealth and fiscal policy in economies with finitely lived agents

  Co-auteur(s) : A. Bisin

  Abstract

  We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and inter-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor income and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth, of wealth inequality in particular, on various fiscal policy instruments like capital income taxes and estate taxes. We show that capital income and estate taxes can significantly reduce wealth inequality. Finally, we study the effects of different degrees of social mobility on the wealth distribution.

  Full text [pdf]

• Thursday 18 June 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  MARTIN A. (CREI) : Institutions and Foreign Finance: Sovereign and Private Flows

  Co-auteur(s) : N. Gennaioli & S. Rossi

  Abstract

  We model the interactions between sovereign and private borrowing in a small open economy. We assume that sovereign borrowing is subject to the government’s strategic default, while private borrowing relies on the country’s financial institutions. We find that the latter institutions create a complementarity between capital flows to the private and public sectors. This complementarity causes asymmetric effects of financial liberalization, which reduces sovereign risk only in countries with sufficiently good institutions, and of unanticipated global liquidity shortages, which — through government default — cause the most severe dislocations in countries with relatively weak institutions. We present empirical evidence that is broadly consistent with some of the predictions of our model. JEL classification: G33, K22. Keywords: Sovereign Risk, Capital Flows, Institutions, Financial Liberalization, Sudden Stops

  Full text [pdf]

• Thursday 18 June 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  MARTIN A. (CREI) : Institutions and Foreign Finance: Sovereign and Private Flows

  Co-auteur(s) : N. Gennaioli & S. Rossi

  Abstract

  We model the interactions between sovereign and private borrowing in a small open economy. We assume that sovereign borrowing is subject to the government’s strategic default, while private borrowing relies on the country’s financial institutions. We find that the latter institutions create a complementarity between capital flows to the private and public sectors. This complementarity causes asymmetric effects of financial liberalization, which reduces sovereign risk only in countries with sufficiently good institutions, and of unanticipated global liquidity shortages, which — through government default — cause the most severe dislocations in countries with relatively weak institutions. We present empirical evidence that is broadly consistent with some of the predictions of our model. JEL classification: G33, K22. Keywords: Sovereign Risk, Capital Flows, Institutions, Financial Liberalization, Sudden Stops

  Full text [pdf]

• Thursday 18 June 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  MARTIN A. (CREI) : Institutions and Foreign Finance: Sovereign and Private Flows

  Co-auteur(s) : N. Gennaioli & S. Rossi

  Abstract

  We model the interactions between sovereign and private borrowing in a small open economy. We assume that sovereign borrowing is subject to the government’s strategic default, while private borrowing relies on the country’s financial institutions. We find that the latter institutions create a complementarity between capital flows to the private and public sectors. This complementarity causes asymmetric effects of financial liberalization, which reduces sovereign risk only in countries with sufficiently good institutions, and of unanticipated global liquidity shortages, which — through government default — cause the most severe dislocations in countries with relatively weak institutions. We present empirical evidence that is broadly consistent with some of the predictions of our model. JEL classification: G33, K22. Keywords: Sovereign Risk, Capital Flows, Institutions, Financial Liberalization, Sudden Stops

  Full text [pdf]

• Thursday 11 June 2009 16:30-18:00

  The session was canceled.

  MARTIN A. (Research Centre in International Economics) : *

• Thursday 11 June 2009 16:30-18:00

  The session was canceled.

  MARTIN A. (Research Centre in International Economics) : *

• Thursday 11 June 2009 16:30-18:00

  The session was canceled.

  MARTIN A. (Research Centre in International Economics) : *

• Thursday 4 June 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  MARIMON R. (European University Institute) : Recursive contracts

  Co-auteur(s) : A. Marcet

  Abstract

  We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization (sup) problems non recursive. Our approach consists of studying a recursive Lagrangian. Under standard general conditions, there is a recursive saddle point (infsup) functional equation (analogous to Bellman's equation) that characterizes the recursive solution for the planner's problem and the individual values. Our approach applies to a large class of dynamic contractual problems, as examples, we study the optimal policies in a model with limited enforcement and in a model with implementability constraints (as in Ramsey problems).

  Full text [pdf]

• Thursday 28 May 2009 16:30-18:00

  The session was canceled.

  DALGAARD C. J. (University of Copenhagen) : Lightning, IT Diffusion and Economic Growth across US States

  Co-auteur(s) : T. B. Andersen, J. Bentzen & P. Selaya

  Abstract

  Empirically, a higher frequency of lightning strikes is associated with slower growth in labor productivity across the 48 contiguous US states after 1990; before 1990 there is no correlation between growth and lightning. Other climate variables (e.g., temperature, rainfall, and tornadoes) do not conform to this pattern. A viable explanation is that lightning influences IT diffusion: a higher frequency of ground strikes increases IT user costs and thereby slows the spread of IT. We find that lightning indeed slows IT diffusion, conditional on standard controls. Hence, an increasing macroeconomic sensitivity to lightning may be due to the increasing importance of digital technologies for the growth process. Keywords: Climate; IT diffusion; economic growth JEL Classification: O33, O51, Q54

  Full text [pdf]

• Thursday 21 May 2009

  Pas de séminaire

• Thursday 14 May 2009 16:30-18:00

  CABALLE J. (Universitat Autonoma de Barcelona) : Fiscal policy, composition of intergenerational transfers, and income distribution

  Co-auteur(s) : J. Alonso-Carrera & Xavier Raurich

  Abstract

  In this paper, we characterize the relationship between the initial distribution of human capital and physical inheritances among individuals and the long-run distribution of these two variables. In a model with borrowing constraints and indivisible investment in education, we discuss how the initial composition of intergenerational transfers determines the posterior intergenerational mobility in human capital and the evolution of intragenerational income inequality. This analysis enables us in turn to characterize the effects of fiscal policy on future income distribution, intergenerational mobility, and economic performance when the composition of intergenerational transfers is endogenous. JEL classification codes: D64, E21, E13, E62 Keywords: Altruism, Intergenerational Transfers, Human Capital, Income Distribution.

  Full text [pdf]

• Thursday 7 May 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  ELLISON M. (University of Oxford) : The Great Inflation and the Greenbook

  Co-auteur(s) : G. Carboni

  Abstract

  We ask whether the story of evolving Federal Reserve beliefs in The Conquest of American Inflation can simultaneously explain the Great Inflation and the forecasts published in the Greenbook during that time. If Sargent is correct and the Great Inflation was caused by the Federal Reserve learning the Phillips curve, then evolving beliefs should be reflected not only in policy outcomes but also in Greenbook forecasts. In our estimations they are. By conditioning on the Greenbook, we show that both inflation outcomes and Greenbook forecasts can be rationalised by the evolution of beliefs. Our results improve on recent empirical evidence that has been criticised for relying on unrealistic beliefs that produces forecasts inconsistent with the Greenbook. JEL classification: E52, E58, E65 Keywords: Great Inflation, Greenbook, Learning, Monetary Policy

  Full text [pdf]

• Monday 4 May 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, salle B31

  WAELDE K. (University of Glasgow) : Estimating incentive and welfare effects of non-stationary unemployment benfits

  Co-auteur(s) : A. Launov & I. Schumm

  Abstract

  We formulate a general equilibrium matching model with spell-dependent unemployment benefits and endogenous search effort. The model gives rise to an endogenous distribution of unemployment duration characterized by a time-varying hazard function. Using methods from the literature on Semi-Markov processes, we obtain an expression for the aggregate unemployment rate under heterogeneous search effort. We perform structural estimation of the model using a German micro-data set (SOEP) and discuss the effects of the recent unemployment benefit reform (Hartz IV). Our results show that although the reform and eco- nomic growth have contributed to the reduction of the aggregate unemployment rate, aggregate welfare has gone down. JEL Codes: J 65, J 64, C 13 Keywords: Non-stationary unemployment benefits, general equilibrium matching model, structural estimation, Semi-Markov process

  Full text [pdf]

• Thursday 30 April 2009 16:30-18:00

  KOREN M. (Central European University) : A Spatial Explanation for the Balassa–Samuelson Effect

  Co-auteur(s) : P. Karádi

  Abstract

  We propose a simple spatial model to explain why the price level is higher in rich countries. There are two sectors: manufacturing, which is freely tradable, and nontradable services, which have to locate near customers in big cities. As countries develop, total factor productivity increases simultaneously in both sectors. However, because services compete with the population for scarce land, labor productivity will grow slower in services than in manufacturing. Services become more expensive, and the aggregate price level becomes higher. The model hence provides a theoretical foundation for the Balassa–Samuelson assumption that productivity growth is slower in the non-tradable sector than in the tradable sector. Empirical results confirm two key implications of the theory. First, we compare countries where land is scarce (densely populated, highly urban countries) to rural countries. The Balassa–Samuelson effect is stronger among urban countries. Second, we compare sectors that locate at different distance to consumers. The Balassa–Samuelson effect is stronger within sectors that locate closer to consumers.

  Full text [pdf]

• Thursday 23 April 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  AGUIAR M. (University of Rochester) : Growth in the Shadow of Expropriation

  Co-auteur(s) : M. Amador

  Abstract

  In this paper, we address two questions: (i)Why do developing countries with the highest growth rates export capital; and (ii) Why are some countries unable or unwilling to pursue the high growth/low debt strategies that has proven successful for many “miracle” economies. The model we study is a small open economy subject to political economy and contracting frictions. The political economy frictions involve polarization and political turnover, while the contracting friction is a lack of commitment regarding foreign debt and expropriation. We show that the political economy frictions induce growth dynamics in a limited-commitment environment that would otherwise move immediately to the steady state. In particular, greater polarization corresponds to a high tax rate on investment, which declines slowly over time, generating slow convergence to the steady state. Moreover, while political frictions shorten the horizon of the government, the government may still pursue a path of tax rates in which the first best investment is achieved in the long run, although the transition may be slow. The model rationalizes why openness has different implications for growth depending on the political environment, why institutions such as respect for property rights evolve over time, why governments in open countries that grow rapidly tend to accumulate net foreign assets rather than liabilities, and why foreign aid does not affect growth.

  Full text [pdf]

• Thursday 16 April 2009 16:30-18:00

  TILLE C. (HEI) : Disconnect and Information Content of International Capital Flows: Evidence and Theory

  Co-auteur(s) : E. van Wincoop

  Abstract

  The relationship between asset prices and fundamentals is characterized by both disconnect and predictability: asset prices are largely disconnected from current publicly observed fundamentals and at the same time contain information about future fundamentals, even when conditioning on current fundamentals. Previous research has shown that both aspects can be explained by dispersed private information. In this paper we document these same features for international capital flows. We show that this can be explained by introducing information dispersion into recently developed open economy dynamic general equilibrium models encompassing portfolio choice. A calibration exercise shows that these features are quantitatively significant. JEL classification: F32, F36, F41 Keywords: international capital flows, information dispersion

  Full text [pdf]

• Thursday 9 April 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  GRANDMONT J.M. (CREST) : Negishi-Solow efficiency wages, unemployment insurance and stochastic endogenous Keynesian unemployment business cycles

• Thursday 2 April 2009 16:30-18:00

  MILLER M. (The university of Warwick) : Leverage and Asset Bubbles: Averting Armageddon with Chapter 11?

  Co-auteur(s) : J. Stiglitz

  Abstract

  The current financial crisis poses severe challenges for central bank policymaking; but the widely-used DSGE paradigm - designed to help control inflation - seems illsuited to understanding the origins of the crisis or designing measures to resolve it. The relevant macroeconomic framework must surely include high leverage and overvalued collateral assets, with capital restructuring the key to crisis resolution. The usual ‘bankruptcy’ procedures for doing this are not, however, designed to handle macro shocks hitting the whole economy : they would fail to internalise the price effects of asset ‘fire-sales’ required to satisfy margin calls. We use a simple model of credit-constrained borrowers to show how “super” Chapter 11 procedures can play a crucial role in preventing an asset price correction triggering widespread economic collapse. (Timely cuts in interest rates - which act as transfers from lenders to borrowers - can also help.) To cope with the financial shock, balance sheets need ‘restructuring’: what about the micro-foundations of conventional macroeconomics? JEL Classification: E32, G21, G32, G33, and O54 Keywords: Credit constraints, leverage, asset bubbles, crisis resolution, interest rates.

  Full text [pdf]

• Thursday 26 March 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  GHIGLINO C. (University of Essex) : Keeping up with the neighbors: social interaction in a market economy

  Co-auteur(s) : S. Goyal

  Abstract

  We consider a world in which individuals have private endowments and trade in markets, while their utility is negatively affected by the consumption of their neighbors. Our interest is in understanding how social structure of comparisons, taken together with the familiar fundamentals of the economy – endowments, technology and preferences – shapes equilibrium prices, allocations and welfare. We show that equilibrium prices and consumptions are a function of a single network statistic: centrality. An individual’s ‘centrality’ is given by the weighted sum of paths of different lengths to all others in a social network. In particular, prices are proportional to sum of centralities, while an individual’s consumption depends on how central she is relative to others in the network. Inequalities in wealth and connections reinforce each other in markets: a transfer of resources from less to more central agents raises prices. As segregated communities become integrated the poor lose while the rich gain in utility!

  Full text [pdf]

• Thursday 19 March 2009 16:30-18:00

  The session was canceled.

  KREBS T. (Universität Mannheim) : Risk Sharing in Human Capital Models with Limited Enforcement

  Co-auteur(s) : M. Wright

  Abstract

  This paper develops a tractable model of economic growth with human capital risk and limited enforcement/ commitment. The paper shows how recursive equilibria can be exactly computed by solving a convex, finite-dimensional fixed point problem, and proves the existence of recursive equilibria by proving the existence of a solution the finite-dimensional fixed point problem. The paper also shows that a calibrated version of the model is consistent with some important empirical facts about individual income and consumption. In particular, the model replicates the strong response of individual consumption to permanent (highly persistent) income shocks that has been documented by recent micro studies. The calibrated model implies that any government policy that improves the enforcement of risk sharing arrangements/contracts has substantial effects on economic growth and welfare.

  Full text [pdf]

• Thursday 12 March 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  GIANNITSAROU C. (University of Cambridge) : Stock Prices and Monetary Policy Shocks: A General Equilibrium Approach

  Co-auteur(s) : E. Challe

  Abstract

  Recent empirical literature documents that unexpected changes in the nominal interest rates have a significant effect on stock prices: a 25-basis point increase in the Fed funds rate is associated with an immediate decrease in broad stock indices that may range from 0.6 to 1.7 percent, followed by a gradual decay as stock prices revert towards their long-run expected value. In this paper, we assess the ability of a general equilibrium New Keynesian asset-pricing model to account for these facts. The model we consider allows for staggered price and wage setting, as well as time-varying risk aversion through habit formation. We find that the model predicts a stock market response to policy shocks that matches empirical estimates, both qualitatively and quantitatively. However, the model seems to underestimate the contribution of time-varying expected excess returns in generating the current response of ex post excess returns to the shock. Our findings are robust to a range of variations and parameterizations of the model. Keywords: Monetary policy; Asset prices; New Keynesian general equilibrium model JEL Classification: E31, E52, G12

  Full text [pdf]

• Thursday 5 March 2009 16:30-18:00

  BELLETTINI G. (University of Bologna) : Political persistence, connections and economic growth

  Co-auteur(s) : C. Berti Ceroni & G. Prarolo

  Abstract

  Using data on a panel of 56 democratic countries in the period 1975-2004, we find evidence of a negative association between political stability and economic growth which is stronger and empirically more robust in countries with high bureaucratic costs. Motivated by these results, which contrast with previous contributions, we develop a model of growth with quality improvements where political connections with long-term politicians can be exploited by low-quality producers to defend their monopoly position and prevent innovation and entry of high-quality competitors.This requires that the incumbent politician remains in office and that the red-tape cost advantage granted by political connections is large relative to the quality upgrade related to innovation. Consistently with our empirical findings, the model delivers a negative association between the probability that the incumbent politician remains in office and average economic growth in the presence of high bureaucratic costs.

  Full text [pdf]

• Thursday 26 February 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  HOMMES C. (Universiteit van Amsterdam) : Evolutionary Selection of Individual Expectations and Aggregate Outcomes

  Co-auteur(s) : M. Anufrievy

  Abstract

  We construct a model of evolutionary or reinforcement learning, where boundedly rational agents choose from a few simple rules for price prediction, such as naive, adaptive or trend following expectations. Agents update their active rule by evolutionary selection based upon forecasting errors. Simulations show that after some initial learning phase, coordination on a common rule occurs. Which rule survives evolutionary selection depends on the initial conditions, particularly on the price pattern in the first few periods and the initial shares of agents attached to the rules. Consequently, evolutionary learning exhibits path dependence and different patterns of realized prices are generated, explaining the results of the recent experiment on expectations formation in a standard asset pricing setting (Hommes, Sonnemans, Tuinstra and Van de Velden, 2005). Tuning the parameters, these patterns can be made both qualitatively and quantitatively close to those observed in the experiments. We thus provide an explanation of the experimental findings using a low dimensional nonlinear deterministic model with few parameters. Keywords: Learning, Heterogeneous Expectations, Expectations Feedback, Experimental Economics

  Full text [pdf]

• Thursday 19 February 2009 16:30-18:00

  ORTIGUEIRA S. (European University Institute) : Labor-Market Volatility in the Search-and-Matching Model: The Role of Investment-Specific Technology Shocks

  Co-auteur(s) : R. Faccini

  Abstract

  Shocks to investment-specific technology have been identified as a main source of U.S. aggregate output volatility. In this paper we assess the contribution of these shocks to the volatility of labor market variables, namely, unemployment, vacancies, tightness and the job- finding rate. Thus, our paper contributes to a recent body of literature assessing the ability of the search-and-matching model to account for the large volatility observed in labor market variables. To this aim, we solve a neoclassical economy with search and matching in the labor market, where neutral and investment-specific technologies are subject to shocks. The three key features of our model economy are: i) Firms are large, in the sense that they employ many workers. ii) Adjusting capital and labor is costly. iii) Wages are the outcome of an intra-firm Nash-bargaining problem between the firm and its workers. In our calibrated economy, we find that shocks to investment-specific technology explain 40 percent of the observed volatility in U.S. labor productivity. Moreover, these shocks generate relative volatilities in vacancies and the workers' job ¯nding rate which match those observed in U.S. data. Relative volatilities in unemployment and labor market tightness are 55 and 75 percent of their empirical values, respectively. Keywords: Business Cycles; Labor Market Fluctuations; Investment-Specific Technical Change; Search and Matching; Adjustment Costs; Wage Bargaining. JEL Classification Numbers: E22; E24; E32; J41; J64; O33.

  Full text [pdf]

• Thursday 12 February 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  VEGH C. (University of Maryland) : Interest Rates and the Exchange Rate: A Non-Monotonic Tale

  Co-auteur(s) : V. Hnatkovska & Am. Lahiri

  Abstract

  What is the relationship between interest rates and the exchange rate? The empirical literature in this area has been inconclusive. We use an optimizing model of a small open economy to rationalize the mixed empirical findings. The model has three key margins. First, higher domestic interest rates raise the demand for deposits, and, hence, the money base. Second, firms need bank loans to finance the wage bill, which reduces output when domestic interest rates increase. Lastly, higher interest rates raise the government’s fiscal burden, and, therefore, can lead to higher expected inflation. While the first effect tends to appreciate the currency, the remaining two effects tend to depreciate it. We then conduct policy experiments using a calibrated version of the model and show the central result of the paper: the relationship between interest rates and the exchange rate is non-monotonic. In particular, the exchange rate response depends on the size of the interest rate increase and on the initial level of the interest rate. Moreover, we show that the model can replicate the heterogeneous responses of the exchange rate to interest rate innovations in several developing economies. JEL Classification: F3, F4 Keywords: Interest rate policy, flexible exchange rates, currency depreciation

  Full text [pdf]

• Thursday 5 February 2009 16:30-18:00

  SEMINAIRE REMPLACE PAR UN SEMINAIRE DE RECRUTEMENT

• Thursday 22 January 2009 15:30-17:00

  MONACELLI T. (Università Bocconi) : Fiscal Policy, Wealth Effects and Markups

  Co-auteur(s) : R. Perotti

  Abstract

  We document that an increase in government purchases generates a rise in con- sumption, the real and the product wage, and a fall in the markup. This evidence is robust across alternative empirical methodologies used to identify innovations in government spending (structural VAR vs. narrative approach). Simultaneously accounting for these facts is a formidable challenge for a neoclassical model, which relies on the wealth effect on labor supply as the main channel of transmission of un- productive government spending shocks. The goal of this paper is to explore further the role of the wealth effect in the transmission of government spending shocks. To this end, we build an otherwise standard business cycle model with price rigidity, in which preferences can be consistent with an arbitrarily small wealth effect on labor supply, and highlight that such effect is linked to the degree of complementarity be- tween consumption and hours. The model is able to match our empirical evidence on the effects of government spending shocks remarkably well. This happens when the preferences are such that the positive wealth effect on labor supply is small and therefore the negative wealth effect on consumption is, somewhat counterintuitively, large. Keywords: Government spending, private consumption, wealth effect, markup. JEL Classification Numbers: D91, E21, E62.

  Full text [pdf]

• Thursday 15 January 2009 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  BRITO P. (Universidade Técnica de Lisboa) : Equilibrium asset prices and bubbles in a continuous time OLG model

  Full text [pdf]

• Thursday 18 December 2008 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  GABAIX X. (New York University) : Rare Disasters and Exchange Rates

  Co-auteur(s) : E. Farhi

  Abstract

  We propose a new model of exchange rates, which yields a theory of the forward premium puzzle. Our explanation combines two ingredients: the possibility of rare economic disasters, and an asset view of the exchange rate. Our model is frictionless, has complete markets, and works for an arbitrary number of countries. In the model, rare worldwide disasters can occur and affect each country’s productivity. Each country’s exposure to disaster risk varies over time according to a mean-reverting process. Risky countries command high risk premia: they feature a depreciated exchange rate and a high interest rate. As their risk premium mean reverts, their exchange rate appreciates. Therefore, currencies of high interest rate countries appreciate on average. To make the notion of disaster risk more implementable, we show how options prices might in principle uncover latent disaster risk, and help forecast exchange rate movements. We then extend the framework to incorporate two factors: a disaster risk factor, and a business cycle factor. We calibrate the model and obtain quantitatively realistic values for the volatility of the exchange rate, the forward premium puzzle regression coefficients, and near-random walk exchange rate dynamics. Finally, we solve a model of stock markets across countries, which yields a series of predictions about the joint behavior of exchange rates, bonds, options and stocks across countries. The evidence from the options market appears to be supportive of the model. (JEL: E43, E44, F31, G12, G15)

  Full text [pdf]

• Thursday 11 December 2008 16:30-18:00

  CHAMPONNOIS S. (University of California San Diego) : Bank competition and economic stability: the role of monetary policy

  Full text [pdf]

• Thursday 4 December 2008 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  ENGEL C. (University of Wisconsin) : Currency Misalignments and Optimal Monetary Policy: A Reexamination

  Full text [pdf]

• Thursday 27 November 2008 15:30-17:00

  DEN HAAN W. (University of Amsterdam) : Anticipated Growth and Business Cycles in Matching Models

  Co-auteur(s) : G. Kaltenbrunner

  Abstract

  Anticipated Growth and Business Cycles in Matching Models Positive news about future productivity growth causes a contraction in most neoclassical business cycle models, which is counterfactual. We show that a business cycle model that incorporates the standard matching framework can generate an expansion. Although the wealth effect of an increase in expected productivity induces workers to reduce their labour supply, the matching friction has the opposite effect leaving labour supply roughly unaffected. Employment increases because the matching friction also induces firms to post more vacancies. This translates into additional resources, which makes it possible for both consumption and investment to increase in response to positive news about future productivity growth before the actual increase in productivity materializes. JEL Classification: E24, E32 and J41 Keywords: labour force participation, Pigou cycles and productivity growth

  Full text [pdf]

• Thursday 20 November 2008 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  DIXON H. (Cardiff Business School) : Non-smooth Dynamics and Multiple Equilibria in a Cournot-Ramsey Model with Endogenous Markups

  Co-auteur(s) : P. Britoa & L. Costa

  Full text [pdf]

• Thursday 13 November 2008 16:30-18:00

  ZIMMERMANN C. (University of Connecticut) : Basel Accord and Financial Intermediation: The Impact of Policy

  Co-auteur(s) : M. Berca

  Abstract

  This paper studies loan activity in a context where banks have to follow Basel Accord type rules and need to find financing with the households. Loan activity typically decreases when investment returns of entrepreneurs decline, and we study which type of policy could revigorate an economy in a trough. We find that active monetary policy increases loan volume even when the economy is in a good shape, while introducing active capital requirement policy can be effective as well if it implies tightening of regulation in bad times. This is performed with an heterogeneous agent economy with occupational choice, financial intermediation and aggregate shocks to the distribution of entrepreneurial returns. Keywords: Bank Capital Channel, Capital Requirements, Basel Accord, Occupational Choice, Bankruptcy, Credit Crunch. JEL Classification: E44, E22, G28, E58

  Full text [pdf]

• Thursday 6 November 2008 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  CHERON A. (Université du Maine) : Turbulence, Training and Unemployment: Do we need higher training subsidies?

  Co-auteur(s) : P. Belan

  Full text [pdf]

• Thursday 30 October 2008 16:30-18:00

  ASCARI G. (Univ. of Pavia) : Sacrifice Ratio or Welfare Gain Ratio? Disinflation in a DSGE monetary model

  Co-auteur(s) : T. Ropele - Séminaire conjoint avec la Banque de France

  Abstract

  The aim of this paper is to see how successful the current workhorse DSGE model of business cycle fluctuations can be in replicating the stylized facts above, without resorting to any kind of irrationality or imperfect credibility/information. We will show that: (i) a credible disinflation cause a prolonged slump; (ii) the SR resulting from the model simulations are well within the range of the estimated SRs in the literature; (iii) the model exhibits the property that SR decreases with average inflation. Finally, we perform a rigorous welfare evaluation of the costs of a disinflation, constructing a welfare based SR. JEL classification: E31, E5. Keywords: Disinflation, Sacrifice ratio, Nonlinearities

  Full text [pdf]

• Thursday 23 October 2008 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  MOJON B. (Banque de France) : Monetary Policy, Output Composition and the Great Moderation

  Abstract

  This paper shows how US monetary policy contributed to the drop in the volatility of US output fluctuations and to the decoupling of household investment from the business cycle. I estimate a model of household investment, an aggregate of non durable consumption and corporate sector investment, inflation and a short-term interest rate. Subsets of the models? parameters can vary along independent Markov Switching processes. A specific form of switches in the monetary policy regimes, i.e. changes in the size of monetary policy shocks, affect both the correlation between output components and their volatility. A regime of high volatility in monetary policy shocks, that spanned from 1970 to 1975 and from 1979 to 1984 is characterized by large monetary policy shocks contributions to GDP components and by a high correlation of household investment to the business cycle. This contrasts with the 1960's, the 1976 to 1979 period and the post 1984 era where monetary policy shocks have little impact on the fluctuations of real output. Keywords: business cycle volatility, monetary policy, Markov Switching VAR JEL classification: E3 E5

  Full text [pdf]

• Thursday 16 October 2008 16:30-18:00

  The session was canceled.

  *

• Thursday 9 October 2008 16:30-18:00

  MSE, 106-112 boulevard de l'Hôpital, 6ème étage

  CAVALCANTI FERREIRA P. (EPGE-Fundação Getulio Vargas) : The Effect of Social Security, Demography and Technology on Retirement

  Co-auteur(s) : M. Rodrigues dos Santos

  Abstract

  This article investigates the causes of the reduction of the labor force participation of the old. We argue that the changes in social security policy, in technology and in demography may account for the most of the changes in retirement over the second part of the last century in the U.S. economy. We develop a dynamic general equilibrium model with endogenous retirement that embeds social security legislation. The model is able to match very closely the increase in the retirement rate of males aged 65 and older. It is also quantified the isolated impact on retirement and on the solvency of social security system of the different factors. The model suggests that technological and demographic changes had a strong influence on retirement, so that it would have increased significantly even if the social security rules had not changed. However, as the latter became much more generous in the past, changes in social security policy can accounts not only for a sizable part of the expansion of retirement but also for the most of the observed increase in the benefits paid-output ratio. Key words: social security; aging population; technology; retiment decision. JEL classification: D11; B12

  Full text [pdf]

• Thursday 3 July 2008 16:30-18:00

  IMBS Jean (Universite de Lausanne) : Elasticity Optimism

  Co-auteur: Isabelle MEJEAN, Ecole Polytechnique // Séminaire joint Macroéconomie PSE-Paris I / TRADE

  Abstract

  Estimates of the elasticity of substitution between domestic and foreign varieties are small in macroeconomic data, but substantially larger in disaggregated microeconomic studies. This may be an artifact of heterogeneity. We use disaggregated multilateral trade data to structurally identify imports elasticities in the US.We spell out a partial equilibrium model to aggregate them adequately at the country level. We compare aggregate elasticities that impose equality across sectors, to estimates allowing for heterogeneity. The former are similar in value to conventional macroeconomic estimates; but they are more than twice larger -up to 5 - with heterogeneity. The parameter is central to calibrated models in most of international economics. We discuss the difference our corrected estimate makes in various areas of international economics, including the dynamics of external balances, the international transmission of shocks, international portfolio choice and optimal monetary policy.

• Thursday 26 June 2008 16:30-18:00

  WEILL Pierre-Olivier (UCLA) : Learning from Prices: Public Communication and Welfare

  Manuel AMADOR, Stanford

• Thursday 12 June 2008 17:30-18:00

  MURTIN F. (Stanford Univ.) : Convexities of Growth: a Resolution of the Krueger-Lindahl Puzzle

  Co-auteur: Philippe AGHION (Harvard University)

• Thursday 29 May 2008 16:30-18:00

  Univ. Paris 1-Panthéon-Sorbonne (MSE), (6th floor)

  VIOLANTE Giovanni (New York Univ.) : Joint-Search Theory: New Opportunities and New Frictions

  Co-auteurs : Bulent GULER (University of Texas at Austin), Fatih GUVENEN (University of Minnesota and NBER)

  Abstract

  Search theory routinely assumes that decisions about the acceptance/rejection of job o¤ers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their partners? in couples and families? and decisions are made jointly. This paper studies, from a theoretical viewpoint, the joint job-search and location problem of a household formed by a couple (e.g., husband and wife) who perfectly pool income. The objective of the exercise, very much in the spirit of standard search theory, is to characterize the reservation wage behavior of the couple and compare it to the single-agent search model in order to understand the rami?cations of partnerships for individual labor market outcomes and wage dynamics. We focus on two main cases. First, when couples are risk averse and pool income, joint-search yields new opportunities? similar to on-the-job search? relative to the single-agent search. Second, when couples face o¤ers from multiple locations and a cost of living apart, joint-search features new frictions and can lead to signi?cantly worse outcomes than single-agent search.

  Full text [pdf]

• Thursday 22 May 2008 16:30-18:00

  The session was canceled.

  DOEPKE M. (UCLA) : The Baby Boom and World War II: A Macroeconomic Analysis

  Co-auteurs : M. HAZAN and Y. MAOZ

• Thursday 15 May 2008 16:30-18:00

  Univ. Paris 1-Panthéon-Sorbonne (MSE), (6th floor)

  KRUSELL Per (Princeton University) : Aggregate Implications of Indivisible Labor, Incomplete Markets, and Labor Market Frictions

  Co-auteurs : T. MUKOYAMAZ R. ROGERSONX and A SAHIN

• Thursday 24 April 2008 16:30-18:00

  LEVCHENKO A. A. (University of Chicago) : Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement

  Co-auteur (s) : J. Di Giovanni

  Abstract

  This paper examines the mechanisms through which bilateral trade linkages affect business cycle comovement using an industry-level panel dataset of manufacturing production and trade. We establish that higher bilateral trade in an individual sector increases both the comovement within the sector between trading countries, as well as the comovement between that sector and the rest of the economy of the trading partner. The estimated magnitudes imply that transmission across sectors is responsible for nearly 90% of the total impact of higher bilateral trade on the business cycle correlation. We also demonstrate that vertical linkages in production are an important force behind the overall impact of trade on business cycle synchronization. The elasticity of comovement with respect to bilateral trade is significantly higher in industry pairs that use each other as intermediate inputs in production. Our estimates indicate that vertical production linkages account for some 19% of the total impact of bilateral trade on business cycle correlation. JEL Classifications: F15, F4 Keywords: Business cycle comovement, trade, industry-level data, vertical linkages

  Full text [pdf]

• Thursday 17 April 2008 16:30-18:00

  STORESLETTEN Kjetil (Stockholm University) : The Macroeconomic Implications of Rising Wage Inequality in the United States

  with Jonathan HEATHCOTE (Federal Reserve Board of Governors) and Giovanni L. VIOLANTE (New York University)

  Abstract

  This paper explores the implications of the recent shifts in U.S. wage structure (rising skill pre- mium, narrowing gender gap, increasing persistent and transitory residual wage dispersion) for the cross-sectional distributions of hours worked, consumption and earnings across U.S. house- holds. We develop an incomplete-markets overlapping-generations model where individuals choose education and form households, and households choose consumption and labor supply of each spouse. The model is parameterized using micro data from PSID, CPS and CEX. With the changing wage structure as the only primitive force, the model can account for many of the key trends in cross-sectional U.S. data. The model allows to quantify the welfare consequences of the rise in wage inequality, and the role played by education, labor supply, and saving in providing insurance against the observed shocks

  Full text [pdf]

• Thursday 3 April 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  BENHABIB Jess (New York University) : Optimal Migration

  Co-auteur : Boyan JOVANOVIC (New York University )

  Full text [pdf]

• Thursday 27 March 2008 16:30-18:00

  MENDOZA Enrique (University of Maryland and NBER) : A Solution to the Default Risk-Business Cycle Disconnect

  Vivian Z. YUE (New York University)

  Abstract

  Models of business cycles in emerging economies explain the negative correlation between country spreads and output by modeling default risk as an exogenous interest rate on working capital. Models of strategic default explain the cyclical properties of sovereign spreads by assuming an exogenous output cost of default with special features, and they underestimate debt-output ratios by a wide margin. This paper proposes a solution to this default risk-business cycle disconnect based on a model of sovereign default with endogenous output dynamics. The model replicates observed V-shaped output dynamics around default episodes, countercyclical sovereign spreads, and high debt ratios, and it also matches the variability of consumption and the countercyclical fluctuations of net exports. Three features of the model are key for these results: (1) working capital loans pay for imported inputs; (2) imported inputs support more efficient factor allocations than when these inputs are produced internally; and (3) default on the foreign obligations of firms and the government occurs simultaneously.

  Full text [pdf]

• Thursday 20 March 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  GARCIA-PENALOSA Cecilia (GREQAM ) : Education, Corruption, and the Distribution of Income

  Theo EICHER (University of Washington), Tanguy van YPERSELE (GREQAM and CEPR)

  Abstract

  Abstract: We model the two way interaction between education, corruption and the level of output. Corruption reduces income levels and hence educational attainment. Education in turn affects the incentives for corruption: more education increases output and thus the rents from corruption, but it also increases the probability that the electorate identifies corrupt behavior and ousts the incumbent party. In this context, we identify the conditions under which an opportunist party has the incentives to take actions that will allow the economy to escape from a poverty trap. Our analysis shows that the relationship between education, output levels and the level of corruption is non-monotonic, and that both institution-led development and education-led development are possible. Which path occurs crucially depends on the initial level of inequality.

  Full text [pdf]

• Thursday 13 March 2008 16:30-18:00

  COLLARD F. (Toulouse School of Economics) : Goods Trade and International Equity Portfolios

  Harris Dellas (Toulouse School of Economics), Behzad Diba (Georgetown University), and Alan Stockman (University of Rochester)

  Abstract

  We show that international trade in goods is the main determinant of international equity portfolios and it also o ers a compelling {theoretically and empirically{ resolution of the portfolio home bias puzzle. The model implies that investors can achieve full international risk diversication if the share of wealth invested in foreign equity matches their country's degree of openness (the imports to GDP share). The empirical evidence strongly supports this implication.

  Full text [pdf]

• Thursday 6 March 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  NORMANDIN M. (HEC ) : Fluctuations in the Foreign Exchange Market: How Important Are Monetary Policy Shocks?

  Co-auteur : Hafedh BOUAKEZ (HEC Montréal)

  Abstract

  We study the effects of U.S. monetary policy shocks on the bilateral exchange rate between the U.S. and each of the G7 countries. We also estimate deviations from uncovered interest rate parity and exchange rate pass-through conditional on these shocks. The analysis is based on a structural vector autoregression in which monetary policy shocks are identified through the conditional heteroscedasticity of the structural disturbances. Unlike earlier work in this area, our empirical methodology avoids making arbitrary assumptions about the relevant policy indicator or transmission mechanism in order to achieve identification. At the same time, it allows us to assess the implications of imposing invalid identifying restrictions. Our results indicate that the nominal exchange rate exhibits delayed overshooting in response to a monetary expansion, depreciating for roughly ten months before starting to appreciate. The monetary policy shock also leads to large and persistent departures from uncovered interest rate parity, and to a prolonged period of incomplete pass-through. Variance-decomposition results indicate that monetary policy shocks account for a large proportion of exchange rate movements.

  Full text [pdf]

• Thursday 28 February 2008 16:30-18:00

  LICANDRO O. (European University Institute) : The Child is Father of the Man: Implications for the Demographic Transition

  David de la CROIX (Department of Economics and CORE, Universit´e catholique de Louvain)

  Abstract

  We propose a new theory of the demographic transition based on the evi- dence that body development during childhood is an important predictor of adult life expectancy. Fertility, childhood development, longevity, education and in- come growth all result from individual decisions. Parents face a trade-off between the number of children they have and the spending they can afford on each of them in childhood. These childhood development spending will determine chil- dren longevity when adults. It is in this sense that we refer to Wordsworth’s aphorism that “The Child is Father of the Man.” Parents face a second trade-off in allocating their time between increasing their own human capital and rearing children. The model displays different regimes. In a Malthusian regime with no education fertility increases with adult life expectancy. In the modern growth regime, life expectancy and fertility move in opposite directions. The dynam- ics display the key features of the demographic transition, including the hump in both population growth and fertility, and replicate the observed rise in educational attainment, adult life expectancy and economic growth. Consistent with the em- pirical evidence, a distinctive implication of our theory is that improvements in childhood development precede the increase in education.

  Full text [pdf]

• Thursday 21 February 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  BENASSY Jean-Pascal (PSE) : Interest Rate Rules and Global Determinacy: An Alternative to the

  Full text [pdf]

• Thursday 14 February 2008 16:30-18:00

  YOUNG A. (London School of Economics) : In Sorrow to Bring Forth Children: Fertility amidst the Plague of HIV

  Full text [pdf]

• Thursday 7 February 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  TRESSEL T. (FMI) : Does Financial Globalization Discipline Politically Connected Firms?

  Co-auteur : T. Verdier

  Full text [pdf]

• Thursday 31 January 2008 16:30-18:00

  RABANAL Pau (Caixa d'Estalvis i Pensions de Barcelona) : Inflation Differentials in a Currency Union: a DSGE Perspective

  Full text [pdf]

• Thursday 24 January 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  GALI J. (UPF) : The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s?

  Co-auteur : Olivier J. Blanchard

  Abstract

  We characterize the macroeconomic performance of a set of industrialized economies in the aftermath of the oil price shocks of the 1970s and of the last decade, focusing on the di®erences across episodes. We examine four di®erent hypotheses for the mild e®ects on in°ation and economic activity of the recent increase in the price of oil: (a) good luck (i.e. lack of concurrent adverse shocks), (b) smaller share of oil in production, (c) more °exible labor markets, and (d) improvements in monetary policy. We conclude that all four have played an important role.

  Full text [pdf]

• Thursday 17 January 2008 16:30-18:00

  JUILLARD C. (London School of Economics) : Money Illusion and Housing Frenzies

  Co-auteur : Markus K. Brunnermeier

  Full text [pdf]

• Thursday 10 January 2008 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  DUFOURT F. (Beta) : Sunspot equilibria with persistent unemployment fluctuations

  Co-auteur : Teresa Lloyd-Braga and Leonor Modesto

  Full text [pdf]

• Thursday 20 December 2007 16:30-18:00

  MATSUYAMA Kiminori (Northwestern University) : Beyond Icebergs

  Full text [pdf]

• Thursday 13 December 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  GROEN J. (Bank of England) : Investigating the Structural Stability of the Phillips Curve Trade-Off

  Full text [pdf]

• Thursday 6 December 2007 16:30-18:00

  GUIMARAES B. (London School of Economics) : Sales and Monetary Policy

  Kevin Sheedy (LSE)

• Thursday 29 November 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  BRONER F. A. (University Pompeu Fabra) : Rethinking the Effects of Financial Liberalization

  Jaume Ventura (CREI and Universitat Pompeu Fabra)

  Abstract

  This paper presents a theoretical study of the effects of globalization on risk sharing and welfare. We model globalization as a gradual improvement in technology that increases the frac- tion of goods that are tradable. With complete markets, globalization does not affect domestic trade and, thus, improves risk sharing and raises welfare. We assume, however, that markets are incomplete because countries cannot commit to pay their debts. We also assume that countries cannot discriminate between domestic and foreign creditors when paying their debts. This cre- ates crucial interactions between domestic and international asset trade. Globalization increases the fraction of debts held by foreigners, thereby increasing the incentives to default and mar- ket incompleteness. Through this new channel, globalization might lower domestic asset trade, worsening risk sharing and lowering welfare. We show how the e¤ects of globalization depend on various characteristics of tradable goods and explore the roles of reputation, renegotiation, and borrowing limits.

  Full text [pdf]

• Thursday 22 November 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  SA F. (MIT and IZA) : The 35-Hour Workweek in France: Straightjacket or Welfare Improvement?

  Co-auteur : Marcello Estevão (IMF)

  Abstract

  Since the 1970s hours of work have been declining in Europe relative to the United States and Japan. A range of explanations has been offered for this trend, from tight labour market regulations and powerful labour unions, to higher tax rates and a stronger preference for leisure in Europe. In France, laws limiting work time, usually with the aim of reducing unemployment, are directly responsible for part of the decline in average hours worked. The most recent law reduced the length of the workweek from 39 to 35 hours in large firms in 2000 and in small firms two years later. Since then, there has been an intense debate about the impact of this policy on welfare, most notably during the 2007 presidential campaign. This paper studies the immediate impact of the 35-hour workweek on several dimensions: hours, wages, dual-job holdings, employment, and workers’ satisfaction with hours of work. We find evidence that the policy did not succeed in increasing employment and generated a series of behavioural responses that are likely to have reduced welfare, as workers and firms tried to avoid the rigidities created by the law. This suggests that the recently elected French government should increase the flexibility of workers and firms in setting hours of work.

  Full text [pdf]

• Thursday 15 November 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  DECREUSE B. (GREQAM) : Foreign Direct Investment and the labor share in developing

  Co-auteur : Paul Maarek (University of Aix-Marseilles II)

  Full text [pdf]

• Thursday 8 November 2007 16:30-18:00

  ANTRAS P. (Univ. of Harvard) : Trade and Capital Flows: A Financial Frictions Perspective

  Ricardo J. Caballero

  Full text [pdf]

• Monday 29 October 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  IMROHOROGLU S. (Univ. of Southern California) : Business Cycle Fluctuations and the Life Cycle: How Important is On-The-Job Skill Accumulation?

  Co-auteur (s) : G. D. Hansen ATTENTION : EXCEPTIONNELLEMENT, LA SEANCE AURA LIEU UN LUNDI

  Abstract

  We study the effects of on-the-job skill accumulation on average hours worked by age and the volatility of hours over the life cycle in a calibrated general equilibrium model. Two forms of skill accumulation are considered: learning by doing and on-the-job training. In our economy with learning by doing, individuals supply more labor early in the life cycle and less as they approach retirement than they do in an economy without this feature. The impact of this feature on the volatility of hours over the life cycle depends on the value of the intertemporal elasticity of labor supply. When individuals accumulate skills by on-the-job training, there are only weak effects on both the steady-state labor supply and its volatility over the life cycle.

  Full text [pdf]

• Thursday 25 October 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  RIOS-RULL J. V. (University of Pennsylvenia) : Redistributive Shocks and Productivity Shocks

  Co-auteur (s) : R. Santaeulalia-Llopis

  Abstract

  We document the cyclical properties of the labor share: it is quite volatile; an innovation to productivity produces an initial reduction of labor share, making it countercyclical, but it also produces a long-lasting subsequent increase that peaks five years later at a level larger in absolute terms than the initial drop. We pose and estimate a bivariate shock to the production function that, under the assumption of competition in factor markets, simultaneously accounts for movements in the Solow residual and in the factor shares of production. We then incorporate this bivariate process into an otherwise standard real business cycle model and compare the outcomes with those that result from the specification of a univariate productivity shock that matches the properties of the Solow residual. The volatility of hours worked in the bivariate shock economy is a lot smaller than that in the standard univariate shock economy (about 33% of the standard deviation or 11% of the variance), with productivity innovations in the bivariate economy generating 6% of the variance of hours displayed in the univariate economy. The effect of the productivity innovation on labor share reduces dramatically the incentives to work now relative to later both because wages will increase later and because the rate of return will go down. This behavior can be described in terms of a very strong positive wealth effect in the bivariate shock economy relative to the univariate shock economy, while the implied substitution effects tend to delay, first intra- and then intertemporally, the response of hours and not to mitigate them. Our results hold independently of the Frischian elasticity of labor supply. We conclude that understanding the cyclical movements of labor share, and hence constructing a theory of its particular movements should become an important piece of business cycle research.

  Full text [pdf]

• Thursday 18 October 2007 16:30-18:00

  The session was canceled.

  RABANAL P. (La Caixa) : *

• Thursday 11 October 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  THOENIG M. (Université de Genève) : The coevolution of international trade and cultural diversity: is the village global?

  Co-auteur (s): N. Maystre

• Thursday 7 June 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  REIS R. (Princeton univ.) : Measuring changes in the value of the numeraire

  Full text [pdf]

• Thursday 31 May 2007 16:30-18:00

  COMIN D. (New York univ.) : Was the Wealth of Nations Determined in 1000 B.C. ?

  Co-auteur (s) : W. Easterly et E. Gong

  Abstract

  We assemble a dataset on technology adoption in 1000 B.C., 0 A.D., and 1500 A.D. for the predecessors to today’s nation states. We find that this very old history of technology adoption is surprisingly significant for today’s national development outcomes. Although our strongest results are for 1500 A.D., we find that even technology as old as 1000 BC matters in some plausible specifications. Keywords: Technology adoption, technology history, economic development. JEL codes: O3, N7.

  Full text [pdf]

• Thursday 24 May 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  ZILIBOTTI F. (Univ. of Zurich) : Occupational Choice and the Spirit Of Capitalism

  Co-auteur (s) : M. Doepke

  Abstract

  The British Industrial Revolution triggered a reversal in the social order of society whereby the landed elite was replaced by industrial capitalists rising from the middle classes as the economically dominant group. Many observers have linked this transformation to the contrast in values between a hard-working and frugal middle class and an upper class imbued with disdain for work. We propose an economic theory of preference formation where both the divergence of attitudes across social classes and the ensuing reversal of economic fortunes are equilibrium outcomes. In our theory, parents shape their children’s preferences in response to economic incentives. This results in the stratification of society along occupational lines. Middleclass families in occupations that require effort, skill, and experience develop patience and work ethics, whereas upper-class families relying on rental income cultivate a refined taste for leisure. These class-specific attitudes, which are rooted in the nature of pre-industrial professions, become key determinants of success once industrialization transforms the economic landscape.

  Full text [pdf]

• Thursday 10 May 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  ASCARI G. (Univ. of Pavia) : Trend Inflation, Taylor Principle and Indeterminacy

  Co-auteur (s) : T. Ropele

  Abstract

  In this paper, we show that low trend inflation strongly affects the dynamics of a standard Neo-keynesian model where monetary policy is described by a standard Taylor rule. In particular, we show that trend inflation: (i) enlarges the indeterminacy region in the parameter space, substantially altering the so-called Taylor principle; (ii) changes the dynamic responses of the economy. Furthermore, we generalize the basic analysis to different types of Taylor rules, inertial policy rules and indexation schemes. The key point is that, whatever the set up, the literature on Taylor rules cannot disregard average inflation in both theoretical and empirical analysis. JEL classification: E31, E52. Keywords: Sticky Prices, Taylor Rules and Trend Inflation

  Full text [pdf]

• Thursday 26 April 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  ZEIRA J. (Hebrew University of Jerusalem) : Technology and Labor Regulations

  Co-auteur (s) : A. Alesina

  Abstract

  Many low skilled jobs have been substituted away for machines in Europe, or eliminated, much more so than in the US, while technological progress at the “top”, i.e. at the high-tech sector, is faster in the US than in Europe. This paper suggests that the main difference between Europe and the US in this respect is their different labor market policies. European countries reduce wage flexibility and inequality through a host of labor market regulations, like binding minimum wage laws, permanent unemployment subsidies, firing costs, etc. Such policies create incentives to develop and adopt labor saving capital intensive technologies at the low end of the skill distribution. At the same time technical progress in the US is more skill biased than in Europe, since American skilled wages are higher.

  Full text [pdf]

• Thursday 29 March 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  TSYVINSKI A. (Harvard univ.) : Political Economy of Mechanisms

  Co-auteur (s) : D. Acemoglu & M. Golosov

  Abstract

  We study the optimal Mirrlees taxation problem in a dynamic economy. In contrast to the standard approach where the taxation mechanism is operated by a benevolent planner with full commitment power, we focus on economies in which policy decisions are made by self-interested politicians, who cannot commit to policies. The society controls politicians using elections. We show that the provision of incentives to politicians can be partly separated from redistribution across agents and that political economy constraints can be modeled as introducing additional aggregate distortions in the dynamic Mirrlees problem. We provide conditions under which the political economy distortions persist or disappear in the long run. If the politicians are as patient as the agents, the “best sustainable mechanism” leads to an asymptotic allocation where the aggregate distortions arising from political economy disappear. In contrast, when politicians are less patient than the citizens, positive aggregate labor and capital taxes remain even asymptotically. We conclude by providing a brief comparison of centralized mechanisms operated by self-interested politicians to anonymous markets. Keywords: dynamic incentive problems, mechanism design, optimal taxation, political economy, public finance. JEL Classification: H11, H21, E61, P16.

  Full text [pdf]

• Thursday 22 March 2007 16:30-18:00

  LORENZONI G. (MIT) : Persistent appreciations and overshooting: a normative analysis

  Co-auteur (s) : R. J. Caballero

  Abstract

  Most economies experience episodes of persistent real exchange rate appreciation, when the question arises whether there is a need for intervention to protect the export sector. In this paper we present a model of irreversible export destruction where exchange rate intervention may be justified if the export sector is financially constrained. However the criterion for intervention is not whether there are bankruptcies or not, but whether these can cause a large exchange rate overshooting once the factors behind the appreciation subside. The optimal policy often involves no ex-ante (i.e., during the appreciation phase) intervention early on, followed by an increasingly aggressive stabilization as the appreciation persists and the financial resources of the export sector dwindle. The optimal policy balances ex-ante and ex-post interventions. In instances where ex-ante policy is ineffective or undesirable, the optimal policy typically exacerbates (but shortens) the initial overshooting during the depreciation phase. On the methodological front, the solution approach should be useful in other optimal dynamic intervention problems with financially constrained agents. JEL Codes: E0, E2, F0, F4, H2. Keywords: Appreciations, overshooting, financial frictions, irreversible investment, pecuniary externality, real wages, optimal policy, exports.

  Full text [pdf]

• Thursday 15 March 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  VERDELHAN A. (Boston univ.) : A Habit-Based Explanation of the Exchange Rate Risk Premium

  Abstract

  This paper presents a risk premium explanation of the uncovered interest rate parity (UIP) puzzle. In my two-country model, agents are characterized by slow- moving external habit preferences, and they incur international trade costs. The precautionary savings effect dominates the inter-temporal consumption-smoothing motive. Thus, times of high risk-aversion, when consumption is close to the habit level, correspond to low interest rates. The domestic investor receives a positive exchange rate risk premium when he is effectively more risk-averse than his foreign counterpart. As a result, the domestic investor receives a positive risk premium when interest rates are lower at home than abroad.

  Full text [pdf]

• Thursday 8 March 2007 16:30-18:00

  GOURIO F. (Boston univ.) : Investment Spikes: New Facts and a General Equilibrium Exploration

  Co-auteur (s) : A. K. Kashyap

  Abstract

  Using plant-level data from Chile and the U.S. we show that investment spikes are highly pro-cyclical, so much so that changes in the number of establishments undergoing investment spikes (the “extensive margin”) account for the bulk of variation in aggregate investment. The number of establishments undergoing investment spikes also has independent predictive power for aggregate investment, even controlling for past investment and sales. We re-calibrate the Thomas (2002) model (that includes fixed costs of investing) so that it assigns a prominent role to extensive adjustment. The recalibrated model has very different properties than the standard RBC model for some shocks. Key words: adjustment costs, investment, investment tax credit, fixed costs, extensive margin. JEL Classification Number: E22, E32

  Full text [pdf]

• Thursday 22 February 2007 13:00-14:30

  GUISO L. (European university Institute) : The Cost of Banking Regulation

  Co-auteur (s) : P. Sapienza et L. Zingales

  Abstract

  We use exogenous variation in the degree of restrictions to bank competition across Italian provinces to study both the effects of bank regulation and the impact of deregulation. We find that where entry was more restricted the cost of credit was higher and - contrary to expectations- access to credit lower. The only benefit of these restrictions was a lower proportion of bad loans. Liberalization brings a reduction in rate spreads and an increased access to credit at the cost of an increase in bad loans. In provinces where restrictions to bank competition were most severe, the proportion of bad loans after deregulation raises above the level present in more competitive markets, suggesting that the pre-existing conditions severely impact the effect of liberalizations.

  Full text [pdf]

• Thursday 15 February 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  WASMER E. (IEP) : Are Specific Skills an Obstacle to Labor Market Adjustment?

  Co-auteur (s) : A. Lamo & J. Messina

  Abstract

  Countries react differently to large labor reallocation shocks. Some minimize the costs by adapting rapidly, while others suffer long periods of costly adjustment, typically high and persistent unemployment and temporary output losses. We argue that the existence of large amounts of specific human capital slows down the transitions and makes them costly. We illustrate this point by first measuring the penalty associated with specific skills in two countries having experienced important macroeconomic turbulence. Using labor force data from a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia, we document our main claim, namely that specialized education reduces workers’ mobility and hence their ability to cope with economic changes. We find that holding a vocational degree is associated with much longer unemployment duration spells, relatively large wage penalties when changing jobs and higher likelihood of leaving activity for elder workers. We then build a theoretical framework in which young agents’ career is heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. In the absence of mobility, it takes as much as a generation for the economy to absorb the shock. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a much lesser extent.

  Full text [pdf]

• Thursday 8 February 2007 16:30-18:00

  TERRA C. (Fundação Getulio Varga) : Political Business Cycles through Lobbying

  Co-auteur (s) : M. Bonomo

  Abstract

  In this paper we build a framework where the interplay between the lobby power of special interest groups and the voting power of the majority of the population leads to political business cycles. We apply our set up to explain electoral cycles in government expenditure composition, which are not explained by traditional business cycles models, as well as to cycles in aggregate expenditures and in real exchange rates.

  Full text [pdf]

• Thursday 1 February 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  MATSUYAMA K. (Northwestern univ.) : Aggregate Implications of Credit Market Imperfections

  Full text [pdf]

• Thursday 25 January 2007 16:30-18:00

  COEURDACIER N. (ESSEC) : Do Trade Costs in Good Market Lead To Home Bias in Equities?

  Abstract

  Two of the main puzzles in international economics are the consumption and the portfolio home biases. They are empirically related: countries that are more open to trade also have more internationally diversified portfolios. In a two-country stochastic equilibrium model, I prove that introducing trade costs in goods market alone, as suggested by Obstfeld and Rogoff [2000], is not sufficient to explain these two puzzles simultaneously. On the contrary, for reasonable parameter values, trade costs create a foreign bias in portfolios. To reconcile facts and theory, I introduce a combination of small frictions in financial markets and trade costs in goods market. The interaction between the two types of frictions determines optimal portfolio allocation. When trade costs increase, competition in the goods market softens and the volatility of domestic income falls. Facing lower risk, investors have less incentive to pay the financial transaction cost and increase their holdings of domestic assets. The model correctly predicts that the larger the home bias in consumption, the larger the home bias in portfolios. Keywords: Trade Costs, Portfolio Choice, Home Bias, International Macroeconomics. JEL Classification: F30, F36, F41, G11.

  Full text [pdf]

• Thursday 18 January 2007 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  COLLARD F. (Institut d'économie industrielle) : What Happens After A Disinflation Policy Shock

  Co-auteur (s) : P. Fève & J. Matheron

  Abstract

  This paper investigates the effects of disinflation policies on key macroeconomic variables. Using postwar US data and episode techniques, we identify disinflation shock as shocks that drive the inflation rate to a lower level in the long–run. We find that in the immediate aftermath of the announcement of a disinflation, the economy enters in a persistent recession. The inflation rate increases above its long–run level and exhibits a positive hump–shaped response for about 10 quarters. A similar pattern is found for the nominal interest rate, which responds even more strongly in the short–run. We then show that the standard new Keynesian model fails to mimic the dynamics of both inflation and the nominal interest rate. Conversely, because it generates countercyclical markups, a deep habit version of the model successfully accounts for the effects of disinflation policies. Keywords: Disinflation, Deep Habits, New Keynesian Models, Countercyclical Markups. JEL Class: E31, E32, E52.

  Full text [pdf]

• Thursday 11 January 2007 16:30-18:00

  GABAIX X. (MIT) : A unified theory of ten financial puzzles

  Abstract

  This methodological paper proposes a new class of stochastic processes with appealing properties for theoretical or empirical work in finance and macroeconomics, the “linearity-generating” class. Its key property is that it yields simple exact closed-form expressions for stocks and bonds, with an arbitrary number of factors, feats that are not possible with the hitherto available modelling methods. It operates in discrete and continuous time. It has a number of economic modeling applications. These include macroeconomic situations with changing trend growth rates, or stochastic probability of disaster, asset pricing with stochastic risk premia or stochastic dividend growth rates, and yield curve analysis that allows flexibility and transparency. Many research questions may be addressed more simply and in closed form by using the linearity-generating class. (JEL: G12, G13) Keywords: Modified Gordon growth model, Stochastic Discount Factor, Linearity-generating process, Affine models, Long term risk, Growth rate risk, Interest rate processes, Yield curve, Bond pricing, Equity Premium, Rare Disasters.

  Full text [pdf]

• Thursday 21 December 2006 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  BILBIIE F. (Nuffield college) : Endogenous Entry, Product Variety and Business Cycles

  Co-auteur (s) : F. Ghironi & M. J. Melitz

  Abstract

  This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers over the business cycle. Economic expansions induce higher entry rates by prospective entrants subject to irreversible investment costs. The sluggish response of the number of producers (due to the sunk entry costs) generates a new and potentially important endogenous propagation mechanism for real business cycle models. The stock-market price of investment in the creation of new productive units determines household saving decisions, producer entry, and the allocation of labor across sectors. The model performs at least as well as the traditional setup with respect to the implied second-moment properties of key macroeconomic aggregates. In addition, our framework jointly predicts a procyclical number of producers and procyclical profits even for preference specifi- cations that imply countercyclical markups. When we include physical capital, the model can reproduce the variance and autocorrelation of GDP found in the data. JEL Codes: E20; E32. Keywords: Business cycle propagation; Entry; Markups; Product creation; Profits; Variety.

  Full text [pdf]

• Thursday 14 December 2006 16:30-18:00

  GILCHRIST S. (Boston univ.) : Investment During the Korean Financial Crisis: The Role of Foreign-Denominated Debt

  Co-auteur (s) : J. Sim

  Abstract

  Without capital market imperfections, the capital structure of a firm, including the size, the maturity and the currency compostion of debts, should not matter for investment decisions. The Asian financial crises provide a good opportunity to test this hypothesis. We approach the problem in two ways: First, we apply a conventional reduced-form analysis to a panel data of Korean manufacturing firms, argueing that the devaluation that occurred during the crisis provides a natural experiment in which to assess the effect of balance sheet shocks to investment. Second, we use indirect inference to estimate a structural dynamic programming problem of a firm with foreign debts and financial constraints. Both reduced-form evidence and structural parameter estimates imply an important role for finance in investment at the firm level. Counterfactual simulations imply that balance sheet effects may account for 50% to 80% of the drop in investment during the crisis period. In contrast, our estimates suggest that foreigndenominated debt had relatively little effect on aggregate investment spending during this period.

  Full text [pdf]

• Thursday 7 December 2006 16:30-18:00

  MILESI-FERRETI G. M. (Institut monetary fund) : The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities

  Co-auteur (s) : P. R. Lane

  Abstract

  We construct estimates of external assets and liabilities for 145 countries for the period 1970–2004. We describe our estimation methods and present key features of the data at the country and the global level. We focus on trends in net and gross external positions, and the composition of international portfolios, distinguishing between foreign direct investment, portfolio equity investment, official reserves, and external debt. We document the increasing importance of equity financing and the improvement in the external position for emerging markets, and the differing pace of financial integration between advanced and developing economies. We also show the existence of a global discrepancy between estimated foreign assets and liabilities, and identify the asset categories that account for this discrepancy. JEL Classification Number: F32 Keywords: International financial integration; net foreign assets

  Full text [pdf]

• Thursday 23 November 2006 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  CASELLI F. (LSE) : Economics and Politics of Alternative Institutional Reform

  Co-auteur (s) : N. Gennaioli

  Abstract

  We compare the economic consequences and political feasibility of reforms aimed at reducing barriers to entry (deregulation) and improving contractual enforcement (legal reform). Deregulation fosters entry, thereby increasing the number of firms (entrepreneurship) and the average quality of management (meritocracy). Legal reform also reduces financial constraints on entry, but in addition it facilitates transfers of control of incumbent firms, from untalented to talented managers. Since when incumbent firms are better run entry by new firms is less profitable, in general equilibrium legal reform may improve meritocracy at the expense of entrepreneurship. As a result, legal reform encounters less political opposition than deregulation, as it preserves incumbents’ rents, while at the same time allowing the less efficient among them to transfer control and capture (part of) the resulting efficiency gains. Using this insight, we show that there may be dynamic complementarities in the reform path, whereby reformers can skillfully use legal reform in the short run to create a constituency supporting future deregulations. Generally speaking, our model suggests that “Coasian” reforms improving the scope of private contracting are likely to mobilize greater political support because — rather than undermining the rents of incumbents — they allow for an endogenous compensation of losers. Some preliminary empirical evidence supports the view that the market for control of incumbent firms plays an important role in an industry’s response to legal reform.

  Full text [pdf]

• Thursday 16 November 2006 16:30-18:00

  MARIMON R. (European university institute) : Competition, Innovation and Growth with Limited Commitment

  Co-auteur (s) : V. Quadrini

  Full text [pdf]

• Thursday 9 November 2006 16:30-18:00

  MSE-Paris 1, salle du 6ème étage

  CARRE M. (Univ. de Cergy-Pontoise) : Subsidizing Low-Skilled Jobs in a Dual Labor Market

  Co-auteur (s) : P. Belan & S. Gregoir

  Full text [pdf]

• Thursday 26 October 2006 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  HAEFKE C. (IAS) : Labor Market Participation and the Business Cycle

  Co-auteur (s) : M. Reiter

  Full text [pdf]

• Thursday 19 October 2006 16:30-18:00

  GANCIA G. (Univ. Pompeu Fabra) : On Globalization and the Growth of Governments

  Co-auteur (s) : P. Epifani

  Full text [pdf]

• Thursday 12 October 2006 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  PHILIPPON T. (New York univ.) : The y-Theory of Investment

  Full text [pdf]

• Thursday 5 October 2006 16:30-18:00

  ALGAN Y. (PSE) : On the Non-Neutrality of Money with Borrowing Constraints

  Co-auteur (s) : X. RAGOT

  Full text [pdf]

• Thursday 14 September 2006 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  WOODFORD M. (Columbia univ.) : Robustly Optimal Monetary Policy with Near-Rational Expectations

  Full text [pdf]

• Wednesday 13 September 2006 16:30-18:00

  MSE-Paris 1, salle du 6e étage

  FARMER R. E. A. (Univ. of California) : Minimal State Variable Solutions to Markov-Switching Rational Expectations Model

  Co-auteur (s) : D. F. Waggoner et Tao Zha

  Full text [pdf]

• Wednesday 31 May 2006

  KEMPF H. (Univ. de Paris 1) : Gouvernance et performances macroéconomiques

  Co-auteur : L. Clerc

  Full text [pdf]

• Wednesday 24 May 2006

  EICHENBAUM M. (Northwestern univ.) : The Returns To Currency Speculation

  Co-auteur(s) : C. Burnside, I. Kleshchelski & S. Rebelo

  Full text [pdf]

• Wednesday 17 May 2006

  ROGERSON R. (Arizona state univ.) : Structural Transformation and the Deterioration European Labor Market Outcomes

  Full text [pdf]

• Wednesday 10 May 2006

  FLANDREAU M. (IEP) : Does Bilateralism Promote Trade? Nineteeth Century Liberalization Revisited

  Co-auteur : O. Accominotti

  Full text [pdf]

• Wednesday 3 May 2006

  NORMANDIN M. (HEC) : Global versus Country-Specific Shocks and International Business Cycles

  Co-auteur(s) : B. Powo Fosso

  Full text [pdf]

• Wednesday 26 April 2006

  MAYER T. (Univ. de Paris 11) : Make Trade Not War?

  Co-auteur(s) : P. Martin & M. Thoenig

  Full text [pdf]

• Wednesday 5 April 2006

  KURMAN A. (Univ. du Québec ) : Credit Market Frictions and Costly Capital Reallocation as a Propagation Mechanism

  Co-auteur(s) : N. Petrosky-Nadeau

  Full text [pdf]

• Wednesday 29 March 2006

  AGHION P. (Harvard univ.) : Appropriate Growth Policy

  Co-auteur(s) : P. Howitt

  Full text [pdf]

• Wednesday 22 March 2006

  CHERON A. (Univ. du Maine) : Job Creation, Job Destruction and the Life Cycle

• Wednesday 15 March 2006

  O'ROURKE K. (Trinity college) : Democracy and Protectionism in the Nineteenth Century

  Co-auteur(s) : A. M. Taylor

  Full text [pdf]

• Wednesday 8 March 2006

  GONG G. (Tsinghua univ.) : Wage Stickiness and Nonclearing Labor Market in Business Cycles

  Co-auteur(s) : W. Semmler

  Full text [pdf]

• Wednesday 1 March 2006

  The session was canceled.

  FRANCO F. (Univ. nova de Lisboa) : *

• Wednesday 22 February 2006

  RAVN M. O. (European university institute) : The Consumption-Tightness Puzzle

  Full text [pdf]

• Wednesday 15 February 2006

  SAINT-PAUL G. (Univ. de Toulouse 1) : Research Cycles

  Co-auteur(s) : Y. Bramoullé

  Full text [pdf]

• Wednesday 8 February 2006

  PORTIER F. (Univ. de Toulouse 1) : Gold Rush Fever in Business Cycles

• Wednesday 1 February 2006

  LE VAN C. (Univ. de Paris 1) : When Does a Developping Country Use New Technologies ?

  Co-auteur(s) : O. Bruno & B. Masquin

  Full text [pdf]

• Wednesday 25 January 2006

  CHALLE E. (Univ. de Paris 9) : Risk shifting, bubbles, and self-fulfilling crises

  Co-auteur(s) : Xavier Ragot

  Full text [pdf]

• Wednesday 18 January 2006

  T2M Conference

  Full text [pdf]

• Wednesday 11 January 2006

  BERGIN P. (Univ. of California) : Outsourcing and Volatility

  Co-auteur(s) : G. H. Hanson & R.C. Feenstra

  Full text [pdf]

• Wednesday 4 January 2006

  CORSETTI P. (European university institute) : DSGE Models of High Exchange-Rate Volatility and Low Pass-Through

  Co-auteur(s) : Luca Dedola & Sylvain Leduc

  Full text [pdf]

• Wednesday 14 December 2005

  GABAIX X. (MIT) : The Granular Origins of Aggregate Fluctuations

  Full text [pdf]

• Wednesday 7 December 2005

  WIGNIOLLE B. (Univ. de Paris 1) : Political economy of social security with endogenous preferences

  Co-auteur(s) : P. Belan

  Full text [pdf]

• Wednesday 30 November 2005

  LANE P. (Trinity college) : A Global Perspective on External Positions

  Co-auteur(s) : G. M. Milesi-Ferretti

  Full text [pdf]

• Wednesday 23 November 2005

  CHATELAIN J.B. (Univ. d'Orléans) : Deep pockets, collateral assignments of patents and the growth of innovations

  Co-auteur(s) : B. Amable & K. Ralf

  Full text [pdf]

• Wednesday 16 November 2005

  PINTUS P. A. (Univ. d'Aix-Marseille 2) : Progressive Fiscal Rules as Built-In Stabilizers

  Co-auteur(s) : N.L. Dromel

  Full text [pdf]

• Wednesday 9 November 2005

  PHILIPPON T. (New York univ.) : Concentrated Ownership and Labor Relations

  Co-auteur(s) : H. M. Mueller

  Full text [pdf]

• Wednesday 2 November 2005

  IMROHOROGLU S. (Univ. of Southern California) : Elimination of Social Security in a Dynastic Framework

  Co-auteur(s) : L. Fuster & A. Imrohoroglu

  Full text [pdf]

• Wednesday 26 October 2005

  TAYLOR A. M. (Univ. of California) : Productivity, Tradability, and the Long-Run Price Puizzle

  Co-auteur(s) : P. Bergin & R. Glick

  Full text [pdf]

• Wednesday 19 October 2005

  KOLLMANN R. (Univ. de Paris 12) : International Portfolio Equilibrium and the Current Account

  Full text [pdf]

• Wednesday 12 October 2005

  DUFLO E. (MIT) : Dams

  Co-auteur(s) : R. Pande

  Full text [pdf]

• Wednesday 5 October 2005

  MATSUYAMA K. (Northwestern univ.) : Emergent Class Structure

  Full text [pdf]

• Tuesday 28 June 2005

  HUBERMAN G. (Columbia business school) : What is the NPV of Expected Future Profits of Money Managers?

  Full text [pdf]

• Wednesday 22 June 2005

  The session was canceled.

  TAYLOR A. (Univ. of California) : Productivity, Tradability, and the Long-Run Price Puizzle

  Full text [pdf]

• Wednesday 22 June 2005

  The session was canceled.

  TAYLOR A. (Univ. of California) : Productivity, Tradability, and the Long-Run Price Puizzle

  Full text [pdf]

• Tuesday 21 June 2005

  HAU H. (INSEAD) : Exchange Rates, Equity Prices and Capital Flows

• Tuesday 21 June 2005

  HAU H. (INSEAD) : Exchange Rates, Equity Prices and Capital Flows

• Wednesday 15 June 2005

  AGHION P. (Harvard univ.) : Volatilité et Croissance : implications pour la politique macroéconomique de la croissance

• Wednesday 15 June 2005

  AGHION P. (Harvard univ.) : Volatilité et Croissance : implications pour la politique macroéconomique de la croissance

• Wednesday 8 June 2005

  FEVE P. : *

• Wednesday 8 June 2005

  FEVE P. : *

• Wednesday 1 June 2005

  The session was canceled.

  KUBLER F. (Univ. Mannheim) : *

• Wednesday 1 June 2005

  The session was canceled.

  KUBLER F. (Univ. Mannheim) : *

• Wednesday 25 May 2005

  DESDOIGTS A. (Univ. de Dijon) : *

• Wednesday 25 May 2005

  DESDOIGTS A. (Univ. de Dijon) : *

• Wednesday 18 May 2005

  POMMERET A. : Irreversible Investment with Embodied Technological Progress

  Co-auteur(s) : B. Cruz

  Full text [pdf]

• Wednesday 18 May 2005

  POMMERET A. : Irreversible Investment with Embodied Technological Progress

  Co-auteur(s) : B. Cruz

  Full text [pdf]

• Wednesday 11 May 2005

  MODESTO L. (Univ. catolica portuguesa) : Externalities in Preferences as a Source of Indeterminacy : An Approach to Taxation

  Co-auteur(s) : T. Lloyd-Braga et T. Seegmuller

  Full text [pdf]

• Wednesday 11 May 2005

  MODESTO L. (Univ. catolica portuguesa) : Externalities in Preferences as a Source of Indeterminacy : An Approach to Taxation

  Co-auteur(s) : T. Lloyd-Braga et T. Seegmuller

  Full text [pdf]

• Wednesday 20 April 2005

  BELLUTINI G. (Univ. di Bologna) : When the Union Hurts the Workers: A Positive Analysis of the Immigration Policy

  Co-auteur(s) : C. Berti Ceroni

  Full text [pdf]

• Wednesday 20 April 2005

  BELLUTINI G. (Univ. di Bologna) : When the Union Hurts the Workers: A Positive Analysis of the Immigration Policy

  Co-auteur(s) : C. Berti Ceroni

  Full text [pdf]

• Wednesday 13 April 2005

  DANTHINE J.P. (HEC) : Macro- labor Efficiency wages revisited: the internal reference perspective

• Wednesday 13 April 2005

  DANTHINE J.P. (HEC) : Macro- labor Efficiency wages revisited: the internal reference perspective

• Wednesday 6 April 2005

  HEAD A. (Queen's univ.) : Search, Price Adjustment, and Inflation Dynamics

  Co-auteur(s) : A. Kumar et B. Lapham

  Full text [pdf]

• Wednesday 6 April 2005

  HEAD A. (Queen's univ.) : Search, Price Adjustment, and Inflation Dynamics

  Co-auteur(s) : A. Kumar et B. Lapham

  Full text [pdf]

• Wednesday 30 March 2005

  TAVERES J. (Univ. nova de Lisboa) : Women Prefer Larger Governments: Female Labor Supply and Public Spending

  Co-auteur(s) : T.V. de V. Cavalcanti

  Full text [pdf]

• Wednesday 30 March 2005

  TAVERES J. (Univ. nova de Lisboa) : Women Prefer Larger Governments: Female Labor Supply and Public Spending

  Co-auteur(s) : T.V. de V. Cavalcanti

  Full text [pdf]

• Wednesday 23 March 2005

  LICANDRO O. (European institute) : The under-estimated virtues of the two-sector AK model

  Co-auteur(s) : G.J. Felbermayr

  Full text [pdf]

• Wednesday 23 March 2005

  LICANDRO O. (European institute) : The under-estimated virtues of the two-sector AK model

  Co-auteur(s) : G.J. Felbermayr

  Full text [pdf]

• Wednesday 16 March 2005

  VANDENBROUCKE G. (Univ. of Southern California) : The U.S. Westward Expansion

  Full text [pdf]

• Wednesday 16 March 2005

  VANDENBROUCKE G. (Univ. of Southern California) : The U.S. Westward Expansion

  Full text [pdf]

• Wednesday 9 March 2005

  BACCHETTA P. (HEC) : Can Information Heterogeneity Explain the Exchange Rate Determination Puzzle?

  Full text [pdf]

• Wednesday 9 March 2005

  BACCHETTA P. (HEC) : Can Information Heterogeneity Explain the Exchange Rate Determination Puzzle?

  Full text [pdf]

• Friday 4 March 2005

  VENTURA J. (CEPR) : Managing Financial Integration

  Full text [pdf]

• Friday 4 March 2005

  VENTURA J. (CEPR) : Managing Financial Integration

  Full text [pdf]

• Wednesday 2 March 2005

  DRIFFILL J. (Birkbeck college) : Inertia in Empirical Taylor Rules

  Full text [pdf]

• Wednesday 2 March 2005

  DRIFFILL J. (Birkbeck college) : Inertia in Empirical Taylor Rules

  Full text [pdf]

• Wednesday 23 February 2005

  KAAS L. (Univ. of Vienna) : Endogenous Financial Developpement, Growth and Volatility

  Co-auteur(s) : C. Azariadis

  Full text [pdf]

• Wednesday 23 February 2005

  KAAS L. (Univ. of Vienna) : Endogenous Financial Developpement, Growth and Volatility

  Co-auteur(s) : C. Azariadis

  Full text [pdf]

• Wednesday 16 February 2005

  KHARROUBI E. (Banque de France) : Financial Integration, Competition and Credit Crunches

  Full text [pdf]

• Wednesday 16 February 2005

  KHARROUBI E. (Banque de France) : Financial Integration, Competition and Credit Crunches

  Full text [pdf]

• Wednesday 9 February 2005

  CROIX (DE LA ) D. : Early Literacy Achievements, Population Density and the Transition to Modern Growth

  Co-auteur(s) : R. Boucekkine et D. Peeters

  Full text [pdf]

• Wednesday 9 February 2005

  CROIX (DE LA ) D. : Early Literacy Achievements, Population Density and the Transition to Modern Growth

  Co-auteur(s) : R. Boucekkine et D. Peeters

  Full text [pdf]

• Wednesday 2 February 2005

  BERENTSEN A. (Univ. of Basel) : Money, Credit and Banking

  Full text [pdf]

• Wednesday 2 February 2005

  BERENTSEN A. (Univ. of Basel) : Money, Credit and Banking

  Full text [pdf]

• Wednesday 26 January 2005

  RAGOT L. (Univ. de Lille 1) : Immigration and the American Dreams

  Co-auteur(s) : F. Docquier et X. Chojnicki

  Full text [pdf]

• Wednesday 26 January 2005

  RAGOT L. (Univ. de Lille 1) : Immigration and the American Dreams

  Co-auteur(s) : F. Docquier et X. Chojnicki

  Full text [pdf]

• Wednesday 19 January 2005

  BERGIN P. (Univ. of California) : Endogenous Tradability and Macroeconomic Implications

  Co-auteur(s) : R. Glick

  Full text [pdf]

• Wednesday 19 January 2005

  BERGIN P. (Univ. of California) : Endogenous Tradability and Macroeconomic Implications

  Co-auteur(s) : R. Glick

  Full text [pdf]

• Wednesday 12 January 2005

  ARCANGELIS (DE) G. (Univ. of Bari) : Identifying Fiscal Policy Shocks and Policy Regimes in OECD Countries

  Co-auteur(s) : S. Lamartina

  Full text [pdf]

• Wednesday 12 January 2005

  ARCANGELIS (DE) G. (Univ. of Bari) : Identifying Fiscal Policy Shocks and Policy Regimes in OECD Countries

  Co-auteur(s) : S. Lamartina

  Full text [pdf]

• Wednesday 5 January 2005

  CARCELES POVEDA E. (State university of New York) : Endogenous Trading Constraints with Incomplete Asset Markets

  Full text [pdf]

• Wednesday 5 January 2005

  CARCELES POVEDA E. (State university of New York) : Endogenous Trading Constraints with Incomplete Asset Markets

  Full text [pdf]

• Wednesday 15 December 2004

  LAUBACH T. (OCDE) : The Responses of Wages and Prices to Technology Shocks"

  Full text [pdf]

• Wednesday 15 December 2004

  LAUBACH T. (OCDE) : The Responses of Wages and Prices to Technology Shocks"

  Full text [pdf]

• Wednesday 1 December 2004

  IMBS J. (London business school) : Competition, Globalization and the Decline of Inflation

  Co-auteur(s) : N. Chen et A. Scott

• Wednesday 1 December 2004

  IMBS J. (London business school) : Competition, Globalization and the Decline of Inflation

  Co-auteur(s) : N. Chen et A. Scott

• Wednesday 17 November 2004

  RAGOT X. (DELTA) : Inflation and Public Debt in the long term

  Full text [pdf]

• Wednesday 17 November 2004

  RAGOT X. (DELTA) : Inflation and Public Debt in the long term

  Full text [pdf]

• Wednesday 3 November 2004

  TILLE C. (Federal Reserve Bank of New York) : Financial Integration and the Wealth Effect of Exchange Rate Fluctuations

  Full text [pdf]

• Wednesday 3 November 2004

  TILLE C. (Federal Reserve Bank of New York) : Financial Integration and the Wealth Effect of Exchange Rate Fluctuations

  Full text [pdf]

• Wednesday 20 October 2004

  REDDING S. (LSE) : Comparative Advantage and Heterogeneous Firms" Comparative Advantage and Heterogeneous Firms

  Co-auteur(s) : A.B. Bernard et P.K. Schott

  Full text [pdf]

• Wednesday 20 October 2004

  REDDING S. (LSE) : Comparative Advantage and Heterogeneous Firms" Comparative Advantage and Heterogeneous Firms

  Co-auteur(s) : A.B. Bernard et P.K. Schott

  Full text [pdf]

• Wednesday 6 October 2004

  BEN-GAD M. (Univ. of Haifa) : Capital-Skil Complementarity and the Immigration Surplus

  Full text [pdf]

• Wednesday 6 October 2004

  BEN-GAD M. (Univ. of Haifa) : Capital-Skil Complementarity and the Immigration Surplus

  Full text [pdf]

• Wednesday 29 September 2004

  GALI J. (Univ. Pompeu Fabra) : Optimal Fiscal Policy in a Monetary Union

  Co-auteur(s) : T. Monacelli

  Full text [pdf]

• Wednesday 29 September 2004

  GALI J. (Univ. Pompeu Fabra) : Optimal Fiscal Policy in a Monetary Union

  Co-auteur(s) : T. Monacelli

  Full text [pdf]

• Monday 20 September 2004

  REY H. (Princeton univ.) : International Financial Adjustments

  Co-auteur(s) : P.O. Gourinchas

  Full text [pdf]

• Monday 20 September 2004

  REY H. (Princeton univ.) : International Financial Adjustments

  Co-auteur(s) : P.O. Gourinchas

  Full text [pdf]