WORKING PAPERS 2023

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2023-35

What Makes Econometric Ideas Popular: The Role of Connectivity

Bertrand Candelon, Marc Joëts, Valérie Mignon

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Abstract
This paper aims to identify the factors contributing to the diffusion of ideas in econometrics by paying particular attention to connectivity in content and social networks. Considering a sample of 17,260 research papers in econometrics over the 1980-2020 period, we rely on Structural Topic Models to extract and categorize topics relevant to key domains in the discipline. Using a hurdle count model, we show that both content and social connectivity among the authors (i.e., social connectivity) enhance the likelihood of non-zero citation counts and play a key role in shaping the diffusion of econometric ideas. We also find that high topic connectivity augmented by robust social connectivity among authors or authoring teams further enhances econometric ideas' diffusion success. Finally, our findings unveil an inverted U-shaped relationship between connectivity and the success of idea diffusion; the latter initially escalates but starts to wane upon reaching a certain threshold.
Mot(s) clé(s)
Connectivity; Idea diffusion; Econometric publications; Citations; Structural Topic Model; Hurdle count model.
2023-34

Competition, Privacy, and Multi-Homing

Jean-Marc Zogheib

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Abstract
Two digital firms compete in prices and information disclosure levels. A consumer signing up to one firm's service decides how much personal information to provide. We find that firms essentially trade-off between consumer valuations and disclosure levels to determine their business strategies when consumers single-home. Under multi-homing, business strategies are more complex to assess and may completely shift compared to single-homing. All things being equal, implementing a strict privacy regime with no data disclosure can be optimal under single-homing, while a soft privacy regime with data disclosure may be preferred under multi-homing.
Mot(s) clé(s)
competition, online privacy, information disclosure, multi-homing.
2023-33

On the time-varying impact of China's bilateral political relations on its trading partners (1960-2022)

António Afonso, Valérie Mignon, Jamel Saadaoui

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Abstract
We assess the impact of China's bilateral political relations with three main trading partners - the US, Germany, and the UK - on current account balances and exchange rates, over the 1960Q1-2022Q4 period. Relying on the lag-augmented VAR approach with time-varying Granger causality tests, we find that political relationships with China strongly matter in explaining the dynamics of current accounts and exchange rates. Such relationships cause the evolution of the exchange rate (except in the UK) and the current account; these causal links being time-varying for the US and the UK and robust over the entire period for Germany. These findings suggest that policymakers should account for bilateral political relationships to understand the global macroeconomic consequences of political tensions.
Mot(s) clé(s)
Political relationships with China strongly matter in explaining the dynamics of current accounts and exchange rates
2023-32

Ports and their influence on local air pollution and public health: a global analysis

César Ducruet, Hidekazu Itoh, Hidekazu Itoh, Mariantonia Lo Prete, Yoann Pigné, Bárbara Polo Martin, Ling Sun, Mame Astou Séné

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Abstract
Despite the skyrocketing growth of environmental studies in recent decades about ports and shipping, the local health impacts of ports remain largely under-researched. This article wishes to tackle this lacuna by statistically analyzing data on global shipping flows across nearly 5,000 ports in 35 OECD countries between 2001 and 2018. The different traffic types, from containers to bulks and passengers, are analyzed jointly with data on natural conditions, air pollution, socio-economic features, and public health. Main results show that port regions pollute more than non-port regions on average, while health impacts vary according to the size and specialization of port regions. Three types of port regions are clearly differentiated, of which industrial, intermediate, and metropolitan port regions.
Mot(s) clé(s)
health; maritime transport; air pollution; port region; vessel movements
2023-31

Fairness of the First-Come, First-Served rule on the rental housing market: answers from a hypothetical survey experiment

Mathieu Bunel, Élisabeth Tovar

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Abstract
En écho aux politiques récemment mises en œuvre à Seattle et à Portland, nous examinons les perceptions de l'équité de la règle du premier arrivé, premier servi (PAPS) dans le contexte de la discrimination sur le marché du logement locatif. Nous utilisons un hypothetical survey experiment original dans lequel un agent immobiliers est confronté aux préférences discriminatoires de ses clients, les propriétaires des unités vacantes mises en location. Un échantillon de 1.541 répondants représentatifs de la population américaine a été interrogé sur la façon dont, d'un point de vue moral, l'agent immobilier devrait se comporter : attribuer les logements exclusivement au groupe non discriminé, exclusivement au groupe discriminé, ou au groupe qui s'est manifesté en premier (règle PAPS). Les manipulations factorielles incluses dans le design sont i) le coût de la mise en œuvre de la règle PAPS pour l'agent immobiliers, qui risque de perdre ses clients propriétaires s'il loue au groupe discriminé, ii) les effets de pairs, c'est-à-dire ce que font les autres agents immobiliers et iii) la norme sociale (égalitaire, ségrégationniste et pro-PAPS) partagée par les membres de la communauté. Conformément à la littérature, nous constatons que la règle PAPS occupe une place importante parmi les autres principes normatifs, mais que son coût a un effet causal sur le soutien qu'elle reçoit de la part des personnes interrogées. Nous constatons également que les effets des pairs et les normes sociales ont un effet causal sur le soutien à la règle PAPS, les normes sociales ayant un effet plus important. Enfin, nous constatons que les répondants susceptibles d'être victimes de discrimination sont les moins susceptibles de soutenir la règle PAPS.
Mot(s) clé(s)
discrimination, fairness, first-come first-served rule, hypothetical survey experiment, rental housing market
2023-30

Opportunistic Political Central Bank Coverage: Does media coverage of ECB's Monetary Policy Impacts German Political Parties' Popularity?

Hugo Oriola, Matthieu Picault

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Abstract
We define the concept of Opportunistic Political Central Bank Coverage (OPCBC) which corresponds to an opportunistic modification of parties’ popularity induced by media coverage of monetary policy. More precisely, we suppose that the treatment of monetary policy in the press has a significant impact on the popularity of national political parties prior to an election. To investigate on the existence of this concept, we collect monthly popularity ratings for 6 German political forces on the period between January 2005 and December 2021. Then, we measure media coverage through a textual analysis on more than 26.000 press articles from 6 different German newspapers. Finally, we estimate popularity functions for these German political parties in which we introduce our textual measures interacted with a dummy taking the value 1 in the month prior to an election. Our analysis underlines the existence of OPCBCs in Germany in the month preceding federal elections and elections to the European Parliament. This result is robust to the use of a SUR model, alternative pre-electoral periods, the implementation of two different tone analysis, the use of Google Trends data and the interest of the public for members of the ECB. Finally, it seems that the existence of OPCBCs depend on the partisanship of the media studied.
Mot(s) clé(s)
European Central Bank; Press; Textual Analysis; Tone Analysis; Elections; Political Cycles; Germany
2023-29

Capital diversion in Vietnamese state-owned enterprises

Ngoc Anh Nguyen, Ngoc Minh Nguyen, Phu Nguyen-Van

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Abstract
We consider the capital productivity of a panel data set of 10,200 Vietnam state-owned enterprises over the period 2010-2018, using a stochastic frontier production modelling. We discover there exists an overutilization of the physical capital and more importantly, diversion of the capital stock. This diversion may be due to a waste of capital stocks or to a special form of bribery we call "hidden overhead". The very high diversion rate, 69% on average, calls for a profound reform of the sector.
Mot(s) clé(s)
Productivity; stochastic production frontier; hidden overhead
2023-28

How Do Political Tensions and Geopolitical Risks Impact Oil Prices?

Valérie Mignon, Jamel Saadaoui

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Abstract
This paper assesses the effect of US-China political relationships and geopolitical risks on oil prices. To this end, we consider two quantitative measures, the Political Relationship Index (PRI) and the Geopolitical Risk Index (GPR), and rely on structural VAR and local projection methodologies. Our findings show that improved US-China relationships, as well as higher geopolitical risks, drive up the price of oil. In fact, unexpected shocks in the political relationship index are associated with optimistic expectations of economic activity, whereas unexpected shocks in the geopolitical risk index also reflect fears of supply disruption. Political tensions and geopolitical risks are thus complementary causal drivers of oil prices, the former being linked to consumer expectations and the latter to the prospects of aggregate markets.
Mot(s) clé(s)
Oil prices, political relationships, geopolitical risk, China.
2023-27

Stated preferences outperform elicited preferences for predicting reported compliance with Covid-19 prophylactic measures

Thierry Blayac, Dimitri Dubois, Sebastien Duchene, Phu Nguyen-Van, Bruno Ventelou, Marc Willinger

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Abstract
This paper studies the behavioral and socio-demographic determinants of reported compliance with prophylactic measures against COVID-19: barrier gestures, lockdown restrictions and mask wearing. The study contrasts two types of measures for behavioral determinants: experimentally elicited preferences (risk tolerance, time preferences, social value orientation and cooperativeness) and stated preferences (risk tolerance, time preferences, and the GSS trust question). Data were collected from a representative sample of the metropolitan French adult population (N=1154) surveyed during the first lockdown in May 2020, and the experimental tasks were carried out on-line. The in-sample and out-of-sample predictive power of several regression models - which vary in the set of variables that they include - are studied and compared. Overall, we find that stated preferences are better predictors of compliance with these prophylactic measures than preferences elicited through incentivized experiments: self-reported level of risk, patience and trust are predicting compliance, while elicited measures of risk-aversion, patience, cooperation and prosociality did not.
Mot(s) clé(s)
COVID-19, individual preferences, social preferences, elicited preferences, stated preferences
2023-26

Uncertainty is bad for Business. Really?

Nicolas Himounet, Francisco Serranito, Julien Vauday

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Abstract
A growing empirical literature on how to measure uncertainty has emerged following the 2007-2008 financial crisis. We investigate the impact of uncertainty shocks according to their nature, applying local projection methods in a nonlinear framework. More precisely, we investigate the impact of uncertainty shocks according to their nature (nonfinancial and financial) in different regimes of general uncertainty: high, moderate and low. We get a positive and significant effect of the nonfinancial uncertainty shocks when the general level of uncertainty is high or moderate.
Mot(s) clé(s)
Uncertainty, local projection methods, economic activity, nonlinear econometrics
2023-25

Unpacking the green box: Determinants of Environmental Policy Stringency in European countries

Donatella Gatti, Gaye-Del Lo, Francisco Serranito

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Abstract
This paper identifies the determinants of OECD Environmental Policy Stringency (EPS) index using a panel of 21 European countries for the period 2009-2019. If there is a large literature on the macroeconomic, political, and social determinants of EPS, the people’s attitudes or preferences toward environmental policies is still burgeoning. Thus, the main goal of this paper is to estimate the effects of people’s awareness regarding environmental issues on the EPS indicator. Due to the endogeneity of preferences, we have applied an instrumental variable framework to estimate our
empirical model. Our most important result is to show that individual environmental preferences have a positive and significant effect on the level of EPS indicator : on average, a rise in individual preferences of 10% in a country will increase its EPS indicator by 2.30%. Our results have important policy implications.
Mot(s) clé(s)
Environmental policy stringency; Environmental attitudes/concerns, inequality; environmental Kuznets curve; EU
2023-24

Reasons Behind Words: OPEC Narratives and the Oil Market

Celso Brunetti, Marc Joëts, Valérie Mignon

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Abstract
We analyze the content of the Organization of the Petroleum Exporting Countries (OPEC) communications and whether it provides valuable information to the crude oil market. To this end, we derive an empirical strategy which allows us to measure OPEC’s public signal and test its credibility. Using Structural Topic Models, we identify several topics in OPEC narratives. We show that these topics are related to fundamental factors such as demand, supply, and speculative activity in the crude oil market, highlighting that OPEC narratives are highly linked to oil market volatility and traders’ positions. We also find that OPEC communication is credible, reduces oil price volatility, and prompts market participants to rebalance their positions.
Mot(s) clé(s)
OPEC Announcements, Structural Topic Models, Volatility, Traders’ Positions
2023-23

Is participatory democracy in line with social protest? Evidence from the French Yellow Vests movement

Benjamin Monnery, François-Charles Wolff

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Abstract
Participatory democracy and public consultations are increasingly being used to shape public policy or resolve political issues. In France, the Grand Débat was launched in early 2019 as a democratic response to the Yellow Vests movement, a massive grassroots social protest. With more than 500,000 participants, the Grand Débat platform was interpreted as a popular success by the government and the media, but little is known about which citizens expressed their opinions online. Although participants on the platform were anonymous and only answered public policy questions, we are able to infer their support for the Yellow Vests movement by using a second platform (a Facebook app) that asks similar questions as well as support for the Yellow Vests. We find that a large majority of participants in the Grand Débat did not support the Yellow Vests movement, in contrast to the general population at the time. This is evidence of a strong self-selection of participants on political grounds, resulting in a biased representation of French public opinion.
Mot(s) clé(s)
participatory democracy; social protest; public opinion; selection on observables and unobservables
2023-22

Noncooperative Oligopoly in Markets with a Continuum of Traders and a Strongly Connected Set of Commodities: A Limit Theorem

Francesca Busetto, Giulio Codognato, Sayantan Ghosal, Ludovic A. Julien, Damiano Turchet

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Abstract
We consider a mixed version of the Shapley window model, where large traders are represented as atoms and small traders are represented by an atomless part. Our main theorem shows that any sequence of Cournot-Nash allocations of the strategic market games associated with the partial replications of the exchange economy has a limit point for each trader and that the assignment determined by these limit points is a Walrasian allocation of the original economy. Instead of relying on restrictive assumptions on the characteristics of atoms, as in Busetto et al. (2017), our limit theorem relies on the characteristics of agents in the atomless part and their endogenously price-taking behavior.
Mot(s) clé(s)
Cournot-Nash equilibrium, Walras equilibrium, Asymptotic equivalence
2023-21

On the impact of fiscal policy on inflation: The case of fiscal rules

Jocelyne Zoumenou

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Abstract
This paper examines the impact of fiscal rules on inflation across 79 countries from 1985 to 2021, employing entropy balancing as the methodology. By adopting this approach, the study addresses potential endogeneity concerns and takes into account variations among different country groups, including advanced economies, emerging markets, developing economies, and low-income countries. The primary outcome derived from the analysis indicates a negative relationship between fiscal rules and inflation in emerging and low-income countries. Moreover, this effect is observed for moderate and high inflation rates. These results are robust to different specifications.
Mot(s) clé(s)
Fiscal policy ; Inflation ; Propensity score methodology
2023-20

Ambiguous consumer tastes and product differentiation

Olivier Kayser

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Abstract
Considering that firms have multiple consumer taste distributions, we introduce in the vertical differentiation framework an ambiguous demand in a duopoly. We investigate the effects of ambiguity aversion on product differentiation and pricing choices. By specifying these distributions by Heaviside functions we obtain results on the existence and form of several Subgame-Perfect Nash Candidate Equilibria. The associated equilibrium prices are decreasing with ambiguity aversion. Under the market coverage assumption, we show that the level of differentiation is always maximal whatever the degree of ambiguity aversion. Finally, we study which of the Subgame-Perfect Nash Candidate Equilibria is the solution of the game depending on the width of the taste distributions and the degree of ambiguity aversion.
Mot(s) clé(s)
Vertical differentiation, Ambiguous consumer tastes, Ambiguous demand, Ambiguity aversion
2023-19

Information Shocks in the U.S. and Asset Mispricing in Emerging Economies

Antonia Lopez Villavicencio, Marc Pourroy

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Abstract
We explore whether U.S. monetary policy shocks can lead to create booms and busts of asset prices in emerging economies. Using impulse response function obtained from local projections, we show that the Fed's announcements of a tighter monetary policy lead to strong under-valuations of equity markets in EMEs. However, the information content in a tightening announcement lead to over-valuation in EME's asset prices. We attribute these differences to perceptions of signalling a better-than-expected economic outlook. Finally, we show that real integration influences more than financial integration the propagation of communication shocks.
Mot(s) clé(s)
emerging markets, asset mispricing, monetary policy, information channel, local projections
2023-18

The financial cost of stabilizing US farm income under climate change

Cécile Couharde, Rémi Generoso

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Abstract
The paper assesses the financial cost of federal farm programs in mitigating income losses due to drier conditions expected from climate change. Our study encompasses agricultural-producing counties within the conterminous United States during the census years from 2002 to 2017. We quantify historical drought patterns and their projected trends for the near (2020-2049) and more distant (2030-2059) future, using climate reanalysis data and 20 downscaled global circulation model products from the Coupled Model Intercomparison Project 5. We estimate the relationship between federal agricultural payments and climate change by analyzing how farm income losses due to drier conditions affect the magnitude and distribution of these payments under the RCP 8.5 scenario. We predict that, under unmitigated climate change, payments from federal farm program should significantly increase to maintain their income–stabilization capacity, with a greater likelihood
Mot(s) clé(s)
Climate change, Farm income, Federal farm payments, Uncertainty
2023-17

Is Quantitative Easing Productive? The Role of Bank Lending in the Monetary Transmission Process

Philipp RODERWEIS, Jamel Saadaoui, Francisco Serranito

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Abstract
The European Central Bank’s (ECB) quantitative easing (QE) program was supposed to stimulate the real economy and be able to control inflation rates. Nevertheless, primarily the financial sector has benefited from the asset purchase program. Transmission was not taking place as desired, with commercial banks as money creators and thus liquidity distributors at the center of its inefficiency. Accordingly, this article aims to examine the transmission of central bank money to the euro area economy via the banking system and the corresponding bank lending channel (BLC). To bring clarity to the economic debate about the effectiveness of the BLC, bank lending and additional macroeconomic variables are divided into productive and unproductive. We analyze how these data react to an exogenous monetary policy shock in excess reserves, which is identified using different identification schemes before deploying least-square and penalized local projection (LP) methods. Following the estimation results, it can be concluded that a liquidity increase via quantitative easing cannot stimulate economic activity-enhancing lending in the euro area but, on the contrary, tends to disincentivize it. On the other hand, it drives lending to an unproductive sector. Additionally, this is confirmed by the fact that prices, especially in the housing sector, react significantly positively to a QE shock, whereas, on the contrary, producer prices in the industrial sector and inflation are not affected by unconventional monetary policy.
Mot(s) clé(s)
unconventional monetary policy, bank lending, local projection, identification, zero- and sign restrictions
2023-16

Toward an economic theory of populism: Uncertainty, Information, and Public Interest in Downs’s Political Economy

Alexandre Chirat, Cyril Hédoin

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Abstract
In this paper, we claim that Downs’s theory of democracy provides a framework to build an economic and positive theory of populism. Our purpose in this paper is threefold. First, we highlight systematically overlooked aspects of Downs’s work. In particular, we demonstrate that Downs is a thinker of political polarization and that his focus on uncertainty is relevant to build an economic theory of populism. Second, we take the issue of populism as an opportunity to test the explanatory power of Downs’s political economy. Third, our reconstruction of Downs’s political economy enables a comparative analysis with the theoretical political science literature on populism to achieve a wide reflexive equilibrium on the understanding of both the nature and the causes of populism. In accordance with such a method, we conclude that populism is, in essence, a political force in a democracy, always present in a latent state, and rationally promoted by political platforms when the minimum consensus required for democratic stability is in crisis. That is why populism is likely to regenerate as much as to sound the death knell of a democratic political system.
Mot(s) clé(s)
Democracy - Populism - Rationality - Public interest - Information
2023-15

The conditionality of monetary policy instruments

Christophe Blot, Caroline Bozou, Jérôme Creel, Paul Hubert

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Abstract
We investigate the financial market effects of central bank asset purchases by exploiting the unique setting provided by ECB’s PSPP and PEPP policies. While the PSPP aimed to counter deflationary risks, the PEPP was announced to alleviate sovereign risks, these programs consist in purchases of identical assets. We assess their impacts on various asset prices. We find that they have different effects on two variables: PSPP positively affects inflation swaps whereas PEPP negatively impacts sovereign spreads, but not the opposite. We document the channels for these differentiated effects and highlight the role of clarifying the rationale of a policy.
Mot(s) clé(s)
monetary policy, asset prices, central bank communication, central bank reaction function, intermediate objectives
2023-14

Pollution in strategic multilateral exchange: taxing emissions or trading on permit markets?

Ludovic A. Julien, Anicet Kabre, Louis de Mesnard

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Abstract
We introduce polluting emissions in a sequential noncooperative oligopoly model of bilateral exchange. In one sector a leader and a follower use polluting technologies which create negative externalities on the payoffs of strategic traders who belong to the other sector. By modeling emissions as a negative externality, we show that the leader pollutes more (less) than the follower when strategies are substitutes (complements). Then, we consider the implementation of public policies to control the levels of emissions, namely two taxation mechanisms and a permit market. We study the effects of these public policies. Moreover, we determine the conditions under which these public policies can implement a Pareto-improving allocation.
Mot(s) clé(s)
Stackelberg competition; pollution; fiscal policy; permit market
2023-13

Inciting Family Healthy Eating: Taxation and Nudging

Moustapha Sarr

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Abstract
This paper examines whether a tax on unhealthy food and a nudge are suitable to promote families healthy eating. We consider, in a theoretical model, an economy composed of two types of family that differ in their income and their nutritional knowledge, which reflects their degree of misperception of the future health effects of diet, and choose their consumption according to their perceived utility. We find that the decentralized solution of taxation on unhealthy good achieves the first-best optimum if and only if it is possible for the central planner to implement a targeted tax policy. Investigating the case of a mixed policy, we find that taxation of unhealthy food and nudge are probably complementary public policy instruments to promote family healthy eating. The mixed policy reduces both the perception and income gaps between the two family types.
Mot(s) clé(s)
tax, healthy eating, nudge, perception, family environment, nutritional knowledge
2023-12

Optimal self-protection and health risk perception: bridging the gap between risk theory and the Health Belief Model

Emmanuelle Augeraud-Véron, Marc Leandri

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Abstract
In this contribution to the longstanding risk theory debate on optimal self-protection, we aim to bridge the gap between the microeconomic modeling of self-protection, in the wake of Ehrlich and Becker (1972), and the Health Belief Model, a conceptual framework extremely influential in Public Health studies (Janz and Becker, 1984). In doing so, we highlight the crucial role of risk perception in the individual decision to adopt a preventive behavior towards a generic health risk. We discuss the optimal prevention effort engaged by an agent displaying either imperfect knowledge of the susceptibility (probability of occurrence) or the severity (magnitude of the loss) of a health hazard, or facing uncertainty on these risk components. We assess the impact of risk aversion and prudence on the optimal level of self-protection, an issue at the core of the risk and insurance economic literature. Our results also pave the way for the design of efficient information instruments to improve health prevention when risk perceptions are biased.
Mot(s) clé(s)
Prevention, Self-protection, Health Belief Model, Risk perception, Risk aversion, Prudence
2023-11

Trust in the fight against political corruption: A survey experiment among citizens and experts

Alexandre Chirat, Benjamin Monnery

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Abstract
In Western democracies, the last decades are characterized by a transformation of the relationship between citizens and their representatives, towards greater accountability, transparency and anti-corruption efforts. However, such evolutions are sometimes suspected of paradoxically fueling populism and reducing political trust. In this article, we investigate to what extent a new public institution in charge of monitoring the integrity of elected officials is likely to attract popular support and restore citizens' trust in democracy. We focus on France and its main anti-corruption agency, the High Authority for the Transparency of Public Life (HATVP), launched in 2013. We run a survey among 3,000 representative citizens and 33 experts, and augment it with an experimental treatment where we randomly provide simple, concise information on the activity and record of the HATVP. Our results first show a large divergence between the opinions of the average citizen and the much more optimistic views of experts about the state and dynamics of political integrity in France. Second, we find that citizens have highly heterogeneous beliefs and those with high political distrust are not only more likely to vote for populist candidates or abstain, but also the least informed about the anti-corruption agency. Third, our information provision experiment has meaningful, positive impacts on citizens’ perceptions of HATVP, political transparency and representative democracy. Moreover, we show that some of the largest impacts are found among initially distrustful and poorly informed citizens, stressing the potential for communication and information to change the political perceptions and attitudes of disillusioned citizens.
Mot(s) clé(s)
integrity ; corruption ; political trust ; populism ; survey experiment
2023-10

Territoires d’industrie : hétérogénéité et convergence ?

Mounir Amdaoud, Nadine Levratto

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Abstract
This article aims to explore the nature of employment dynamics in industrial territories in France from 2015 to 2020. Two complementary methods of investigation are deployed. The first rests upon the Markov chain model to analyse the relative growth of industrial areas and measure movements in the distribution of employment rates. The second, more recent, tests the hypothesis of convergence in clubs and completes the previous one by specifying and identifying each territory subject to mobility within the distribution. The results highlight the heterogeneity of growth processes, show the existence of several clubs of industry territories evolving at different rates and conclude the absence of an industry trap. They plead in favour of implementing policies to support the economy at the territorial level.
Mot(s) clé(s)
Industrial areas, employment growth, territorial heterogeneity, convergence clubs, Markov chains
2023-9

A Search Model with Self-Employment and Heterogeneity in Managerial Ability

Olivier Bargain, Eliane El Badaoui, Prudence Magejo, Eric Strobl, Frank Walsh

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Abstract
The view of informal employment as a last resort in the labour market has recently been challenged by numerous studies documenting the existence of a high degree of heterogeneity within the formal and informal sectors - in particular the presence of high-tier informal work corresponding to voluntary self-employment. There is currently not much theoretical support for these observations. We develop a formal model to explain this growing empirical evidence about substantial heterogeneity within formal/informal labour markets. In our model, workers may enter self-employment or search for jobs as employees, while allowing for heterogeneity across workers’ managerial ability. While workers with higher managerial ability will manage larger firms, workers with lower managerial ability will manage smaller firms and be in self-employment only when they cannot find a salaried formal/informal job. For the latter, self-employment in the informal sector is the outside employment option.
Mot(s) clé(s)
Self-employment; Managerial ability; Informal sector.
2023-8

Levels of uncertainty and charitable giving

Noémi Berlin, Maria José Montoya Villalobos

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Abstract
This experiment seeks to study the impact of uncertainty and attitudes towards uncertainty on charity donations. We use a modified dictator game, where the donations received by the beneficiaries (environmental NGOs) are exposed to different levels of uncertainty. We study the level of donations and elicit risk aversion, ambiguity aversion, likelihood insensitivity, and pessimism. We aim to test if different levels of uncertainty at the receiver level (risk and ambiguity) impact donations. We do not find any differences between levels of uncertainty compared to no uncertainty. We find that a ``high" level of ambiguity has a significant and negative effect on altruistic behavior compared to a risk or a``low" ambiguity environment. We also find that the effect of pessimism depends on the level of ambiguity. We find no effect of ambiguity aversion, likelihood insensitivity, and pessimism under ``low" ambiguity on altruistic behavior. Meanwhile, under ``high" ambiguity, we find a negative effect of pessimism on charitable giving. These results suggest that there is a threshold for which ambiguity and ambiguity attitudes have a negative impact on donations.
Mot(s) clé(s)
Charitable giving, uncertainty, pro-social behavior, ambiguity attitudes
2023-7

Foreign Direct Investment and Strategic Minerals

Tanguy Bonnet

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Abstract
This paper investigates the links between strategic minerals and foreign direct investment. I contribute to the literature on the FDI-resource curse by studying strategic minerals, the fundamental raw material of the energy transition.

The paper presents a precise overview of strategic minerals, their uses, and the geographical distribution of mineral production. This presentation highlights the novelties and peculiarities of strategic minerals which, due to their plurality, complexity and interdependencies, represent an energy commodity quite different from hydrocarbons, but of capital interest for the needs of the energy transition.

The econometric study in panel data at the macroeconomic level allows to find the results of the literature, namely a negative relationship between foreign direct investments and the presence of hydrocarbons, the FDI-resource curse. The core of my results contributes to the literature by showing a positive relationship between FDI and the presence of strategic minerals. Strategic minerals thus escape the FDI-resource curse. These results can be explained by the new and particular characteristics of strategic minerals which represent new stakes and do not obey the same rules as hydrocarbons. The paper therefore discusses the ambiguous economic consequences of this positive relationship between minerals and foreign investment.

Finally, the paper raises the consequences in terms of geopolitical strategies around strategic minerals issues, in terms of production, needs and energy sovereignty, and highlights China's global strategy and foresight.
Mot(s) clé(s)
strategic minerals, foreign direct investments, resource curse
2023-6

Asymmetries in the oil market: Accounting for the growing role of China through quantile regressions

Valérie Mignon, Jamel Saadaoui

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Abstract
This paper investigates the role of political tensions between the US and China and global market forces in explaining oil price fluctuations. To this end, we rely on quantile regressions—quantile autoregressive distributed lag (QARDL) error-correction model—to account for possible asymmetric effects of those determinants, depending on both the level of oil prices and the period. Our results show evidence of a quantile-dependent long-term relationship between oil prices and their determinants over the 1958-2022 period, with an exacerbated effect of US-China political tensions in times of high oil prices. Furthermore, this quantile-dependent cointegrating relationship is time-varying across quantiles, highlighting the increased role played by China in the oil market since the mid-2000s.
Mot(s) clé(s)
Oil prices, political tensions, quantile regressions
2023-5

Impact of climate change beliefs on farm households’ adaptation behaviors: the case of Ivory Coast.

Louise Ella Desquith

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Abstract
This paper examines how climate beliefs influence the climate change adaptation decisions of Ivorian farmers. Two regions (Bouaké and Bonoua) were selected for data collection and 658 households were surveyed according to the level of exposure to climate shocks and the type of farming practiced. Using a multivariate probit model, we analyze the impact of climate beliefs on decisions to implement an adaptation strategy. Our results indicate that the impact of beliefs on adaptation decisions differs according to the region considered. In Bouaké, religious and traditional beliefs, and subjective predictions about temperature and rainfall trends are the determining factors in farmers' adaptation decisions. In the Bonoua locality, however, concerns about climate change and confidence in scientific studies on the worsening of CC determine farmers' adaptation decisions. Based on our results, we develop policy guidelines.
Mot(s) clé(s)
Climate change, beliefs, climate adaptation, behavior, multivariate Probit, farm households
2023-4

Convergence on inflation and divergence on price-control among Post-Keynesian pioneers: insights from Galbraith and Lerner

Alexandre Chirat, Basile Clerc

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Abstract
This article proposes a historical and analytical reconstruction of a debate that never happened between John Kenneth Galbraith and Abba Lerner over the issue of price controls. While they adopted a similar analysis of underemployment inflation, shared by many post Keynesians, Lerner and Galbraith remained fundamentally opposed as to the effectiveness of price controls. Indeed, while both agreed on the relevance of price controls in the specific context of World War II, they disagreed over including price controls within the conventional framework of economic policies, as illustrated by their respective stances in the debate surrounding the stagflation of the 1970s. Throughout the paper, we provide the rationales behind their divergence on price controls by investigating its theoretical, epistemological, and normative roots. Finally, we put into perspective the contemporary debates about price control in the context of resurgent inflationary pressures with some salient points drawn from our reconstruction of the debate that opposed these two pioneering post Keynesians economists.
Mot(s) clé(s)
Price control - Wage control - Inflation - Unemployment - Stagflation
2023-3

Current account balances’ divergence in the euro area: an appraisal of the underlying forces

Emmanuelle Faure, Carl Grekou, Valérie Mignon

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Abstract
This paper revisits the crucial issue of current account imbalances and focuses on the determinants of their gaps between eurozone Member States. We conduct robust estimations of the current account balances for a panel of ten founding euro area economies and construct a measure that allows us to diagnose why some countries have started to diverge from the eurozone mean in the last two decades. Our findings show evidence of remaining differences in countries’ economic development, meaning that real macroeconomic convergence has failed in the zone. Price and cost competitiveness, as well as fiscal balances, have also participated in this growing macroeconomic divergence. Overall, while the European authorities cannot influence the part of the current account gaps due to demographic factors, the role of fiscal redistribution and investment at the euro area level could help achieve macroeconomic convergence and thus reduce current accounts’ divergence in the zone.
Mot(s) clé(s)
Current account, global imbalances, eurozone
2023-2

Effects of development aid (grants and loans) on the economic dynamics of the recipient country

Cuong LE-VAN, Ngoc Sang Pham, Thi Kim Cuong Pham

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Abstract
This paper investigates the nexus between foreign aid (in both forms: grant and
loan), poverty trap, and economic development in a recipient country by using a Solow
model with two new ingredients: a development loan and a fixed cost in the production process. The presence of this fixed cost generates a poverty trap. We show that
foreign aid may help the country to escape from the poverty trap and converge to a
stable steady-state in the long run, but only if (i) the country’s characteristics, such as
saving rate, initial capital, governance quality, and productivity are good enough, (ii)
the fixed cost is relatively low, and (iii) loan rule is generous enough. We also show
that our model with foreign aid has room for endogenous cycles, unlike the standard
Solow model.
Mot(s) clé(s)
Development loan, economic dynamics, economic growth, foreign aid, grant, poverty trap
2023-1

Land allocation and the adoption of innovative practices in agriculture: a real option modelling of the underlying hidden costs

Marc Baudry, Edouard Civel, Camille Tévenart

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Abstract
The agricultural sector is faced with barriers to the adoption and dissemination of innovative practices that cannot be properly captured by the standard financial analysis of their profitability. These barriers can be particularly detrimental to the shift towards practices favorable to environmental protection and mitigation or adaptation to climate change. This article focuses on how different "hidden" costs of adoption can combine, including risk aversion, uncertainty and irreversibility. It emphasizes the particular context of agriculture, in particular the role of land allocation choices which make it possible to modulate the uncertain and potentially irreversible consequences of adoption by a particular type of hedging. It is highlighted from a numerical simulation on the case of Myscanthus in France that "hidden" costs of prima facie low magnitude can strongly curb the adoption and diffusion of an innovative practice.
Mot(s) clé(s)
Technology diffusion; Uncertainty, Irreversibility, Land allocation
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