Publications: Working papers

Publications: Working papers 2021

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2021-1 "Walking the tightrope: avoiding a lockdown while containing the virus"

Balázs Egert, Yvan Guillemette, Fabrice Murtin, David Turner

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Abstract
Empirical work described in this paper explains the daily evolution of the reproduction rate, R, and mobility for a large sample of countries, in terms of containment and public health policies. This is with a view to providing insight into the appropriate policy stance as countries prepare for a potentially protracted period characterised by new infection waves. While a comprehensive package of containment measures may be necessary when the virus is widespread and can have a large effect on reducing R, they also have effect on mobility and, by extension, economic activity. A wide-ranging package of public health policies – with an emphasis on comprehensive testing, tracing and isolation, but also including mask-wearing and policies directed at vulnerable groups, especially those in care homes – offer the best approach to avoiding a full lockdown while containing the spread of the virus. Such policies may, however, need to be complemented by selective containment measures (such as restricting large public events and international travel or localised lockdowns) both to contain local outbreaks and because implementing some of the recommended public health policies may be difficult to achieve or have unacceptable social costs.
Classification-JEL
C50, H10, H12, I18
Mot(s) clé(s)
Covid-19, lockdown, non-pharmaceutical interventions, mobility
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2021-2 "What do bankrupcty prediction models tell us about banking regulation? Evidence from statistical and learning approaches"

Pierre Durand, Gaëtan Le Quang

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Abstract
Prudential regulation is supposed to strengthen financial stability and banks' resilience to new economic shocks. We tackle this issue by evaluating the impact of leverage, capital, and liquidity ratios on banks default probability. To this aim, we use logistic regression, random forest classification, and artificial neural networks applied on the United-States and European samples over the 2000-2018 period. Our results are based on 4707 banks in the US and 3529 banks in Europe, among which 454 and 205 defaults respectively. We show that, in the US sample, capital and equity ratios have strong negative impact on default probability. Liquidity ratio has a positive effect which can be justified by the low returns associated with liquid assets. Overall, our investigation suggests that fewer prudential rules and higher leverage ratio should reinforce the banking system's resilience. Because of the lack of official failed banks list in Europe, our findings on this sample are more delicate to interpret.
Classification-JEL
C44, G21, G28
Mot(s) clé(s)
Banking regulation ; Capital requirements ; Basel III ; Logistic ; Statistical learning classification ; Bankruptcy prediction models.
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2021-3 "The policy drivers of self-employment: New evidence from Europe"

Mark Baker, Balázs Egert, Gábor Fülöp, Annabelle Mourougane

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Abstract
Using cross-country time series panel regressions for the last two decades, this paper seeks to identify the main policy and institutional factors that explain the share of self-employment across European countries. It looks at the aggregate share of self-employed as well as its breakdown by age, skill and gender. The generosity of unemployment benefits, and to a lesser extent, spending on active labour market policies appear to be robust determinants of the long-term share of self-employed in European countries. No significant relation could be identified between the stringency of employment protection and aggregate self-employment. However, there are significant, and oppositely signed, impacts on high- and low-skilled self-employed separately. Both the tax wedge and the minimum wage appear to be related positively to the share of self-employed in the long term, but the relation holds for some categories of workers only.
Classification-JEL
J01, J21, J41, J48
Mot(s) clé(s)
self-employment, labour market, labour market regulations, labour market institutions, Europe
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2021-4 "Public vs. Private Investments In Network Industries"

Marc Bourreau, Jean-Marc Zogheib

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Abstract
We study the competition between a private firm and public firms on prices and
investment in new infrastructures. While the private firm maximizes its profits,
public firms maximize the sum of their profits and consumer surplus, subject to a
budget constraint. We consider two scenarios of public intervention, with a national
public firm and with local public firms. In a monopoly benchmark, we find that the
national public firm has the highest coverage and charges a uniform price allowing
cross-subsidies between high-cost and low-cost areas. Moreover, the private firm
covers as much as local public firms. In a mixed duopoly, a stronger competitive
pressure drives firms' prices up while it drives down (up) the national public (private)
firm's coverage.
Classification-JEL
D43; H44; L20; L33.
Mot(s) clé(s)
public firms, investment, network industries, mixed duopoly.
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