Publications
This paper exploits daily infrared images taken from satellites to track economic activity in advanced and emerging countries. We first develop a framework to read, clean, and exploit satellite images. Our algorithm uses the laws of physics (Planck's law) and machine learning to detect the heat produced by cement plants in activity. This allows us to monitor in real-time whether a cement plant is working. Using this on around 1,000 plants, we construct a satellite-based index. We show that using this satellite index outperforms benchmark models and alternative indicators for nowcasting the production of the cement industry as well as the activity in the construction sector. Comparing across methods, neural networks appear to yield more accurate predictions as they allow to exploit the granularity of our dataset. Overall, combining satellite images and machine learning can help policymakers to take informed and swift economic policy decisions by nowcasting accurately and in real-time economic activity.
This paper introduces a novel mechanism driving endogenous business cycle fluctuations within a frictionless three-sector intertemporal equilibrium model. We emphasize the critical role of consumer preferences as a primary driver of cyclical dynamics by considering a consumption bundle composed of a pure consumption good and a mixed consumption-investment good that simultaneously serves as both a final consumption good and a capital-accumulating investment good. Endogenous fluctuations naturally arise from sectoral capital intensity differences, an intertemporal consumption trade-off between the two goods, or the interaction of both mechanisms. We offer a detailed characterization of the economy's dynamics, identifying the Hopf bifurcation conditions that trigger persistent cyclical behavior. Additionally, we explore the periodicity of the resulting limit cycles, providing insights into how shifts in preferences and sectoral complementarities can generate self-sustained macroeconomic fluctuations.
Using the text from matrimonial ads, we assemble a novel data set to describe the evolution of partner preferences over time and space. Analyzing ads published in Canada, France and India between 1950 and 1995, we show that stated preferences for economic criteria have fallen sharply in favor of personality traits in the two Western countries while they remain the most prevalent in India. Using ads covering various regions from the US and Canada in 1995, we show that personality traits are consistently more demanded than economic criteria. We provide evidence that these results are unlikely to be driven by the composition effects over time, role of parents or changing social norms. We show that the changes over time are particularly strong for women and accompany narrowing gender gaps in labor force participation in Western countries. We discuss the implications for understanding the evolution of assortative mating over time.
Higher trade policy uncertainty has recessionary effects on U.S. states. To demonstrate this, we first build a novel empirical measure of regional trade policy uncertainty based on the volatility of national import tariffs at the sectoral level and on the sectoral composition of imports in U.S. states. We find that a state that is more exposed to an unanticipated increase in tariff volatility suffers from a larger drop in real GDP and employment than the average U.S. state. We then build a two-region open-economy model and find that the precautionary saving behavior is the main driver of the recession, although this effect is reinforced by high exposure to import tariffs. The feedback effect resulting from trade connections with the Foreign country primarily influences the persistence of these dynamics.
This paper uses a novel dataset on ethnic warfare to shed light on how conflict affects social identification and cohesion. A large body of anecdotal studies suggests that ethnic identities become more salient at times of conflict. Using data from thirty-six African countries, I provide econometric evidence to this notion. The relationship between ethnic conflict and various measures of social cohesion is also examined, revealing a positive link between the two. The finding is understood as a result of the ethnocentric dynamics generated by conflict: as warfare strengthens ethnic identification, prosocial behaviour increases, albeit primarily towards co-ethnics. This parochial interpretation is strengthened by the use of remote violence and the conditionality of conflict-induced prosocial behaviour on low levels of ethnic fractionalisation.
In this paper, we link two existing approaches to derive counterfactuals: adaptations based on a causal graph, and optimal transport. We extend "Knothe's rearrangement" and "triangular transport" to probabilistic graphical models, and use this counterfactual approach, referred to as sequential transport, to discuss fairness at the individual level. After establishing the theoretical foundations of the proposed method, we demonstrate its application through numerical experiments on both synthetic and real datasets.
Narrow bracketers who are myopic in specific decisions would fail to consider preexisting risks in investment and neglect hedging opportunities. Growing evidence has demonstrated the relevance of narrow bracketing. We take a step further in empirical investigation and study individual heterogeneity in narrow bracketing. Specifically, we use a lab experiment in investment and hedging that elicits subjects’ preferences on rich occasions to uncover the individual degree of narrow bracketing without imposing distributional assumptions. Combining prospect theory and narrow bracketing can explain our findings: Subjects who invest more also insure more, and subjects insure significantly less in the loss domain than in the gain domain. More importantly, we show that the distribution of the individual degree of narrow bracketing is skewed at two extremes, yet with a substantial share of people in the middle who partially suffer from narrow bracketing. Neglecting this aspect, we would overestimate the severity of narrow bracketing and misinterpret its relation with individual characteristics.
This paper uses French data to examine how two smoking-related parental health shocks affect offspring smoking behavior depending on the timing of the health shock. A descriptive analysis restricted to individuals whose parents were diagnosed with lung cancer or another smoking-related cancer suggests different smoking behaviors depending on the age of the individual at diagnosis. We build a retrospective panel and use individual fixed effects to control for the endogeneity of the timing of the diagnosis and to neutralize the intergenerational transmission effect in smoking behaviors. Doing so, we aim at evaluating the extent to which a parental diagnosis acts as an informational shock and affects offspring behavior by bringing salient information about the health hazards of smoking. We find that receiving a parental diagnosis reduces the long-term probability of being a smoker. This effect is driven by individuals receiving the parental diagnosis at the age when the decision to smoke is about to be made. The informational shock effect associated with lung cancer appears systematically stronger than the informational shock effect associated with other smoking-related cancers.
We study optimal firm behavior under irreversible pollution risk for a general class of models with irreversible local pollution. Irreversibility comes from the decay rate of pollution dropping to zero above a pollution level featuring non-convexity. In addition, the firm can instantaneously move from a reversible to an irreversible pollution mode, following a Poisson process. First, we prove for the general class of models that for any value of the Poisson probability, the optimal emission policy leads to more pollution with the irreversibility risk than without in a neighborhood of the irreversibility threshold. It’s shown that the extent of uncertainty (as captured by the Poisson arrival rate) is second-order in this neighborhood. Next we study the robustness of the latter result at any pollution level in the case of linear-quadratic objective functions. We find that the general local result does not necessarily hold if actual pollution is far enough from the irreversibility threshold.
The different options people select from a set of non-rival alternatives are compared in terms of singularity. A criterion for ranking these choices on the basis of the number of other choices from which they differ is introduced and characterized. An axiomatic characterization of the ranking of choice profiles based on the aggregation of the singularities of the chosen alternatives is also provided.
