Publications
How will structural change unfold beyond the rise of services? Motivated by the observed dynamics within the service sector we propose a model of structural change in which productivity is endogenous and output is produced with two intermediate substitutable capital goods. In the productive sector the accumulation of specialized skills leads to an unbounded increase in TFP, as sector becoming asymptotically dominant. We are then able to recover the increasing shares of workers, the increasing real and nominal shares of the output observed in productive service and IT sectors in the US. Interestingly, the economy follows a growth path converging to a particular level of wealth that depends on the initial price of capital and knowledge. As a consequence, countries with the same fundamentals but lower initial wealth will be characterized by lower asymptotic wealth.
Article Bertrand Lemennicier (1943–2019): défenseur infatigable de la liberté was published on June 1, 2024 in the journal Journal des Économistes et des Études Humaines (volume 30, issue 1).
Résumé L’article rend hommage à la manière dont Bertrand Lemennicier concevait le raisonnement économique. Après un rappel des différents sophismes pouvant être présents dans l’argumentaire des économistes, l’article met en perspective les avantages et les risques d’une telle approche.
We study a 2-player stochastic differential game of lobbying. Players invest in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We consider the Nash symmetric game where players face the same cost and extract symmetric payoffs, and we solve for Markov Perfect Equilibria (MPE) in the class of affine functions. First, we prove a general sufficient (catching up) optimality condition for two-player stochastic games with uncertainty driven by Wiener processes. Second, we prove that the number and nature of MPE depend on the extent of uncertainty (i.e. the variance of the Wiener processes). In particular, we prove that while a symmetric MPE always exists, two asymmetric MPE emerge if and only if uncertainty is large enough. Third, we study the stochastic stability of all the equilibria. We notably find, that the state converges to a stationary invariant distribution under asymmetric MPE. Fourth, we study the implications for rent dissipation asymptotically and compare the outcomes of symmetric vs asymmetric MPE in this respect, ultimately enhancing again the role of uncertainty.
We investigate how the relationship between capital accumulation and pollution is affected by the source of pollution: production or consumption. We are interested in polluting waste that cannot be naturally absorbed, but for which recycling efforts aim to avoid massive pollution accumulation with harmful consequences in the long run. Based on both environmental and social welfare perspectives, we determine how the interaction between growth and polluting waste accumulation is affected by the source of pollution, i.e., either consumption or production, and by the fact that recycling may or may not act as an income generator, i.e., either capital-improving or capital-neutral recycling efforts. Several new results are extracted regarding optimal recycling policy and the shape of the relationship between production and pollution. Beside the latter concern, we show both analytically and numerically that the optimal control of waste through recycling allows to reaching larger (resp., lower) consumption and capital stock levels under consumption-based waste compared to production-based waste while the latter permits to reach lower stocks of waste through lower recycling efforts.
We study a 2-player stochastic differential game of lobbying. Players invest in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We consider the Nash symmetric game where players face the same cost and extract symmetric payoffs, and we solve for Markov Perfect Equilibria (MPE) in the class of affine functions. First, we prove a general sufficient (catching up) optimality condition for two-player stochastic games with uncertainty driven by Wiener processes. Second, we prove that the number and nature of MPE depend on the extent of uncertainty (i.e. the variance of the Wiener processes). In particular, we prove that while a symmetric MPE always exists, two asymmetric MPE emerge if and only if uncertainty is large enough. Third, we study the stochastic stability of all the equilibria. We notably find, that the state converges to a stationary invariant distribution under asymmetric MPE. Fourth, we study the implications for rent dissipation asymptotically and compare the outcomes of symmetric vs asymmetric MPE in this respect, ultimately enhancing again the role of uncertainty.
This paper examines the interaction between three financial markets: energy and non-energy commodities, bonds and equities, in a particular context of high inflation worldwide, that of Russia–Ukraine war. Our data cover the period January 2016-October 2022. Using a SETAR-GARCH C-Vine Copula model, we provide evidence of two inflation breakouts within COVID pandemic and shortly before Russia–Ukraine war, for all assets considered, and particularly for US 10-Year bond, as an inflation-indexed asset. Over the Russia–Ukraine war period, both linear and nonlinear models explain the studied assets’ behavior faced with high inflation. C-Vine Copula analysis shows that oil prices (WTI), as an inflation-producing assets, impact the volatility of financial markets (VIX) in times of war. This analysis indicates also that the NASDAQ index, as an inflation-exposed assets, is sensitive to commodities and energy prices that drive inflation. Furthermore, we find a high positive Kendall’s tau for all combinations between US 10-Year and all other assets. These results provide strong evidence of the association between US 10-Year futures, as a vehicle of inflation, and all studied assets. Lastly, our findings confirm the evidence that Russia–Ukraine war generated two significant shocks, Gas (NG) prices and financial markets’ volatility (VIX). This study is of crucial interest to policy and decision makers to the extent that it provides a framework for understanding, in a context of high inflation, the mechanisms linked to the vehicles for transmitting this inflation, its pricing process, and its impact on the equity market.
We study the behavioral determinants of COVID-19 vaccination uptake. The vaccine-pass policy, implemented in several countries in 2021, conditioned the access to leisure and consumption places to being vaccinated against COVID-19 and created an unprecedented situation where individuals’ access to consumption goods and vaccine status were interrelated. We rely on a quasi-hyperbolic discounting model to study the plausible relationships between time preference and the decision to vaccinate in such context. We test the predictions of our model using data collected from a representative sample of the French population (N = 1034) in August and September 2021. Respondents were asked about their COVID-19 vaccination status (zero, one, or two doses), as well as their economic and social preferences. Preference elicitations were undertaken online through incentivized tasks, with parallel collection of self-stated preferences. Factors associated with COVID-19 vaccination were investigated using a logistic model. Both elicited and stated impatience were found to be positively associated with COVID-19 vaccination decisions. These results suggest that impatience is a key motivational lever for vaccine uptake in a context where the vaccination decision is multidimensional and impacts the consumption potential. Results also serve to highlight the potential effectiveness of public communications campaigns based on time preferences to increase vaccination coverage.
To compare income and wealth distributions and to assess the effects of policy that affect those distributions require reliable inequality-measurement tools. However, commonly used inequality measures such as the Gini coefficient have an apparently counter-intuitive property: income growth among the rich may actually reduce measured inequality. We show that there are just two inequality measures that both avoid this anomalous behavior and satisfy the principle of transfers. We further show that the recent increases in US income inequality are understated by the conventional Gini coefficient and explain why a simple alternative inequality measure should be preferred in practice.
