Working papers

In this paper, we present a critical raw materials index (CRMI) that represents the price dynamics of the raw materials required for the low-carbon transition. Using a unique market and trade dataset covering 29 critical raw materials from 2012 to 2023, we construct a weekly trade weighted price index following a robust methodological framework. The relevance of our index is demonstrated through a validation process including a plausibility analysis and a comparability analysis. In addition, a sensitivity analysis provides empirical evidence of the robustness of our index to alternative data treatment, weighting factors and weighting schemes. Our framework offers policymakers a useful price benchmark to track the underlying metal market dynamics required by the growing clean energy sectors.

Low fertility rates, mortality outstripping the birth rate and population contraction characterize a new demographic transition (the so-called "fifth stage"). This paper seeks to evaluate how this phenomenon has impacted the Japanese economic structure and overall productivity. We test two key mechanisms that have been at play since the mid-2000s: i) a growing complementarity between goods and services consumption, and ii) the substitution of older workers engaged in routine tasks with technological capital. According to Autor and Dorn’s (2013) model, this should promote the concentration of low-skilled workers in the service sector, and aggravate productivity gaps between industry and services. Using stochastic frontier models and EU-KLEMS data, we compute industry-by-industry TFP growth frontiers in order to check if theoretical predictions match with Japanese reality.

A considerable body of work has shown that motherhood is accompanied by a reduction in labor market participation and hours of market work, while more recent ndings indicate that women who earn more than their husbands tend to subsequently take actions that reduce their market income. Both patterns of behaviour have been interpreted as women trying to conform to child-rearing norms and to the prescription that the husband should be the main breadwinner. In this paper we use panel data for US couples to re-examine women's behaviour when they become mothers and when they are the main breadwinner. We start by asking whether the arrival of a child a ects women who are the main breadwinner and those who are not in the same way, and then turn to how mothers and childless women react when they are the main breadwinner. Our results are consistent with the breadwinner norm only a ecting mothers, suggesting that the salience of gender norms may depend on the household's context, notably on whether or not children are present. Concerning the arrival of a child, we nd that although the labor supply of women who earn more than their husbands initially responds to motherhood less than that of secondary earners, the two groups converge after 10 years. Moreover, women in the former category exhibit a disproportionately large increase in the share of housework they perform after becoming mothers. The latter results suggest that the presence of children pushes women to seek to compensate breaking a norm by adhering to another one.

In developing countries, many policy interventions aim to enhance female entrepreneurship by giving access to cash inflows targeting women. However, important investment decisions are usually made at the household level and may be influenced by local cultural norms about female labour force participation. Using a standard collective household model, this paper studies spouses’ joint investment decisions. We show that the individual optimal investment levels are not necessarily aligned between spouses, though costly utility transfers can realign spouses’ incentives. The required transfer is increasing in the stringency of the gender norm against female labour participation, making investment potentially too costly. We test these predictions using two different empirical settings and strategies. First, we exploit original data from a field experiment in India, which gave access to new investment opportunities to women through microcredit. We find that treated women belonging to castes that are relatively more favourable to women investing are more likely to engage in home agricultural production and less likely to engage in casual low-wage jobs. Yet, they seem to enjoy lower utility levels in some dimensions such as health and freedom. To the contrary, we do not find any change in the occupation or independence of women belonging to castes that traditionally impose strong restrictions on women’s behaviour, suggesting that investment is then too costly. Second, we exploit India’s accession to the GATT in 2005 as a natural experiment and use Indian household surveys to study the effect of the termination of quotas imposed on textile exports, a female-dominated activity, on women’s well-being. We find that in districts that are more suitable for cotton growing, a feminine-oriented occupation, removing the quotas increases specialization in garments and decreases health indicators for women belonging to castes that are relatively more in favour of women working. Those empirical findings are consistent with our model, showing that, in the presence of gender norms, female entrepreneurship entails intra-household transfers that impact female well-being and can eventually prevent investment.

Public pension schemes serve as mechanisms for inter-temporal income smoothing and within-cohort redistribution. This paper examines the influence of income and lifespan inequalities on the structure of a democratically chosen tier-pension scheme. We use a probabilistic voting model where agents vote on the size and the degree of redistribution (i.e. the Beveridgean factor) of the pension scheme and can supplement it with voluntary contributions. Our analysis reveals that when all agents can supplement the public scheme with private contributions, their voting behavior depends solely on the share of total income redistributed through the pension system, referred to as the redistributive power of the pension. Income inequality positively correlates with the equilibrium redistributive power, while lifespan inequality exhibits the opposite effect, leading to a resource-time trade-off; particularly when both inequality measures are correlated. In scenarios where low earners are hand-to-mouth and unable to make voluntary contributions, the effects on pension size (through mandatory contributions) and degree of redistribution become disentangled. Income inequality diminishes pension size while augmenting redistribution, whereas lifespan inequality increases pension size while reducing redistribution. We provide empirical evidence from OECD countries supporting these theoretical findings and calibrate the model on French data to quantify the effects.

This paper examines an endogenous growth model that allows us to consider the dynamics and sustainability of debt, pollution, and growth. Debt evolves according to the financing adaptation and mitigation efforts and to the damages caused by pollution. Three types of features are important for our analysis: The technology through the negative effect of pollution on TFP; The fiscal policy; The initial level of pollution and debt with respect to capital. Indeed, if the initial level of pollution is too high, the economy is relegated to an endogenous tipping zone where pollution perpetually increases relatively to capital. If the effect of pollution on TFP is too strong, the economy cannot converge to a stable and sustainable long-run balanced growth path. If the income tax rates are high enough, we can converge to a stable balanced growth path with low pollution and high debt relative to capital. This sustainable equilibrium can even be characterized by higher growth and welfare. This last result underlines the role that tax policy can play in reconciling debt and environmental sustainability.

We use an overlapping generations model with physical and human capital, and two reproductive periods to explore how fertility decisions may differ in response to economic incentives in early and late adulthood. In particular, we analyze the interplay between fertility choices—related to career opportunities—and wages, and investigate the role played by work experience and investment in both types of capital. We show that young adults postpone parenthood above a certain wage threshold and that late fertility increases with work experience. The long run trend is either to converge to a low productivity equilibrium, involving high early fertility, investment in physical capital and relatively low income, or to a high productivity equilibrium, where households postpone parenthood to invest in their human capital and work experience, with higher late fertility and higher levels of income. A convergence to the latter state would explain the postponement of parenthood and the mitigation or slight reversal of fertility decrease in some European countries in recent decades.

Data on EU economies show no correlation between low-skilled immigration and the skill premium. We rationalise this evidence in a model where firms face search and screening costs. Low-skilled immigration diminishes the relative benefit of screening skilled workers, leading to a decline in their relative ability within the firm and an undetermined impact on the skill premium. On region-sector and firm level data from 2008 to 2013, we find that low-skilled immigration in Italian regions has reduced skill intensity without affecting the skill premium. Using proxies for workers’ ability and screening activity, we provide supporting evidence for the theorised mechanisms.

The strongest empirical regularity about the exchange rate pass-through is that it is incomplete. We provide a new theoretical explanation based on the unwillingness of some firms to price discriminate between markets. These firms set a single price to all destinations and adjust it when the exchange rate shock occurs. But the adjustment is not necessarily proportional since the change in the single price affects revenues in all markets. The single price strategy also implies a “pass-around” effect: The exchange rate shock has repercussions of price changes to all export markets. The analysis of price changes operated by French exporters in different markets after the EUR/CHF shock of 2015 provides evidence in favour of our theoretical explanation.

Dynasties constitute a visible sign of intergenerational persistence and raise questions about the legitimacy of the ruling elite. This paper uses data on graduates of elite colleges to explore the influence of political and business dynasties in France. I link nominative data on 103,309 graduates of 12 French Grandes ´ Ecoles born between 1931 and 1975 to their professional careers as politicians with national-level mandates or as board members of French firms. Identifying lineage through surnames, I find that sons of political and business leaders were substantially more likely than their graduate peers to pursue elite careers themselves, revealing a social gradient in returns to elite education. Political dynasties were particularly sizeable, although progressively declining. These dynasties also affected the composition of the French elite: fewer dynastical board members were graduates of top colleges than their first-generation colleagues. Yet, they were propelled much younger into top business and political positions.

In this paper, we provide a simple framework to show the existence of stationary bubbles on dividend-yielding financial assets. These bubbles are compatible with a positive stationary fundamental value, rather than requiring its collapse in the long run. This result is obtained in an exchange overlapping generations economy with vintage financial assets that depreciate over time. New assets are introduced in each period, ensuring a constant aggregate supply of financial assets. Depreciation introduces a gap between the return of bubbles and the rate at which the dividends are discounted. Because the return of bubble can be lower or equal to the growth rate, we can have stationary equilibria with both a positive bubble and a positive fundamental value. Finally, our framework also allows us to discuss the role of the substitutability between financial assets on the level of bubbles and fundamental values.

We present an overview of selected contributions of the Journal of Mathematical Economics' authors in the last half century. We start with the classical optimal growth theory within a benchmark multisector model and outline the successive developments in the analysis of this model, including the turnpike theory. Different refinements of the benchmark are considered along the way. We after survey the abundant literature on endogenous fluctuations in two-sector models. We conclude with two strong trends in the recent growth literature: green growth and infinite-dimensional growth models.

The assessment of binary classifier performance traditionally centers on discriminative ability using metrics, such as accuracy. However, these metrics often disregard the model’s inherent uncertainty, especially when dealing with sensitive decision-making domains, such as finance or healthcare. Given that model-predicted scores are commonly seen as event probabilities, calibration is crucial for accurate interpretation. In our study, we analyze the sensitivity of various calibration measures to score distortions and introduce a refined metric, the Local Calibration Score. Comparing recalibration methods, we advocate for local regressions, emphasizing their dual role as effective recalibration tools and facilitators of smoother visualizations. We apply these findings in a real-world scenario using Random Forest classifier and regressor to predict credit default while simultaneously measuring calibration during performance optimization.

This paper investigates the dynamic effects of weather shocks on monthly agricultural production in Peru, using a Local Projection framework. An adverse weather shock, measured by an excess of heat or rain, always generates a delayed negative downturn in agricultural production, but its magnitude and duration depend on several factors, such as the type of crop concerned or the timing at which it occurs. On average, a weather shock –a temperature shock– can cause a monthly decline of 5% in agricultural production for up to four consecutive months. The response is time-dependent: shocks occurring during the growing season exhibit a much larger response. At the macroeconomic level, weather shocks are recessionary and entail a decline in inflation, agricultural production, exports, exchange rate and GDP.