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Working papers

The Working Paper Series showcases research work being conducted at the Banque de France on the development of analytical tools for use in macroeconomic forecasting, monetary policy conduct and the safeguarding of financial stability. The papers do not necessarily reflect the position of the Banque de France or the Eurosystem.


Publication Working Paper Series no. 773:
Share Buybacks, Monetary Policy and the Cost of Debt

Share buybacks have become common practice across U.S corporations. This paper shows that firms finance these operations mostly through newly issued corporate bonds, and that the exogenous variation in the cost of debt -due to innovations in monetary...

By Elgouacem Assia, Zago Riccardo
  • Published on 07/02/2020
  • 47 pages
  • EN
  • PDF (2.62 MB)


Publication Working Paper Series no. 772:
How Do Markets React to Tighter Bank Capital Requirements?

We use hikes in the countercyclical capital buffer [CCyB] to measure how tighter bank capital requirements affect their solvency and value, according to market participants. Two features of the CCyB in Europe allow for a unique identification strategy...

By Couaillier Cyril, Henricot Dorian
  • Published on 07/01/2020
  • 30 pages
  • EN
  • PDF (6 MB)


Publication Working Paper Series no. 771:
Heterogeneity in Bank Leverage: the Funding Channels of Complexity

This paper assesses the net impact of complexity on leverage, at the Bank Holding Companies (BHCs) level using unique French supervisory data from 2010 to 2017. Geographical and structural complexity introduce diversification benefits and agency...

By Bussière Matthieu, Meunier Baptiste, Pedrono Justine
  • Published on 06/29/2020
  • 36 pages
  • EN
  • PDF (2.25 MB)


Publication Working Paper Series no. 770:
What Matters in Households’ Inflation Expectations?

We provide evidence that households discretize their inflation expectations so that what matters for durable consumption decisions is the broad inflation regime they expect. Using survey data, we document that a large share of the adjustment in the...

By Andrade Philippe, Gautier Erwan, Mengus Eric
  • Published on 06/25/2020
  • 102 pages
  • EN
  • PDF (3.34 MB)


Publication Working Paper Series no. 769:
Why Fiscal Regimes Matter for Fiscal Sustainability

This paper introduces a Regime-Switching Model-Based Sustainability test allowing for periodic (or local) violations of Bohn (1998, QJE)’s sustainability condition. We assume a Markov-switching fiscal policy rule whose parameters stochastically switch...

By Aldama Pierre, Creel Jérôme
  • Published on 06/22/2020
  • 39 pages
  • EN
  • PDF (2.09 MB)


Publication Working Paper Series no. 768:
Assessing the Role of Institutions in Limiting the Environmental Externalities of Economic Growth

Emissions of pollutants tend to be procyclical as they generally increase with economic growth. However, as government policy has a role to play in the mitigation of the environmental consequences of economic activity, the quality of institutions may...

  • Published on 06/19/2020
  • 27 pages
  • EN
  • PDF (1.94 MB)


Publication Working Paper Series no. 767:
Bank Equity Value and Loan Supply

We study how bank equity values affect loan supply. We exploit granular balance sheet information on euro area banks matched with financial market data. We address endogeneity concerns by instrumenting bank stock prices with a shifter derived from each...

  • Published on 05/12/2020
  • 36 pages
  • EN
  • PDF (2.9 MB)


Publication Working Paper Series no. 766:
Cross-border Investments and Uncertainty: Firm-level Evidence

This paper studies the impact of uncertainty on cross-border investments. We build a data-set of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of...

By Cezar Rafaël, Gigout Timothée, Tripier Fabien
  • Published on 04/29/2020
  • 51 pages
  • EN
  • PDF (2.56 MB)


Publication Working Paper Series no. 765:
Public Opinion on Central Banks when Economic Policy is Uncertain

This paper investigates whether uncertainty about economic policy plays a role in shaping the credibility and reputation of the central bank in the eyes of the public. In particular, we look at the effect of policy uncertainty for the dynamics of...

By Istrefi Klodiana, Piloiu Anamaria
  • Published on 04/22/2020
  • 30 pages
  • EN
  • PDF (2.15 MB)


Publication Working Paper Series no. 764:
Fiscal Consolidations and Informality in Latin America and the Caribbean

The transmission mechanisms of fiscal policy are significantly affected by informality in the labour market. Extending a narrative database of fiscal consolidations in 14 countries from Latin America and the Caribbean between 1989 and 2016 in order to...

By Lemaire Thibault
  • Published on 04/21/2020
  • 62 pages
  • EN
  • PDF (2.14 MB)


Publication Working Paper Series no. 763:
How does Financial Vulnerability amplify Housing and Credit Shocks?

In this paper we study how households’ financial vulnerability affects the propagation of housing and credit shocks. First, we estimate a non-linear model generating impulse responses that depend on the evolution of households' Debt to Service...

  • Published on 04/20/2020
  • 34 pages
  • EN
  • PDF (2.21 MB)


Publication Working Paper Series no. 762:
Does the Liquidity Trap Exist?

The liquidity trap is synonymous with ineffective monetary policy. The common wisdom is that, as the short-term interest rate nears its effective lower bound, monetary policy cannot do much to stimulate the economy. However, central banks have resorted...

By Lhuissier Stéphane, Mojon Benoït, Rubio-Ramirez Juan
  • Published on 04/16/2020
  • 40 pages
  • EN
  • PDF (2.66 MB)