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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.

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June

Publication Working Paper Series no. 820:
Inflation tolerance ranges in the New Keynesian model

A number of central banks in advanced countries use ranges, or bands, around their inflation target to formulate their monetary policy strategy. The adoption of such ranges has been proposed by some policymakers in the context of the Fed and the ECB...

By Le Bihan Hervé, Marx Magali, Matheron Julien
  • Published on 06/29/2021
  • 35 pages
  • EN
  • PDF (1.17 MB)
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June

Publication Working Paper Series no. 819:
Job Polarization and the Flattening of the Price Phillips Curve

This paper shows that the change in the occupational composition of the labor market in favour of non-routine jobs -i.e. job polarization- flattens the price Phillips Curve (PC). Using data from the European Monetary Union and exploiting the fact that...

By Siena Daniele, Zago Riccardo
  • Published on 06/17/2021
  • 56 pages
  • FR
  • PDF (3.48 MB)
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June

Publication Working Paper Series no. 818:
Is a Money-financed Fiscal Stimulus Desirable?

We analyse the redistribution channel of a money-financed versus debt-financed fiscal stimulus in a Borrower-Saver frammework. The redistribution channel is larger when we consider a money-financed fiscal stimulus. However, it generates also larger...

By Punzo Chiara, Rossi Lorenza
  • Published on 06/14/2021
  • 36 pages
  • EN
  • PDF (2.05 MB)
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June

Publication Working Paper Series no. 817:
Welfare-Based Optimal Macroprudential Policy with Shadow Banks

In this paper, I show that the existence of non-bank financial institutions (NBFIs) has implications for the optimal regulation of the traditional banking sector. I develop a New Keynesian DSGE model for the euro area featuring a heterogeneous...

By Gebauer Stefan
  • Published on 06/10/2021
  • 95 pages
  • EN
  • PDF (2.66 MB)
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June

Publication Working Paper Series no. 816:
Foreign Direct Investment and Domestic Private Investment in Sub-Saharan African Countries: Crowding-In or Out ?

This paper investigates the relationship between FDI and private investment in Sub-Saharan Africa (SSA), using a sample of 40 countries over 1980-2017. To disentangle short term from long-term dynamics, our empirical analysis is based on Pooled Mean...

By Askandarou Diallo, Jacolin Luc, Isabelle Rabaud
  • Published on 06/09/2021
  • 38 pages
  • EN
  • PDF (2.11 MB)
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June

Publication Working Paper Series no. 815:
No country is an island. International cooperation and climate change.

In this paper we explore the cross-country implications of climate-related mitigation policies. Specifically, we set up a two-country, two-sector (brown vs green) DSGE model with negative production externalities stemming from carbon-dioxide emissions....

By Ferrari Massimo, Pagliari Maria Sole
  • Published on 06/08/2021
  • 75 pages
  • EN
  • PDF (4.02 MB)
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May

Publication Working Paper Series no. 814:
Good Connections: Bank Specialization and the Tariff Elasticity of Exports

In this paper, we show that exporters react more strongly to a cut in tariffs by a distant country when their banks have already been specializing in funding exports to this country. To make our case, we build upon a theoretical model where an...

By Berthou Antoine, Mayer Thierry, Mésonnier Jean-Stéphane
  • Published on 05/19/2021
  • 41 pages
  • EN
  • PDF (2.37 MB)
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May

Publication Working Paper Series no. 813:
Public spending, currency mismatch and financial frictions

In this paper, we demonstrate that the size of the fiscal multiplier depends both on currency mismatch and home bias. Our demonstration is based on a real two-country dynamic stochastic general equilibrium model with incomplete and imperfect...

By Marie Pierre Hory, Levieuge Grégory, Daria Onori
  • Published on 05/17/2021
  • 33 pages
  • EN
  • PDF (2.4 MB)
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May

Publication Working Paper Series no. 812:
Greening Monetary Policy: Evidence from the People's Bank of China

In June 2018, the People’s Bank of China (PBoC) decided to include green financial bonds into the pool of assets eligible as collateral for its Medium Term Lending Facility. The PBoC also gave green financial bonds a “first-among-equals” status. We...

By Macaire Camille, Naef Alain
  • Published on 05/04/2021
  • 24 pages
  • EN
  • PDF (2.41 MB)
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April

Publication Working Paper Series no. 811:
Should the ECB Adjust its Strategy in the Face of a Lower r*?

We address this question using an estimated New Keynesian DSGE model of the Euro Area with trend inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady-state real interest rate, r*,...

By Andrade Philippe, Galí Jordi, Le Bihan Hervé, Matheron Julien
  • Published on 04/21/2021
  • 40 pages
  • EN
  • PDF (2.15 MB)
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April

Publication Working Paper Series no. 810:
Bankruptcy Costs and the Design of Preventive Restructuring Procedures

A European directive requires Member States to give firms access to preventive restructuring procedures. This paper assesses the interest of a procedure distinct from that for insolvent firms. It is based on the French experience, where a preventive...

By Epaulard Anne, Zapha Chloé
  • Published on 04/20/2021
  • 58 pages
  • EN
  • PDF (4.35 MB)
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March

Publication Working Paper Series no. 809:
Return on Investment on AI: The Case of Capital Requirement

Taking advantage of granular data we measure the change in bank capital requirement resulting from the implementation of AI techniques to predict corporate defaults. For each of the largest banks operating in France we design an algorithm to build...

By Fraisse Henri, Laporte Matthias
  • Published on 03/11/2021
  • 37 pages
  • EN
  • PDF (3.14 MB)
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