Publications in refereed journals (Please download and print for personal use only)

  • Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone with Thomas Philippon, 2017, Forthcoming, American Economic Review (revised version of NBER WP 20572 and CEPR  DP10189). Column in  VOXEU; Abstract: We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage, fiscal policy, labor costs and spreads, and we propose a model and an identification strategy to separate the impact of credit cycles, excessive government spending, and sudden stops. We then ask how eurozone countries would have fared with different policies. We find that countries could have stabilized their employment if they had followed more conservative fiscal policies during the boom. Macro-prudential policies and an early intervention by the ECB to prevent market segmentation and reduce fiscal austerity would also have significantly reduced the recession.
  • Are clusters more resilient in crises? Evidence from French Exporters in 2008-2009, with Thierry Mayer and Florian Mayneris, 2016, in Factory-Free Economy, ed. L. Fontagné and A. Harrison, forthcoming Oxford University Press. CEPR Discussion paper 9667. Abstract: We analyze whether firms that agglomerate in clusters and firms that have been selected to benefit from the ``competitiveness cluster'' industrial policy, implemented in France in 2005, have performed better on export markets during the recent economic turmoil. We show that, on average, both agglomeration and the cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports. However, these effects are not stronger during the 2008-2009 crisis. This is probably due to the fact that firms in clusters are more dependent on the fate of the ``leader'', i.e.the largest exporter in the cluster.
  • "Time to Ship during Financial Crises", with Nicolas Berman, José de Sousa and Thierry Mayer, 2013.  NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225 - 260. First draft. NBER WP 18274 and CEPR DP 9089; Abstract: The negative impact of financial crises on trade is magnified for destinations with longer time-to-ship. A simple model shows that exporters react to an increase in the probability of default of importers in destinations in crisis by increasing their export price and decreasing their export volumes. For those with longer shipping time, this is magnified as the default probability increases with time. Some exporters also decide to stop exporting the more so the longer time-to-ship. Using aggregate data (1950-2009) we show that this magnification effect is very robust. We test the firm-level results on French exporter data (1995-2005) and find that they are broadly consistent with our predictions.
  •  "Varieties and the transfer problem", 2013, with Giancarlo Corsetti and Paolo Pesenti. Journal of International Economics. Volume 89, Issue 1, Pages 1-12, January 2013 (lead article). Abstract: We revisit the classic transfer problem, accounting for two channels of adjustment: increased trade in existing goods (the intensive margin) and net creation and destruction of product varieties (the extensive margin). Over the medium term, the latter reduces the scope for real exchange rate and terms of trade variability in response to cross-border flows. Simulation exercises based on 2006 data suggest that a transfer of the size of the pre-crisis U.S. current account deficit may require only moderate trend depreciation in real terms, and that the aggregate welfare impact of the transfer is disconnected from the size of the relative price correction.
  • "The vulnerability of Sub Saharan Africa to the financial crisis: the case of trade", 2012, with Nicolas Berman , IMF Economic Review 60, 329-364. Abstract: We analyze the eff ect of past banking crises (1976-2002) on trade with a focus on African exporters. These are particularly vulnerable to a banking crisis in the countries they export to. We distinguish an income eff ect from a disruption effect. For African exporters the fall in trade (relative to gravity) is around 15 percentage points higher than for other countries in the aftermath of a banking crisis. We analyze several possible causes of this vulnerability.
  • "The geography of conflicts and free trade agreements", 2011, with Thierry Mayer and Mathias Thoenig,  American Economic Journal: Macroeconomics, 2012, 4(4): 1–35 (lead article). See The economics and politics of Free Trade Agreements, April 2010, VOX. Abstract: In addition to standard trade gains, regional trade agreements (RTAs) can promote peaceful relations by increasing the opportunity cost of conflicts. Country-pairs with large trade gains from RTAs and a high probability of conflict should be more likely to sign a RTA. Using data from 1950 to 2000, we show that this complementarity between economics and politics determines the geography of RTAs. We disentangle trade gains from political factors by a theory-driven empirical estimation and find that country pairs with higher frequency of past wars are more likely to sign RTAs, the more so the larger the trade gains.
  • "How do different exporters react to exchange rate changes?", 2012, with Nicolas Berman and Thierry Mayer, Quarterly Journal of Economics, Volume 127 Issue 1 February 2012See column in VOXAn appendix is here. Abstract: We analyze the heterogenous reaction of exporters to real exchange rate changes using a very rich French firm-level dataset with destination-specific export values and volumes on the period 1995-2005. High-performance firms react to a depreciation by increasing more their markup and by increasing less their export volume. This heterogeneity in pricing-to-market is consistent with models where the demand elasticity decreases with firm performance. Since aggregate exports are concentrated on high performance firms heterogenous pricing-to-market may partly explain the weak aggregate impact of exchange rate movements.
  • "Public support to clusters: A firm level study of French ``Local productive systems" 2011, with Thierry Mayer and Florian Mayneris, Regional Science and Urban Economics, 41, 108–123. Abstract: We analyze empirically a public policy promoting industrial clusters in France. We use firm-level data on production and employment for firms that benefited from the policy and on firms that did not, both before and after the policy started. The policy selected firms in sectors and regions in relative decline and did not succeed in reversing the relative decline in productivity for the targeted firms. The policy had no robust effect on employment or exports.
  • Spatial Concentration and Firm-Level Productivity in France”, 2011, with Florian Mayneris and Thierry Mayer, Journal of Urban Economics, Volume 69, Issue 2, March 2011, Pages 182-195. Abstract: We analyze the effect of spatial agglomeration of activities on plant-level productivity, using French firm and plant-level data (1996-2004). We exploit short-run variations of variables by making use of GMM estimation. This allows us to control for endogeneity biases that the estimation of agglomeration economies typically encounters. French plants benefit from localization economies and these are relatively well internalized by firms in their location choice: we find very little difference between the geography that would maximize productivity gains in the short-run and the geography actually observed.
  • "International portfolios, capital accumulation and foreign assets dynamics", 2010, with Nicolas Coeurdacier and Robert Kollmann, Journal of International Economics, vol 80, 1, p 100-112. Abstract: Despite the liberalization of capital flows among OECD countries, equity home bias remains sizable. The interaction of the following ingredients generates a realistic equity home bias: capital accumulation and international trade in stocks and bonds. In our model, domestic stocks are used to hedge fluctuations in local wage income. Terms of trade risk is hedged using bonds denominated in local and foreign goods. In contrast to related models, the low level of international diversification does not depend on strongly countercyclical terms of trade.
  • "The geography of asset trade and the Euro: Insiders and outsiders", 2009, with Nicolas Coeurdacier. Journal of the Japanese and International Economies. Volume 3, issue 2, pages 87-240, June. see column inVOX. Abstract: We find evidence that the euro has implied 1) a unilateral financial liberalization which makes it cheaper for all countries to buy euro zone assets. For bonds and equity holdings, this would translate into approximately 14% and 17% decrease in transaction costs; 2) a preferential financial liberalization which has decreased transaction costs inside the euro zone by approximately 17% and 10% for bonds and equity respectively. 3) a diversion effect that has led euro countries to purchase less equity from outside the euro zone.
  • "International portfolios with supply, demand and redistributive shocks" 2009 with Nicolas Coeurdacier and Robert KollmannNBER International Seminar in Macroeconomics. University of Chicago Press. NBER working paper 13424. Abstract: This paper explains three key stylized facts observed in industrialized countries: 1) portfolio holdings are biased towards local equity; 2) they are long in foreign currency assets and short in domestic currency; 3) the depreciation of a country's exchange rate is associated with a net external capital gain. We present a two-country, two-good model with trade in stocks and bonds, and three types of disturbances: shocks to endowments, to the relative demand for home vs. foreign goods, and to the distribution of income between labor and capital. With these shocks, optimal international portfolios are shown to be consistent with the stylized facts.
  • "Civil wars and International Trade", with Thierry Mayer and Matthias Thoenig , 2008, Journal of the European Economic Association Papers and Proceedings. April-May, 6 (-3): 541-550.  A  longer version is here in the form of CEPR DP 6659. Abstract: We analyze the relationship between civil wars and international trade.  Trade destruction due to civil wars is very large and persistent. We identify two effects that trade can have on the risk of civil conflicts: it may act as a deterrent if trade gains are put at risk during civil wars but it may also act as an insurance if international trade provides a substitute to internal trade during civil wars. We find support for the presence of these two mechanisms and conclude that trade openness may deter the most severe civil wars (those that destroy the largest amount of trade) but may increase the risk of lower scale conflicts.
  • "Make Trade not war?", with Thierry Mayer and Matthias Thoenig.  2008, Review of Economic Studies  Volume 75, 3, 865 - 900 (press coverage: Le Monde, Libération, Enjeux- Les Echos, Vox). Data is here. Abstract: We analyse theoretically and empirically the relationship between military conflicts and trade. We show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial, military conflicts reduce trade, and leaders are rational. When war can occur because of the presence of asymmetric information, the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains. However, countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict. We test our predictions on a large data set of military conflicts on the 1950–2000 period. We find robust evidence for the contrasting effects of bilateral and multilateral trade openness.
  • "Productivity spillovers, terms of trade and the home market effect", 2007, with Giancarlo Corsetti and Paolo Pesenti,  Journal of International Economics. 73, 99-127. Abstract: This paper analyzes the international transmission and welfare implications of productivity gains and changes in market size when macroeconomic adjustment occurs both along the intensive margin of trade (changes in the relative price of existing varieties of tradable goods) and the extensive margin (creation and destruction of varieties). We draw a distinction between productivity gains that enhance manufacturing efficiency and gains that lower the cost of firms' entry and of product differentiation. Countries with lower manufacturing costs have higher GDP but supply their products at lower international prices. Instead, countries with lower entry costs supply a larger array of goods at improved terms of trade.
  • "Globalization and Emerging Markets: With or without Crash?"  2006, with Hélène Rey. A data appendix is here. American Economic Review, December, vol 96, n5, 1631-51. Abstract: We analyze the effects of financial and trade globalization on the likelihood of financial crashes in emerging markets. While trade globalization always makes crashes less likely, financial globalization may make them more likely, especially when trade costs are high. Pessimistic expectations can be self-fulfilling and lead to a collapse in demand for goods and assets. Such a crash comes with a current account reversal and drops in income and investment. Lower-income countries are more prone to such demand-based financial crises. A quantitative evaluation shows our model is consistent with the main stylized facts of financial crashes in emerging markets.
  • "Subsidies to Poor Regions and Inequalities: Some Unpleasant Arithmetic", with Vincent Dupont, 2006, Journal of Economic Geography, April 2006; 6: 223 - 240
  • "The Geography of inequalities in Europe",  2005, Swedish Economic Policy Review. Volume 12.
  • Financial Super-Markets: Size Matters for Asset Trade", 2004, with Hélène Rey. Journal of International Economics, 64, 335– 361.
  • "Terrorism and the Resilience of Cities", with James Harrigan, novembre 2002, Economic Policy Review, Federal Reserve Bank of New York. Volume 8 number 2.
  • "Coordination, Cooperation, Contagion and Currency Crises", 2001, with Olivier Loisel, Journal of International Economics 53 , 399-419
  • "Global Economic Divergence, Trade and Industrialisation: The Geography of Growth Takeoffs", with Richard Baldwin and Gianmarco Ottaviano,  2001, Journal of Economic Growth, 6: March, 5-37.
  • "Growth and Agglomeration", 2001, with Gianmarco Ottaviano, International Economic Review, November, 42: 947-968
  • "Financial Integration and Asset Returns", with Hélène Rey, 2000, European Economic Review, June, vol 44/7, p. 1327-1350.
  • "Optimal Stabilization Policy in the Presence of Learning by Doing", with Carol Rogers, 2000, Journal of Public Economic Theory, 2 (2), 213-240.
  • "Short Term Economic Instability and Long Term Growth", with Carol Rogers, 2000, European Economic Review (44) 2, pp. 359-381.
  • "Public Policies, Regional Inequalities and Growth", Journal of Public Economics, (73)1 (1999) pp. 85-105; (reedited in book Kluwer)
  • "Growing Locations: Industry Location in a Model of Endogenous Growth", 1999, with Gianmarco Ottaviano, European Economic Review (43) 2, pp. 281-302
  • "Can Regional Policies Affect Growth and Geography in Europe?", 1998, World Economy vol. 21, no. 6, 757-774. (PDF)
  • "Coopération Internationale et Crises de Change Spéculatives", 1999, with Olivier Loisel, Revue Economique
  • "The Exchange Rate Policy of the Euro: A Matter of Size?", 1998, Journal of the Japanese and International Economies, 12, 455-482. Also in French in Revue d’Economie Politique, 1998, 108 (2), 195-225.
  • "Stabilization Policy, Growth and Learning by Doing", with Carol Rogers, 1997, Oxford Economic Papers, 2, volume 49, 152-166.



Chapters in books, policy papers