Séminaire

In the last 50 years, the US extended its security commitment to many countries, while pursuing strategic ambiguity towards Taiwan. To understand these decisions and their implications, we develop a model where a great power (e.g., the US) chooses whether to protect an actor (e.g., Taiwan) in the event of another great power’s aggression (e.g., China). Neutrality invites Chinese aggression; protection leads to moral hazard (e.g., lower Taiwanese defense investments). We show that the strategy that maximizes deterrence is an ambiguous strategy (in the Ellsberg sense): China is deterred as if the US would defend Taiwan, and Taiwan acts as if the US would not. Extending the model, we show that this strategy can only be adopted by a great power who is sufficiently stronger than its competitor. When China reaches similar power as the US (and can also offer security guarantees), then the US would extend its security commitment to Taiwan, giving up on some deterrence to keep Taiwan from switching sides. We argue that this finding can explain why the US is about to abandon strategic ambiguity towards Taiwan, and why great powers expand their portfolio of security commitments when the balance of power gets closer to parity (e.g., NATO and Warsaw Pact).

  Les ventes internationales entre un acheteur et un vendeur sont souvent associées à une phase de transport maritime, longue, couteuse et risquée. Ce type de ventes est régi par des classes de contrats - les Incoterms - qui définissent les rôles et responsabilités de chaque agent. Nous montrons comment ces classes de contrat sont transposables à l’environnement des smart contracts. Ces contrats automatisés inscrits dans la blockchain permettent de contrôler de manière simple et flexible différents risques inhérents à cet

environnement. Nous identifions ainsi une séquence adéquate de mises sous séquestre qui limite, en particulier, les risques de liquidité et de transport associés `a ce type de transactions, et qui est facilement implémentable `a l’intérieur d’un smart contract dédié.

We present a comprehensive analysis of monetary policy in South Africa by employing a state-of-the-art high-frequency identification. Using future contracts, we extract three monetary policy surprises affecting the short-, mid-, and long-end of the yield curve. We report three main results from an event study and an identified VAR. First, conventional monetary policy works in a standard manner in a small open emerging market, with tightenings generating contractionary effects on real, nominal, and financial variables. Second, the exogenous shocks to the longer maturities produce effects compatible with risk premia shocks. Third, monetary surprises represent a relevant share of policy rate decisions, indicating that policymakers always surprise market participants. Furthermore, surprises correlate with the central bank forecasts, as well as global shocks. These findings point to markets having uncertainty regarding both the state of the economy and the reaction function of the bank.

Ce jeudi 15 décembre, le séminaire du LERN accueillera Leonor Modesto, de l'Université Catholique du Portugal, qui présentera l'article "Imperfect competition in the banking sector and economic instability", co-écrit avec Francesco Carlo et Teresa Lloyd-Braga.


 Le résume de l'article est le suivant : 

"The literature identifies good and bad economic effects of bank competition, usually linked to the lower/higher degree of ‘implicit’ credit rationing or higher/lower risk of bank failure.  In this work we highlight a different economic effect of (im)perfect competitionin the banking sector, namely its influence on fluctuations in banking activity and output linked to autonomous volatility in self-fulfilling expectations. 
We  consider  an  OLG  model  with  two  types  of  households:   lenders  who  consume and  work  when  young  and  save  through  bank  deposits  to  finance  consumption  in  old age;  and  entrepreneurs  who  ask  for  a  bank  loan  to  finance  current  consumption  andto  invest  in  a  productive  project  that  will  pay  for  their  second  period  consumption. Banks pay a fee to have a license to operate, face a reserve requirement rate fixed by the monetary authority and solve a profits maximation problem every period under Cournot competition with free entry and exit. We find that more competition in the banking sector facilitates  the  emergence  of  local  indeterminacy  and  sunspots  fluctuations,  promoting therefore macroeconomic instability"

Le séminaire prendra place en salle c 216 à partir de 12h30. Un lien zoom vous sera communiqué prochainement pour celles et ceux souhaitant suivre le séminaire à distance.

This paper primarily investigates the effects of a public sector wage shock using a DSGE model with search and matching frictions in a heterogeneous labour market composed of skilled and unskilled workers. The model is parametrized to reflect the South African labour market. The findings show that a public sector wage shock mainly crowds out private skilled labour which private firms substitute with unskilled workers. Overall unemployment increases in the short term as additional skilled workers queue for public jobs. Given unions high bargaining power, the public wage premium further applies upward pressures on private sector wages, which in turn contributes to rigidities in wages and subsequently to labour shedding in the private sector when economic activity is soft.

Bonjour,

Le premier séminaire du LERN pour l'année 2022-2023 aura lieu le 20 octobre à 12h30.
Titre : Constant Debt-to-GDP Policy and Aggregate (In)-stability
Salle : C-216