Séminaire

We propose a characterization of dynamic completeness in the presence of market frictions taking the form of bid{ask spreads. We show that bid-ask spreads do not necessarily result in dynamically incomplete markets. In fact, in some cases, if there was no bid-ask spread then markets would be dynamically incomplete. Potential applications of the results of this article concern the regulation of securities pricing, in particular the size of acceptable bid-ask spreads.
 

In the 18th century, every second merchant ship sailing from Britain to the Baltic did not carry any exports. This was caused by trade imbalances that were driven by high demand for grains and other raw materials in Britain. Trip level data show that merchant ships based in larger British cities were more likely to make non-empty trips and carried more varieties. This paper argues that wider and denser networks of merchants in large cities, which facilitated information flows and improved the efficiency of matching, allowed them to outperform merchants from other British ports. Furthermore, ships that were based in smaller ports did not improve their performance when they departed from larger cities. This finding and additional tests provide evidence against competing explanations.
 

We analyze economic dynamics and monetary policy response in a Small Open Economy model when the exchange rate is determined in a monopolistic competitive exchange rate market. In the model, international financiers act as intermediaries in bonds trading and their risk-bearing capacity determines how exchange rate react to capital flows. We use the model to reproduce the persistent depreciation observed in indebted countries and the appreciation enhanced by capital inflows. We then analyze the role of monetary policy in stabilizing the economy. Optimal policy, by responding to exchange rate movements, neutralizes some of the real effects of exchange rate misalignment and better performs at stabilizing the economy in a risky environment. 

This article examines how pollution and its health effects during childhood can affect the dynamics of inequalities among households. In a model in which children’s health is endogenously determined by pollution and the health investments of parents, we show that the economy may exhibit inequality in the long run and be stuck in an inequality trap with steadily increasing disparities, because of pollution. We investigate if an environmental policy, consisting in taxing the polluting  production to fund pollution abatement, can address this issue. We find that it can decrease inequality in the long run and enable to escape from the trap if the emission intensity is not too high and if disparities are not too wide. Otherwise, we reveal that a policy mix with an additional subsidy to health expenditure may be a better option, at least if parental investment on children’s health is sufficiently efficient.
 

We investigate the welfare consequences of the choice of a category captain by a retailer, who can select one of his two suppliers to provide services that may boost demand (vertical practice). The welfare effects of the vertical practice depend on the timing of the decisions. When the tariff offers are made after the choice of the category captain and once the effort is exerted, a category captain improves the retailer's profit, consumer surplus and welfare, but reduces the rival's profit. The retailer may however choose the less efficient supplier to enjoy a larger share of a smaller joint profit, thus failing to maximize welfare. When, by contrast, the effort is chosen after the tariff stage, then tariffs are inefficient, consumers are harmed,
and welfare may decrease. We extend these results when the effort exerts spillovers on demand for the rival product (horizontal practice).
 

Developed and developing countries compete using various instruments including corporate taxes and environmental regulations in order to attract _rms.
They also commit to international environmental agreements with \common but differentiated responsibilities" (CBDR). We investigate how the principles of CBDR and of \in a position to do so" embedded in global climate agreements affect optimal corporate taxes and environmental standards. We find that the latter depend only on the mitigation burdens imposed by international agreements.
In other words, the burden of competition between countries is carried by corporate taxes, which depend among others on the level of firms' mobility costs and on production cost di_erentials. Interestingly, we find that developed countries are not necessarily worse-off in terms of payoffs under CBDR, while emerging countries \in a position to do so" are not necessarily harmed by assuming responsibilities.
 

This paper introduces a new shifted negative log-normal distribution for the price parameter in Mixed Multinomial logit models. The new distribution, labelled as the shifted negative log-normal distribution, has desirable properties for welfare analysis and in particular a point-mass which is further away from zero than the negative log-normal distribution. This contributes to mitigating the 'exploding' implicit prices issue commonly found when the price parameter is speci ed as negative log-normal and the model is in preference space. The new distribution is tested on 10 stated preference datasets. Comparisons are made with standard alternative approaches such as the willingness-to-pay space approach. It is found that the new -shifted distribution yields much lower mean marginal WTP estimates compared to the negative lognormal specification (up to 99% lower) and similar to the values derived from a multinomial logit while at the same time tting the data as well as the negative lognormal speci cation and much better than the willingness-to-pay space approach.
 

After fifty years of being classified as endangered the Florida manatee (Trichechus manatus latirostris) was downlisted to the status of threatened in 2017. While it is generally believed that setting boating speed limits in manatee protection zones has been an important factor behind this success, direct quantitative evidence is limited. This study undertakes a comprehensive analysis of whether speed regulations intended to reduce boating related manatee deaths have indeed been effective. To this end a county level annual data set of manatee boating related deaths was combined with geo-referenced measures of the evolution of boating speed restriction zones over nearly 20 years. Regression analysis shows that setting maximum speed limits reduced manatee deaths in a non-linear manner, with greater effects at lower speed limits. Using a stochastic age-structured population model the impact on manatee population dynamics is also explored under different scenarios. This suggests that regulating boating speed significantly reduces their risk of extinction. Using existing economic valuation measures for manatee conservation shows that boaters could be more than monetarily compensated to accept a speed limit that would be marginally most effective.
 

Our next seminar will take place on Thursday 27 May 12h30 via Zoom (link Zoom). We will host Anna Dugan (University of Graz and visiting scholar at CREAM) “The Optimal Extraction of Non-Renewable Resources Under Hyperbolic Discounting” with (Timo Trimborn).

Abstract “In this paper, we investigate the effects of a declining social discount rate(SDR) on the optimal extraction of non-renewable resources and economic growth. For this purpose, we introduce time-consistent hyperbolic utility discounting into models of resource extraction. First, we investigate a small model of pure resource extraction holding constant the magnitude of discounting for hyperbolic and exponential discounting. We show that the rate of resource extraction is lower under hyperbolic discounting resulting in a permanently higher resource stock. Second, we introduce hyperbolic discounting into the seminal Dasgupta-Heal-Solow-Stiglitz(DHSS) model and derive analytically that positive long-run growth of per capita consumption requires a lower rate of technological progress under hyperbolic dis-counting. We show numerically that the rate of resource extraction is lower under hyperbolic discounting in the medium- and long-run.”

Vincent Iehlé (Université de Rouen-Normandie) nous présentera son article intitulé : "SIGEM: Analyse de la Procédure d'Affectation dans les Grandes Ecoles de Management" (avec J. Jacqmin (NEOMAS BS)).