ERC and Other European Projects

Funded by the European Union (ERC, REALLYCREDIBLE,GA N°101043899). Views and opinions expressed are those of the authors and do not reflect those of the European Union or the European Research Council Executive Agency. Neither the European Union nor the granting authority can be held responsible for them

ERC Consolidator Grant 2022

Awardee : Clément de CHAISEMARTIN

Objective

"Applied economists routinely evaluate the effect of economic policies. For instance, what is the effect of raising the minimum wage on employment? Angrist & Pischke (2010) argue that applied economics has recently experienced a ""credibility revolution'': by switching to transparent methods to evaluate policies, applied economists have increased the credibility of their findings, and the impact of their work. In the first part of this proposal, I show that the credibility revolution is not complete. Two-way fixed effects regression, a policy-evaluation method used in as many as 26% of the most-highly cited papers recently published in the American Economic Review, relies on the assumption that the policy's effect is constant, across units and over time. In most applications, this assumption is not credible. Therefore, I propose a series of new differences-in-differences estimators, that do not rely on this constant effect assumption, and that can be used in virtually all the applications where two-way fixed effects regressions have been used. In the second part of this proposal, I argue that the credibility revolution's focus on unbiased estimators may be hard to defend, as variance also matters. I explore two ways of trading-off bias and variance. The first amounts to combining an unbiased and a biased but potentially more efficient estimator of the same parameter. The second amounts to deriving the minimax estimator of the policy's effect, under the assumption that this effect cannot be larger than a (potentially large) constant B. Finally, the third part investigates the potential impact of the ``credibility revolution''. Specifically, I will run a randomized controlled trial to measure the effect of following an online course presenting policy evaluations, in two very different populations: policy makers and members of the general public, focusing on individuals with a low trust in institutions in that second group."

More about Clément de CHAISEMARTIN and his research

Consult the REALLYCREDIBLE project information on CORDIS' website

Read the announcement of the awarding of the ERC Grant to Clément de CHAISEMARTIN

Funded by the European Union (ERC, UNEQUALED, GA N°101044361). Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Research Council Executive Agency. Neither the European Union nor the granting authority can be held responsible for them.

ERC Consolidator Grant 2021

Awardee : Ghazala AZMAT

Objective

Project UNEQUALED aims to study educational constraints faced by individuals at a stage when they are planning their future investments in human capital. Despite its importance, understanding the determinants of educational choices has been a longstanding challenge for two important reasons. First, it requires broad, representative, data. Secondly, because the environment in which individuals’ educational plans are formed, and adjust, is typically endogenous to their characteristics.

Different parts of project UNEQUALED target specific questions that will help construct an overall picture. The project will seek to understand, and quantify, the role of the different barriers in leading to unequal learning and opportunities and the effects of easing the constraints. Specifically asking: Can the easing of technological constraints reduce learning inequality? What role does ICT access and training play for distance learning? Does differential social exposure within the classroom impact student outcomes? Can role models help an individual reach their goal? How important are psychological (or socio-emotional) barriers for achievement?

I plan to combine economic concepts with field interventions, experiments, and rich econometric and analytical tools to analyze big datasets and to causally estimate the impact of the components that drive the adjustment in educational plans, and, ultimately, how these factors into later educational outcomes. All projects will aim to capture the short and long-run impacts.

More about Ghazala AZMAT and her research

Consult the UNEQUALED project information on CORDIS' website 

Read the announcement of the awarding of the ERC Grant to Ghazala AZMAT

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 101018130).

ERC Advanced Grant 2020

Awardee : Jean-Marc ROBIN

Objective

Research proposal MARNET aims at improving our empirical knowledge of markets structured as bipartite networks (all connections involve two different categories of agents) by providing better statistical models of network formation and of the effects of the network structure on outcomes.

The use of random graphs, in which an edge between two nodes is the realization of a random draw, to model networked social, technological and biological systems has been subject to a novel and vigorous effort over the last twenty years. I will contribute to the knowledge corpus on networked economic systems with two separate research lines: first, in studying marriage formation and intrahousehold resource allocation; second, in studying wage dynamics and employment mobility using linked employer-employee data.

The first research line aims to better understand why different marriage markets (regions, countries, time periods) look different. My aim is to disentangle and quantify the sources of differentiation that relate to standard socio-economic variables, such as education and wages, from those that relate to culture and social norms. Various extensions will be considered to improve the design and realism of the model (aging and fertility, lots of heterogeneity, unobserved heterogeneity, housing and asset accumulation).

In the second research line, I will use recent advances in dynamic random graphs to model individual wage dynamics and the mobility of workers across firms. The main empirical objective is to quantify the degree of assortative matching of workers and firms in the labour market, and the relative contributions of worker and firm heterogeneity in wages. Several extensions will be considered (time-varying types, subjecting the network structure to pre-determined firm sizes, opening firm nodes by modelling wage dynamics and occupational mobility within firms).

Read more about Jean-Marc ROBIN and his research

Consult the MARNET project information on CORDIS' website

Read the announcement of the awarding of an ERC Grant to Jean-Marc ROBIN

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 101001694).

ERC Consolidator Grant 2020

Awardee : Eduardo PEREZ

Objective

Informational environments are largely endogenous. They can be, and often are, chosen or designed by individuals or organizations with specific objectives in mind. As recognized by a large literature in economics, information plays a crucial role in shaping the outcome of downstream decisions by strategic players (i.e. at the receiving end of informative signals). However, the structure of information also impacts decisions by strategic agents upstream of the generation of signals, as agents mould the underlying reality differently depending on how other players will eventually be informed about it. Finally, designed information production systems are susceptible to manipulations by third party agents pursuing their own interests.

I will seek to further our understanding of socially or privately optimal information designs, how they shape upstream and downstream decisions, how they can be manipulated by private interests, and how to best anticipate and counter such manipulations. I will rely on the analysis of a largely unexplored designer-agent-receiver class of games, in which the designer picks an information generation system, the agent takes an upstream decision affecting the states of the world, or manipulates the production of information, and receivers choose downstream actions based on realized signals.

The project is organized around the different technologies available to the agent. I will consider fake news production, which is the fabrication of signals that pass as informative but are in fact independent of the truth; state falsification, which consists in falsifying the state of the world, or feeding the information production process with falsified data; pure agency, which is the possibility for the agent to secretly deviate to a different but undistinguishable information generation technology; and state shifting, which is the upstream effort an agent can exert to actually transform the probability distribution of states of the world.

Read more about Eduardo PEREZ and his research

Consult the IMEDMC project information on CORDIS' website 

Read the announcement of the awarding of an ERC Grant to Eduardo PEREZ 

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 948516).

ERC Starting Grant 2020

Awardee : Julia CAGÉ

Objective

The goal of PARTICIPATE is to develop a comprehensive approach to the study of campaign finance, information and influence, using new individual-level data and investigating recent changes in participation behaviors. What are the motives behind small campaign contributions? Does tax policy affect political giving? Why are so few politicians from the working class and can this change? What is the ability of the media to induce citizens to make electoral decisions they would not make if reporting were unbiased? While there is evidence at the macro level on the flow of money in elections, news consumption, or the extent of charitable giving, relatively little is known at the micro level, e.g. on individual-level behaviours such as the motivations of small donors, the tax-price elasticity of political donations, or the exposure to competing information flows. PARTICIPATE will help fill this gap. By providing groundbreaking evidence on new forms of participation, it will lead to the reassessment of influential theories of special interest groups and policy formation. One distinguishing feature of the proposal is to combine comprehensive individual-level datasets and the use of computer sciences tools (such as natural language processing techniques and machine learning).

PARTICIPATE will advance the existing research in three steps. First, I will propose a unified analysis of political contributions. This will include a groundbreaking assessment of the importance of small campaign donations, and a combined study of charitable giving and political contributions investigating the impact of tax policy on donations. Fundraising success can lead to the emergence of new candidates. I will then consider citizens’ decision to run for elections, and investigate the role played by network in political selection. Finally, given the importance of media organizations in shaping participation, I will study the changing patterns of information propagation and political influence.

Read more about Julia CAGÉ and her research

Consult the PARTICIPATE project information on CORDIS' website 

Read the announcement of the awarding of an ERC grant to Julia CAGÉ

Read the interview with Julia CAGÉ, "Counting the Forgotten in Politics"

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 884847).

ERC Advanced Grant 2020

Awardee: Thomas CHANEY

Objective

Do international migrations foster economic dynamism and growth? Does the presence of immigrants and their descendants alter the attitudes and actions of natives towards foreigners? How do cities emerge and survive? Does economic growth increase wellbeing in the long run? These are but a few of the questions that I explore in this proposed research.

The unifying theme of this research is to test the hypothesis that direct contact between individuals affects their preferences and the technologies they use. This research is articulated around eight distinct projects, each exploring this hypothesis from different angles, at different points in time, and over different horizons. The unifying methodology is to use historical data. Using data spanning the Neolithic, the Bronze Age, the Middle Age, and modern history, working with a team composed of both economists and historians, combining a variety of theoretical, empirical, and methodological contributions, I answer the following questions:

Do migrants contribute to local innovation and growth (project 1.1)? Does the presence of neighbors of foreign ancestry alter the attitudes of local residents towards foreigners (project 1.2)? How does the ethnic composition of cities shape the geography of global altruism (project 1.3)? How do local interactions between Assyrian merchants in the Bronze Age affect the emergence of ancient firms (coalitions) and aggregate trade (project 2.1)? Can the local interactions between travellers explain the emergence of cities in the Neolithic (project 2.2)? Do local interactions between city dwellers and traveling merchants explain the survival and growth of new cities in 13th Century France (project 2.3)? How do migration and trade flows affect the diffusion of technology over millennia (project 3.1)? And finally, as language is the key medium through which individuals interact, how to use written words to quantify the growth in wellbeing in the short and long run (project 3.2)?

Read more about Thomas CHANEY and his research

Consult the HMTG project information on CORDIS' website

Read the announcement of the awarding of an ERC grant to Thomas CHANEY

Read the interview with Thomas CHANEY, "When Econometrics Sheds Light on the History of Social Relations"

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 866274).

ERC Consolidator Grant 2020

Awardee: Alfred GALICHON

Objective

This project seeks to build an innovative economic toolbox (ranging from modelling, computation, inference, and empirical applications) for the study of equilibrium models with gross substitutes, with applications to models of matching with or without transfers, trade flows on networks, multinomial choice models, as well as hedonic and dynamic pricing models. While under-emphasized in general equilibrium theory, equilibrium models with gross substitutes are very relevant to these problems as each of these problems can be recast as such.

Thus far, almost any tractable empirical model of these problems typically required making the strong assumption of quasilinear utilities, leading to a predominance of models with transferable utility in applied work. The current project seeks to develop a new paradigm to move beyond the transferable utility framework to the imperfectly transferable utility one, where the agent’s utilities are no longer quasi-linear.

The mathematical structure of gross substitutes will replace the structure of convexity underlying in models with transferable utility.

To investigate this class of models, one builds a general framework embedding all the models described above, the “equilibrium flow problem.” The gross substitute property is properly generalized and properties (existence of an equilibrium, uniqueness, lattice structure) are derived. Computational algorithms that rely on gross substitutability are designed and implemented. The econometrics of the problem is addressed (estimation, inference, model selection). Applications to various fields such as labor economics, family economics, international trade, urban economics, industrial organization, etc. are investigated.

The project touches upon other disciplines. It will propose new ideas in applied mathematics, offer new algorithms of interest in computer science and machine learning, and provide new methods in other social sciences (like sociology, demography and geography).

Read more about Alfred GALICHON and his research

Consult the EQUIPRICE project information on CORDIS' website

Read the annoucement of the awarding of an ERC grant to Alfred GALICHON

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 850996).

ERC Starting Grant 2019

Awardee: Jeanne HAGENBACH

Objective

Economists have distinguished for a long time soft and hard information with the understanding that cheap talk is more prone to subjective interpretation than hard evidence. In fact, any piece of evidence carries some of the true underlying information that agents are usually assumed to be willing and able to access. For various reasons, agents may however prefer to avoid disturbing truths or maintain wrong but encouraging beliefs. In MOREV, I propose to study motivated reading of evidence, that is, study how individuals interpret hard information in ways that serve their own purposes. I wish to identify the goals that push the reading of evidence in systematic ways. I also want to study how agents manage to distort this reading, for example by choosing not to read or reason about available evidence. The MOREV project is divided into two parts, each bringing the recent literature on motivated beliefs to a new area of study.

In part 1, I will focus on agents' motivated reading of evidence about other individuals (their ability, their socio-economic characteristics, etc.). Indeed, one may not view a person the same way ahead of cooperative or competitive tasks. It is wellestablished that how close agents feel to each other (as network members or in terms of social identity) affects what they do to each other. I propose to investigate experimentally and theoretically the converse relationship: how do agents’ strategic goals affect their perception of others?

In part 2, I will focus on agents' motivated reading of evidence about products. For example, consumers may purposefully distort their beliefs about some attributes to make their purchasing plans easier to execute or take on. To do so, agents may not interpret vague information skeptically or, more generally, use motivated reasoning processes. By studying these ideas in the lab and in new models, I aim at bringing a novel explanation to the fact that, in many markets, information does not unravel as theory predicts.

Read more about Jeanne HAGENBACH and her research

Consult the MOREV project information on CORDIS' website

Read the annoucement of the awarding of an ERC grant to Jeanne HAGENBACH  

Read the interview with Jeanne HAGENBACH, "When the Truth is Inconvenient, or 'Motivating' Reading of Information

Housing, Finance, and the Macroeconomy, 1870-2015 (SAFEHOUSE)

ERC Consolidator Grant 2017 

Awardee : Moritz SCHULARICK
*The Department is partner since 2022: the hosting institution is the University of Bonn

Objective 

Popular wisdom has it that no other investment is as ‘safe as houses’. Households have rigorously followed this investment advice. At the beginning of the 20th century, home ownership was the exception, not the rule. 100 years later, about two thirds of Europeans own the houses they live in. Homes have become the most important asset of households and mortgage loans have driven the growth of the financial sector, becoming its main asset. In the 2008 crisis, the housing market was the epicentre of shocks to the wealth of households and the health of banks. The rise of debt-financed home ownership has transformed household portfolios and the balance sheets of banks. Yet the effects on the macroeconomy and the implications for financial stability are not well understood. We do not have a good understanding of how risky residential real estate is as an asset, how growing housing wealth affected the overall wealth distribution, or why housing and credit markets are prone to creating boom-bust cycles. SafeHouse aims to close this gap and break new ground in the macroeconomic and financial history of housing markets in 13 European countries as well as Australia, Canada, Japan and the U.S. from 1870–2015. I will pursue three main goals. First, I will determine the long-run price of housing risk, its time variation, and geographic heterogeneity, based on an extensive data collection effort. Second, I will track the evolution of housing wealth in the 20th century and quantify its contribution to much-debated trends in wealth inequality. Third, I will study the causes of boom-bust episodes in housing markets, focusing in particular on the interaction between house prices and credit supply. By combining the production of new historical data with state-of-the-art quantitative analysis, SafeHouse will open new avenues for macroeconomic and financial research on housing markets, inequality, and financial stability.

Read more about Moritz SCHULARICK and his research

Consult SAFEHOUSE project information on CORDIS' website

Firm-to-Firm Trade Networks (TRADENET)

ERC Starting Grant 2017

Awardee : Isabelle MEJEAN 

Objective

This project analyzes the propagation of shocks through international trade. The microeconomic structure of trade networks is argued to favor the propagation and amplification of shocks with an end-effect on the dynamics and volatility of aggregate trade. The exploitation of highly disaggregated firm-to-firm trade data offers a unique opportunity to analyze these questions into details.

The first part of the proposal studies the determinants of trade networks. I build a search-and-matching framework to explain the formation of bilateral trade relationships as a matching process between individual exporters in one country and individual buyers located in another country. This framework allows explaining the structure of trade networks observed in the data, both in the cross-section and over time. The model is also used to revisit several puzzles of the international economic literature, including the question of welfare gains from trade and the convergence to the law of one price.

The second part of the proposal studies the consequences of the structure of trade networks for the volatility of trade and its resilience to relative price shocks. I study how the observed connections between individual firms help propagate individual and aggregate shocks, with an end-effect on the volatility of aggregate trade and the comovement of GDPs across countries. The high concentration of trade networks and the strength of production linkages, within and across countries, help amplify the aggregate effect of individual shocks. I also analyze how the structure of trade networks shapes the response of aggregate trade to relative price shocks. The nature and history of firm-to-firm relationships is argued to have implications for the aggregate elasticity of trade.

More about Isabelle MEJEAN and her research

Consult the TRADENET project information on CORDIS' website

Read the interview with Isabelle MEJEAN "Protecting Global Value Chains: Smoother Sailing for World Trade"

Social Preferences, Well-Being, and Policy (SOWELL)

ERC Consolidator Grant 2015

Awardee : Yann ALGAN

Objective

"The goal of my project is to develop advanced research into the foundations of social preferences and well-being. If high value is placed on social cooperation and well-being for human development, then it becomes an urgent task to elaborate appropriate theories and measures, to understand their foundations, and to identify policies that will enhance them.

I will advance this research in three steps: 1) The first stage will break new ground in the theory and measurement of social preferences and well-being, by exploiting the "Big Data" revolution and exporting behavioral economics into the field with online representative samples of societies and organizations. 2) The next stage will exploit those new large-scale behavioral measures to analyze the foundations of social preferences, sorting out the role of social cognition, individual life experience and social norms. 3) The third step will be to evaluate how policy affects social preferences and well-being, and in particular in the realms of education, employment and institutions. This project will yield proposals for a new agenda in the assessment of policies, by integrating criteria based on their impact on social cooperation and happiness.

I will propose cutting-edge methods to carry out this research. First I will use the revolutionary possibilities of Big Data to test theories of happiness by exploiting high-frequency behavioral measurements of well-being from Web 2.0. Second I will use computational sciences to develop an online laboratory aimed at studying social behaviors on representative samples of the population and how they relate with real world production and policy, thus addressing the lack of external validity that currently hampers experimental economics. Last, I will combine these new measurements of behavior with randomized trials, in order to assess policy within a new paradigm based on social preferences and well-being. My research is both theoretical, empirical and trans-disciplinary."

Read more about Yann ALGAN and his research

Read more about the project on SOWELL's website or on CORDIS' website
Read the interview with Yann ALGAN, "Big Data, Be Happy"

New Dimensions and Approaches to Anti-Corruption Policy (ANTICORPOL)

Horizon 2020 - Marie Sklodowska-Curie Action - European Fellowship

Awardee : Fei XU

Objective

Corruption continues to be a central issue in the governance of institutions (public, private or mixed). The scholars and practitioners working on the topic are facing with two challenges: (1) measurement of corruption, which is a thorny issue on empirical studies of corruption, and (2) the increasing awareness of the failure of most anti-corruption policies. The overarching objective of ANTICORPOL is to introduce a new dimension in the discussion of corruption: the degree of corruption (i.e., the depth as opposed to the spread). The benchmark of ANTICORPOL is this: it is unclear whether a system (organization, public administration) with few individuals who terribly deviate from their duty is less/more corrupt, than one with many corrupt individuals who only slightly deviate from their duty. Therefore, the degree of corruption of its members must be an integral part of the debate about corruption in a system and the development of effective policies against it. This proposal raises the following research questions: (R1) How can the degree of corruption of an individual be defined? (R2) Which policies are effective in reducing the distortion of duties of corrupt individuals? (R3) How can the degree of corruption be incorporated into measurements of corruption, at organization/country level? The proposed research is based on both theoretical and empirical methods and the combination of qualitative, comparative and quantitative analysis. This project is inherently of interdisciplinary interest because corruption is a multifaceted issue with economic, political and sociological dimensions. The research findings will contribute to a deeper understanding of corruption and further to the evaluation of the quality of democracy.

Read more about Fei XU and her research

Consult the ANTICORPOL project information on CORDIS' website

Firm Networks, Trade, and Growth (FiNet)

ERC Starting Grant 2013

Awardee : Thomas CHANEY

Objective

The general theme of this research is to introduce the notion of large-scale economic networks into the mainstream of economics, in particular in macroeconomics and international trade. Economic agents often do not have access to all the relevant information they may need: whom they know, whom they interact with represents a small fraction of all possible interactions. I model this limited set of interactions as a network: agents are nodes, and they only interact with other agents they have formed a link with. What is the shape of this network of linkages between agents, and how does it evolve? More importantly, what are the aggregate implications of the shape of this network? These are the broad questions I will address in this research. I will consider six specific applications of this unifying idea in various fields: international trade, IO, macroeconomics and growth. In international trade, we have only a very crude understanding of the frictions that prevent most firms from exporting. I propose to model trade frictions as a dynamic network: at a point in time, a given exporter only has information about a limited set of potential customers in a few foreign countries; over time, this exporter discovers new export opportunities, and its network of customers evolves dynamically. I offer theoretical and empirical tools to understand and analyze the properties of this network, and show how it shapes aggregate trade patterns. In IO and macroeconomics, most plants only have few suppliers. I will model the input-output linkages between plants as a dynamic network; I offer theoretical and empirical tools to analyze this network, and show how it shapes the propagation of plant level shocks to generate aggregate fluctuations. Human capital accumulation is key to economic growth and development, with workers learning from each other. I will model these growth-enhancing interactions as a dynamic network; I will show how the properties of this network shape long run growth.

Read more about Thomas CHANEY and his research

Consult the FiNet project information on CORDIS' website

Heterogeneity That Matters for Trade and Welfare (HETMAT)

ERC Starting Grant 2012

Awardee: Thierry MAYER

Objective

Accounting for firms' heterogeneity in trade patterns is probably one of the key innovations of international trade that occurred during the last decade. The impact of initial papers such as Melitz (2003) and Bernard and Jensen (1999) is so large in the field that it is considered to have introduced a new paradigm. Apart from providing a convincing framework for a set of empirical facts, the main motivation of this literature was that there are new gains to be expected from trade liberalization. Those come from a selection process, raising aggregate productivity through the reallocation of output among heterogeneous firms. It initially seemed that the information requirements for trade policy evaluations had become much more demanding, in particular requiring detailed micro data. However, the recent work of Arkolakis et al. (2011) suggests that two aggregate "sufficient statistics'' may be all that is needed to compute the welfare changes associated with trade liberalization. More, they show that those statistics are the same when evaluating welfare changes in representative firm models. The project has three parts. The first one starts by showing that the sufficient statistics approach relies crucially on a specific distributional assumption on heterogeneity, the Pareto distribution. When distributed non-Pareto, heterogeneity does matter, i.e. aggregate statistics are not sufficient to evaluate welfare changes and predict trade patterns. The second part of the project specifies which type of firm-level heterogeneity matters. It shows how to identify which sectors are characterized by "productivity sorting'' and in which ones "quality sorting'' is more relevant. Extending the analysis to multiple product firms, the third part shows that heterogeneity inside the firm also matters for welfare changes following trade shocks. It considers how the change in the product mix of the firm following trade liberalization alters the measured productivity of the firm.

More about Thierry MAYER and his research

Read more about the project on HETMAT's website or on CORDIS' website

Within and Across Countries Heterogeneity in International Finance (INFINHET)

ERC Starting Grant 2014

Awardee : Nicolas CŒURDACIER

Objective

Financial globalization has led to a large increase in capital flows together with increasing global imbalances. Understanding how investors structure their international portfolios and how such decisions interact with the real side of the economy has become a critical macro issue. Recently, policy makers have been advocating the understanding of capital flows and global imbalances as a necessary step to analyze the roots of the last financial crisis and its international transmission. Another important evolution is the larger role played by fast growing emerging markets. The world is getting more asymmetric as they feature very different characteristics compared to developed countries.

INFINHET aims at developing new dynamic multi-country macro-models to better account for the heterogeneity across agents and across countries in order to answer age-old questions in international macro such as the benefits from financial integration, the adjustment of global imbalances, the dynamics of exchange rates and asset prices, international financial contagion, the international dimension of tax policies.

The first part of INFINHET deals with new methods for dynamic stochastic models with heterogeneous agents/countries. Applications include normative questions regarding the welfare impact of policies in open economies and positive questions regarding the dynamics of asset prices and capital flows. The second part focuses on long-term issues in multi-country overlapping generations models. It analyzes the importance of asymmetries between countries on macroeconomic outcomes in a globalized world. Besides differences in growth and demographics, asymmetries in financial institutions, insurance mechanisms and welfare states are emphasized, with a particular focus on the specificities of China. The theoretical predictions will be tested empirically. This will require the development of panel data based on cross-country aggregates and the use of micro data based on individuals.

More about Nicoals CŒURDACIER and his research

Read more about the project on INFINHET's website or on CORDIS' website

Macroeconomics and Financial History (MACROHIST)

FP7 - Marie-Curie Action: "Initial Training Networks"

Awardee : Philippe MARTIN 

Objective

The current macroeconomic and financial crisis has given rise to a vigorous debate about the state of macroeconomics and macroeconomic training. Among the voices arguing most strongly for a change in the way that young macroeconomists are trained are those coming from employers in the private and public sector. Strikingly, many employers are also arguing that a knowledge of economic history might be particularly useful. A knowledge of economic and financial history is crucial in thinking about macroeconomic problems and the financial sector in several ways. It forces students to recognize that major discontinuities in economic performance and economic policy regimes have occurred many times in the past, and may therefore occur again in the future. Additionally, economic history teaches students the importance of context. Finally, exposure to economic history leads to an empirical frame of mind, and a willingness to admit that one’s preferred theoretical framework may not always work in explaining the real world. These are essential habits for young economists wishing to apply their skills in the work environment. Young macroeconomists need training in economic and financial history. Equally, students of economic history need exposure to the techniques of modern macroeconomics and financial economics. MACROHIST brings together some of the strongest history, economic history and economics departments in Europe. Its aim is to expose young macroeconomists to the most recent work in macroeconomic and financial history; young economic historians to the most recent techniques in financial and macroeconomics, and both groups to the policy and work environment. We will achieve these aims by funding research on macroeconomics and macroeconomic and financial history; by funding visiting studentships for ESRs in partner institutions; by organising internships and other activities with our private sector partners; and by arranging network-wide research and training events.

More about Philippe MARTIN and his research

Consult the MACROHIST project information on CORDIS' website

Economics of Matching Markets: Theoretical and Empirical Investigations (EcoMatch)

ERC Starting Grant 2013

Awardee : Alfred GALICHON

Objective

This project offers a theoretical and empirical investigation of matching markets. Matching is, broadly speaking, the study of complementarities, which explains the formation of coalitions. Matching models are found in many applied fields within Economics: Labour Economics, Family Economics, Consumer theory of differentiated goods (hedonic models), Trade, etc. Desirable properties of these coalitions, such as stability, lead to testable implications of the surplus that individuals generate in a match, allowing for structural estimation of matching models.

The goal of this proposal is to expand the frontiers of the theory of matching to design a very general and highly flexible model of matching that will lend itself to estimation and thus lead to empirical findings in various fields of Economics. Based on promising work initiated by the PI, this proposal seeks to bridge the gap between the theory and the empirics of matching markets that was traditionally observed in this literature.

Particular focus will be given to situations where stable outcomes may not exist (such as unipartite, or one-to-many matching models), frictions, taxes. In these cases, a thorough investigation is carried on what solution concept should be used, and what are the testable implications.

Applications will be given to various empirical issues or policy relevant questions such as:

The nature of the complementarities between senior and junior employees within teams,

The role played by the marriage market in the problem of rural depletion in China,

The impact of CEO risk aversion on assignment to firms, and on the CEO compensation package,

The pricing of attributes of French wines.

More about Alfred GALICHON and his research

Consult the EcoMatch project information on CORDIS' website

Risk Incentives in Financial Institutions and Financial Instability (RIFIFI)

ERC Starting Grant 2010

Awardee : Guillaume PLANTIN

Objective

The main objective of this research project is to develop a new framework for the study of the informational frictions that separate investors from sophisticated traders operating in complete markets. I plan to develop a model of “generalized risk-shifting,” in which traders in complete markets can secretly take fair bets with any arbitrary distribution. The goal is to study the interplay of this generalized risk-shifting with traders’ career concerns. When investors learn about trading skills from observing traders’ realized returns, taking exposures on risk factors with rare adverse realizations may help a trader temporarily improve her reputation and attract more funds. The first intermediary step of this project consists in fully characterizing the payoff functions that lead a trader to gamble inefficiently in a one-period setting. The second step consists in solving for contracts that are risk-shifting-proof in a dynamic career concern environment. Finally, the model is well suited to be taken to hedge fund data.

More about Guillaume PLANTIN and his research

Consult the RIFIFI project information on CORDIS' website

Wage Dynamics, Sorting Patterns in Labour Markets and Policy Evaluation (WASP)

ERC Advanced Grant 2011

Awardee : Jean-Marc ROBIN

Objective

WASP is aimed at developing realistic empirical equilibrium search models of the labour market, with heterogeneous agents and long-term self-enforcing contracts, that:

• Can help better understand rent sharing mechanisms in labour markets,

Allow for multiple sources of productivity dynamics, including deterministic human capital accumulation and idiosyncratic productivity shocks,

Do not rule out sorting by assumption, nor the possibility of mismatch – as in perfectly competitive Beckerian marriage models,

Can fit linked employer-employee data in all three dimensions: across workers, firms and time,

Can be used for policy evaluation.

These research questions will be addressed within six different sub-projects:

1. Understanding tenure effects. Human capital accumulation and productivity shocks are introduced in a search-matching framework to explain the difference between tenure and experience effects.
2. Employment protection policies, wage dynamics and sorting. A search-matching model with productivity shocks is estimated on worker data and used to discuss the optimal design of employment protection policies.
3. Large firms, sorting and linked employer-employee data. Firms post more than one job offer. The model permits the use of linked employer-employee data for estimation.
4. Risk-aversion, savings and risk sharing. Risk-averse workers, subject to productivity shocks, are matched with risk-neutral employers. The model is used to measure the relative importance of self-insurance vis-à-vis insurance provided by the employer.
5. Unemployment, wage inequality and business cycle. Allowing for aggregate productivity shocks in a search-matching model with worker heterogeneity can explain the unemployment volatility puzzle and the effect of business cycles on the wage distribution.
6. Marriage, search and welfare policy. The intra-household resource allocation process is endogenised in a search model of marriage.

More about Jean-Marc ROBIN and his research

Consult the WASP project information on CORDIS' website

The Welfare State in a Complex World Taxes and Benefits in a Diverse Society (WSCWTBDS)

ERC Advanced Grant 2011

Awardee : Guy LAROQUE

Objective

Empirical studies of labour supply at the microeconomic level describe a diverse society with heterogeneous agents and stress the importance of the participation decision, to work or not to work. The aim of this project is to improve our knowledge of the properties of the optimal tax and benefit systems in the extensive model in the presence of heterogeneity.

The proposal has a theoretical part and an empirical part. The theoretical part deals with four applications of the extensive model: (1) family benefits and the interaction between household transfers and income taxes; (2) fraud and tax evasion; (3) indirect taxes; (4) dynamic aspects, such as capital taxation and the life-cycle. The empirical part is based on microeconomic data sets. It is made of three different projects: (1) how much of the difference in the number of hours worked in France, the UK and the USA can be assigned to differences in the tax and benefit structure of these countries?; (2) the role of taxes and benefits in the participation decisions of United Kingdom couples, 1979-2008; (3) pensions, savings, and the decision to retire in the United Kingdom.

More about Guy LAROQUE and his research

Consult the WSCWTBDS project information on CORDIS' website

Mapping European Competitiveness (MAPCOMPETE)

FP7 - Specific Programme "Cooperation" 2013

Awardee : Philippe MARTIN

Objective

“Mapping European Competitiveness” (MAPCOMPETE) is a FP7 proposal by six European research centers to provide an assessment of data opportunities and requirements for the analysis of comparative competitiveness in European countries.

Partners of the project are Brussels based think tank Bruegel, Budapest based research center CERS-HAS (coordinator), Milan research center LdA, Paris School of Economics and Sciences-Po in Paris, and Tübingen research institute IAW. Associate partners are the OECD, the ECB and several central banks in Europe.

Competitiveness is at the heart of policy making at the Union level and specifically within the Eurogroup. Definition of new country-level competitiveness indicators is an essential task. The aim of this project is to provide a thorough assessment of data opportunities and requirements for the analysis of comparative competitiveness in European countries. Work will examine how to interconnect different approaches to research and policy making in this field at the macro, sectoral and micro-level and consequently map data availability and needs. It will come up with proposals for enhancing standards and consistency of data, with the aim of improving future comparative work on competitiveness. It will analyze data requirement and suggest collection methods for selected topics such global value chains, trade and performance as well as pricing and quality.

Researchers in the team are and have been working on the analytics of how to combine macro and micro approaches on the study of competitiveness. Taking stock from these two sets of activities, researchers will be in the ideal position for mapping data opportunities and requirements in this field. The team includes some of the most prominent researchers in the field, who have also been involved with leading roles in carrying out the first European survey on the international activities of firms (www.EFIGE.org).

More about Philippe MARTIN and his research

Consult the MAPCOMPETE project information on CORDIS' website

Culture, Cooperation and Economics (TRUST)

ERC Starting Grant 2010

Awardee : Yann ALGAN

Objective

My research project TRUST aims at looking at the links between culture of cooperation, economics and institutions, with causality running in both directions. The first step is to assess the causal effect of cooperation on economic decisions and happiness. Social attitudes such as trust seems a prerequisite to expand economic exchanges, in particular in modern societies characterized by the increased complexity of information and relations with anonymous others. Cooperative beliefs might also directly affect happiness by reducing the feelings of risks that humans have to cope with in modern societies. The second step of my research is to look conversely at the effect of economic policies on social attitudes. I will assess the effect of human resources management and welfare state policies on cooperation within organizations and the society. I propose cutting-edge methods to carry on this research agenda. First, I will track social and economic attitudes on the cyberspace by using a Medialab. The development of new communications technologies has triggered a revolution in the social traces that citizens leave simply by using digital technologies. The available data reservoirs on the web are colossal and can provide a new way to relate self-reported social and economic attitudes. I will also provide to the civil society new instruments of reflexivity on the state of social and economic cooperation. Second, I will introduce the new tools of randomized experiments in the sphere of social sciences to estimate the impact of economic policies on social attitudes. I will run these experiments in the context of the management of human resources to understand how inequalities and organizational structure can influence cooperative attitudes.

More about Yann ALGAN and his research

Consult the TRUST project information on CORDIS' website