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Agence nationale de la recherche (ANR) projects

The Agence nationale de la recherche (ANR) provides funding for project-based research - both basic and applied. Employing a method based on competitive peer reviews compliant with international standards, ANR provides the scientific community with instruments and programmes promoting creativity and openness, and stimulate new ideas and partnerships, particularly between academia and industry. Its activity also contributes to enhancing the competitiveness and the influence of French research in Europe and across the world. 

ANR funding comes in many ways, shapes and forms and despite the relatively small size of the Department, our faculty members are awarded ANR funding on a regular basis - and this right from the start !

  • Emeric Henry and Nicolas Cœurdacier were each awarded in 2009 and 2010 respectively a "Junior Chair of Excellence". This type of grant is awarded to young researchers who have already forged a solid international reputation based on their publication records and seeks to attract researchers based outside of France.
  • Étienne Wasmer who has been awarded a number of ANR grants over the years, received very important financial support in the framework of ANR's "Investissements d'Avenir" programme which allowed him to create the Laboratory for Interdisciplinary Evaluation of Public Policies (LIEPP). The LIEPP aims to play a major role in evaluating various aspects of public policy through an innovative method based on multidisciplinarity and the combination of qualitative, comparative, and quantitative analysis.

Ghazala Azmat and Eduardo Perez-Richet were each awarded an ANR "Tremplin-ERC" grant which the ANR introduced as a new funding instrument in 2016 to help researchers draft and submit ERC proposals and which is designed to improve France’s success rate in ERC calls.

Julia Cagé was awarded funding through the ANR's "Young Researcher Programme" intended to promote young scientists and help them develop their own research themes, set up or consolidate research teams and give them the opportunity to rapidly express innovative initiatives by giving them strong support.

The Department's researchers may also find support from the ANR for special collaborative projects with other universities - Jean-Marc Robin, Etienne Wasmer, Emeric Henry and Zsofia Barany have all received funding for their coordination and/or participation in such projects.

Read more about our ongoing ANR projects

Consult the list of our completed ANR projects

Ongoing ANR Projects

ANR Grant awarded in 2022 for 48 months.

Coordinator: Emeric HENRY (with Roberto GALBIATI)


Prosocial behaviour is driven, not only by formal incentives, but also by image concerns, both self- and social image. While there is a growing literature on the consequences of image concerns on ethical behavior, the interactions between self-and social-image have not been studied yet. In SOSELF, we propose a comprehensive approach to fill this gap.

Our project will use a combination of theory, laboratory experiments and empirical methods relying on an interdisciplinary team. We will explore how social and self-image are tied together by a principle of coherence and how their interactions drive behavioural responses to the environment. Building on these results, we will study the optimal design of one of the main interventions used to promote prosocial behavior: moral reminders.

SOSELF can inform policy in a wide range of domains and we will focus specifically on how behavioural interventions can decrease the circulation of fake news or can change company culture.

More about Emeric HENRY and his research

More about Roberto GALBIATI and his research

Read more about the SOSELF project on the ANR's website

ANR Grant awarded in 2018 for 48 months + 6-month "COVID" extension (transferred to Sciences Po in 2021)

Partner: Pierre-Philippe COMBES


The aim of this project is to consider the impact of job complementarities in employment on segregation, inequality, and social mobility. The degree of complementarity between different categories of workers is a key dimension determining labour market outcomes. Moreover, these complementarities evolve over time. In a predominantly manufacturing economy, the key question was the interaction between capital and labour, but the move to a service economy has changed this and over the past 40 years a growing complementarity across different groups of workers has appeared. It is hence important to understand who works with whom (at the level of the firm, the city, the region or the household) if we want to explain the labour market performance of different groups, notably of minorities.

Complementarities can arise at many levels, but we intend to focus on three features.

  • The first concerns different skill groups. Complementarities may exist at the level of the firm since low‐skill workers provide business services that increase the productivity of the skilled, or of the city as the leisure/personal service sector is low‐skill intensive and hence these workers provide the amenities that attract the most productive individuals to urban centres. 
  • A second dimension of complementarity relates to the geographical origin of individuals. The small effect of immigration on local wages found in empirical studies can best be explained by the fact that the type of skills supplied by immigrants is a complement to the native skills (Peri, 2016), yet this hypothesis has not been fully tested on the data, particularly for middle‐income countries. 
  • Lastly, it is also possible to think of complementarities arising at the level of the household. On the one hand, domestic services are also provided by those at the bottom of the skill distribution, raising the question of whether the expansion of this sector has been a factor in the increase in high‐skilled female labour force participation. On the other, spouses in a household complement each other in the production of the household good, and this has implications for the involvement of each of them in the labour market. 

Our project will consider these different sources of complementarities to deepen our understanding of how they shape earnings dispersion across different groups and will hence contribute to explaining the causes and consequences of inequality.

More about Pierre-Philippe COMBES and his research

Read more about the JOCE project on the ANR's website

ANR Grant awarded in 2020 for a duration of 48 months

Partner : Xavier RAGOT


Labor income risks, namely unemployent risk and wage risk, are a major concern for many workers, essentially because they are imperfectly insured (that is, insurance markets against idiosyncratic labor-income shocks are “incomplete”). As a result, those risks generate significant ex post inequalities across agents as well as an inefficient precautionary motive for saving, whose instability over the business cycle may greatly amplify economic crises. This source of inequality and aggregate instability is a recurrent phenomenon, and one that is dramatically illustrated by the ongoing worldwide economic collapse. The purpose of the project is to:

  • quantify how aggregate shocks are amplified under incomplete markets; 
  • clarify the transmission channels of alternative economic policies in these circumstances; and 
  • design macroeconomic policies (monetary policy, fiscal policy, labor-market policies etc.) capable of optimally stabilizing economic crises in the presence of uninsured labor-income risk. 

The project will be composed of two main parts: one that will focus on understanding the transmission mechanisms of aggregate shocks and policies under incomplete markets; and another part that will analyze the optimality of macroeconomic policies (i.e., monetary, fiscal, tax, labormarket policies) in response to aggregate shocks. The focus will be on the way different types of aggregate shocks alter the amount of idiosyncratic risk and rising inequality faced by the households. Given these propagation mechanisms, we will investigate the transmission and the optimality of alternative macro and insurance policies following sharp and brutal declines in economic activity, such as those triggered worldwide by the 2008 financial crisis or the current Covid-19 crisis. Both aspects of the study –the positive one and the normative one–, which will require the development of new models and methods, will be divided into several subprojects involving members of the research team and possibly outside co-authors.

To sum up, the purpose of the overall project is to revisit the transmission channel and optimality of a variety of policy instruments, under the assumption that individual risks are uninsured and households are heterogeneous. These policy tools include:

  • conventional monetary policy (i.e., changes in nominal interest rates by the central bank);
  • unconventional monetary policy (i.e., forward guidance about future policy rates; large-scale asset purchases; money-financed fiscal stimulus; etc.); 
  • transitory expansions in government spending or reductions in taxes; 
  • public debt policies (i.e., optimal public debt in the presence of liquidity demand); 
  • changes in the level, cyclicality and duration of unemployment benefit payments and short-time work arrangements; 
  • changes in the level, cyclicality and persistence of tariffs on traded goods.

This is a thriving area of macroeconomics in which several teams are currently competing worldwide. We aim at being one of these teams and would like to rely on the support of ANR to achieve this. We stress that we will pay special attention to the euro area, which is currently facing a number of macroeconomic policy challenges. Indeed, in the euro area monetary policy is centralized but constrained (by the zero lower bound on nominal interest rates), why fiscal policy is decentralized and, overall, non-cooperative. Unemployment insurance is also decentralized, hence with no crosscountry risk sharing. Our project will thus help better understand how monetary and fiscal policies should be designed in a context where the institutional features of the euro area may aggravate the lack of insurance across households.

More about Xavier RAGOT and his research

Read more about the IRMAC project on the ANR's website

ANR Grant awarded in 2020

Awardee : Johannes BOEHM


With interest rates at zero, central banks need to rely on unconventional policy measures to stimulate the economy. We propose a specific form of a direct monetary transfer to households and evaluate its impact on consumption using a randomized controlled trial. We design the transfer in a way that is politically and economically feasible, and, if the trial is successful, could be scaled to the national scale.

More about Johannes BOEHM and his research

Read more about the HELIMON project on the ANR's website

ANR Grant awarded in 2019

Coordinator : Jean-Marc ROBIN (with Francis KRAMARZ and Fabien POSTEL-VINAY)


Recent research has emphasized the key importance of the equilibrium allocation of heterogeneous workers into heterogeneous jobs or occupations as a determinant of economic efficiency. Most of the literature on this subject envisions worker reallocation as occurring between employers. Yet, the data suggest that a very large amount of reallocation occurs within firms, in the form of internal promotions or demotions.   

We want to construct a model with internal and external labor markets. Internal labor markets mediate occupational mobility and wage dynamics within firms, whereas the external labor market refers to occupational mobility with employer change, and related wage dynamics. We use  “occupation” to refer to a set of job characteristics, which may include industry (e.g., manufacturing, services, etc.) and/or the degree of managerial responsibility that goes with the job (e.g. unskilled worker, supervisor, manager, etc.).  

The aim of this construction is to understand and quantify the forces at work in a labor market where, at one extreme, workers spend their entire careers with one single employer (as was the norm in France in the three decades following WWII), gradually moving up some hierarchical ladder within a single firm, and at the other extreme, workers change employers regularly to prevent their career from stalling. Intuitively, the first type of equilibrium is stable if there is little complementarity between worker skill and firm technology. Biased technical progress, however, increases complementarity at the same time as total factor productivity (TFP), and is responsible for the observed shift in workers' careers from a single “job-for-life” to a sequence of different employments. Our research project therefore addresses important issues covered by the ANR research theme  “Innovation and labor”.

More about Jean-Marc ROBIN and his research

Read more about the OMWD project on the ANR's website

ANR Grant awarded in October 2017 for a duration of 48 monthes

Partner : Etienne WASMER for the LIEPP (with Pierre-Henri BONO, Guillaume CHAPELLE, and Florian OSWALD)


Housing is a critical target of public policy in France. Our proposal aims at filling the gap that exists in France in terms of evaluating housing policies using general equilibrium economic modelling. Its overarching scientific purpose is to deepen our understanding on the long run impact of housing policies on housing inequalities in France and across countries.

Housing is a primary good, defined by John Rawls as desirable to any citizen, thus a common base for social justice. Public policies are explicitly targeted to the reduction of housing inequality with respect to laissez-faire. An extended set of policies (social housing, taxes and subsidies to renting or accessing ownership, rent controls, lower bounds of social housing for municipalities etc.) have been used to reach that goal but we do not know much about how successful they have been. Even from a purely descriptive view point, we cannot assess whether housing inequality in France is lower than in the US, the UK or Germany and by how much. Such a comparison would contrast countries between laissez-faire and intervention. Research in housing economics is undertaken in many research centers in France although the number of researchers involved remains small. The crucial importance of a high-quality public debate about housing policies in France cannot be enough emphasized given the large budgetary efforts at stake. This is why we propose to create ECHOPPE, a decentralized laboratory on the issue, which will provide a scientific environment for researchers in housing economics in France. This would coordinate their research effort and further our knowledge of housing economics. This “open laboratory” would favor scientific exchanges between a large group of researchers located in Aix-Marseille, Paris and Toulouse. Each researcher involved has already carried out research on the impact of housing policies, housing inequalities, social housing, economic geography or housing supply. Our project will formalize this cooperation and will open a platform accessible by all researchers in housing economics. Specifically, we will organize workshops and other exchanges (seminars) to invite national or international researchers in economics, but also in other disciplines working in housing-related fields.

More about Etienne WASMER and his research

More about Florian OSWALD and his research

Consult the ECHOPPE project's website

Read more about the ECHOPPE project on the ANR's website

ANR Grant "Laboratoire d'excellence" (LABX), awarded in April 2011 until December 2022

Coordinator : Etienne WASMER 


The Laboratory for Interdisciplinary Evaluation of Public Policies (LIEPP) aims to play a major role in evaluating various aspects of public policy through an innovative method based on multidisciplinarity and the combination of qualitative, comparative, and quantitative analysis.

LIEPP also aims to develop and disseminate the best academic methods and research in the field of policy evaluation. 

LIEPP supports several research projects and most of them are already part of the various research groups (Discriminations and social inequalities; Evaluation of democracy; Educational policies; and Socio-fiscal policies). Co-directed by experienced researchers from different disciplines, the research groups guarantee an interdisciplinary approach.

More about Etienne WASMER and his research

Consult the LIEPP's website

ANR Project Archive


ANR Grant awarded in September 2018 for a duration of 48 monthes

Partner : Zsófia BÁRÁNY


Over the last 30 years, employment growth has been fast, not only in high-paid jobs (abstract, cognitive tasks requiring creativity), but also in low-paid jobs (manual, non-routine job requiring human interaction). In contrast, employment has decreased significantly among middling jobs (routine, repetitive), and those involving tasks that can be replaced by machines. As robots can now beat humans in performing complex tasks, employment becomes polarized with the disappearance of middle-income workers (replaced by machines) and an expansion in top and bottom jobs (performing tasks that cannot be computerized). Will this job polarization lead to a polarized society? This project aims at shedding light on this worldwide phenomenon using theoretical and empirical works.

More about Zsófia BÁRÁNY and her research

Read more about the TOPAZE project on the ANR's website


ANR "Tremplin-ERC" Grant awarded in April 2018 for a duration of 24 monthes

Awardee : Ghazala AZMAT


Establishing gender equality has been one of the most important global objectives in recent times. A large part of the gender pay gap, for instance, can be attributed to differences in the choices made – such as occupational and educational. However, many of these choices have a root that is less well-understood. To understand this process, it is crucial to understand the role of aspiration in driving the choices made by individuals before entering the labor market or early in their career.

A central objective of project ASPIRE is to open, and develop, a new line of research into the formation, and role, of aspirations in understanding gender differences in labor market outcomes. I will advance this research in three steps: i) combine innovative methodology and rich data sources to explore the relationship (and distance) between what individuals aspire towards and what they actually achieve, as well as to analyze the choices they make in the process. ii) Exploit important historical political and institutional changes to analyze the role of society in shaping aspirations. iii) Through a series of small and large-scale economic experiments, to advance our understanding of how aspirations are shaped and if they can be altered.

I will, first, study how aspirations affect wages and promotions within the firm using detailed data on aspirations, expectations and other factors, such as, discrimination and professional opportunities. I will then study early aspiration formation among adolescents and young adults, where there is no contemporaneous influence of current work conditions. Next I will look at how aspirations are influenced by society by analyzing the effect important shifts in political regimes on gender culture, and its consequences (on individuals’ beliefs and aspirations, as well as labor market outcomes). Finally, I will design experiments that elicit aspirations. For this, it is imperative to study the influence of expectations, contemporaneous conditions, peer composition and the role of feedback on aspiration formation.

More about Ghazala AZMAT and her research

Read more about the ASPIRE project on the ANR's website


ANR Grant "Young Researchers Programme" awarded in September 2017 for a duration of 36 monthes

Coordinator : Julia CAGÉ


The modern media industry is in a state of crisis. Digitalization has changed the nature of competition in media markets and the range of products provided. There is growing concern about news quality and the effectiveness of the media as a check on power. Furthermore, the number of journalists is collapsing in all developed countries, a major social change that may reflect media outlet’s falling incentives to invest in quality. An open question – with important consequences for journalists who are facing social mutations threatening their profession and more generally for the quality of the democratic debate – is whether news still have a commercial value, and what kind of new business models and legal status need to be developed for media organizations.

The first objective of this research project is to improve our understanding of the determinants of news consumption and production in the online world, using an interdisciplinary approach at the intersection between Economics and Computer sciences. In collaboration with the Institut National de l’Audiovisuel, we will construct a unique dataset on all offline and online news production by the universe of French news media (newspaper, TV, radio, pure online media and the AFP) from 2013 to 2017, and develop state-of-the art algorithms to analyze this data. We will merge this data with detailed input data (e.g. number of reporters) and disaggregated audience data.

We will then use this unique micro-level dataset to estimate a structural model of the media market. In our model, media outlets’ profit comes from selling content to citizens and advertising space, and outlets chose their slant and quality. We will use an original approach to define the quality of each article, based on the previous research I have conducted with the INA: its originality, i.e. the share of the article’s content that is original rather than copied-and-pasted from articles published earlier (Cagé et al., 2016, 2017). Heterogeneous consumers consume multiple piece of news from different media outlets. Each consumer derives utility both from the characteristics of a media outlet (e.g. its slant) and the quality of each piece of news. We will evaluate the welfare effects of a number of counterfactual experiments, such as changing online price or reinforcing ownership regulation. These experiments will be determined as a result of exchanges with media professionals.

This innovative project will be the first attempt at merging together high-quality content data, economic data and structural estimation tools to estimate the production and consumption of news media. The central objective of the structural estimation is to better understand the extent to which media organizations producing original and valued information get rewarded for this, and how different legal and institutional features (such as paywall for online news or better copyright enforcement for news agencies) can affect these incentives.

In terms of scientific contributions, this project will give rise to publications in top journals, and the results will be extensively presented in international conferences and seminars. Beyond its scientific contributions, it will have a large societal impact and important implications for the on-going public debates about the financing and business models of the media. Our goal is to provide up-to-date knowledge on how information is produced and consumed, in particular to media professionals searching for new business models, regulatory agencies, and more generally all citizens concerned with the future of democracy. We will write comprehensive non-technical reports at the different steps of the project, and set up a website providing access to the non-proprietary data, a number of visualization tools and algorithms. Finally, we will organize a semi-professional seminar that will gather together top scientists and media professionals, as well as training modules aimed at media executives and journalists.

More about Julia CAGÉ and her research

Read more about the Destination_Moon project on the ANR's website

Strategic Communication : Theoretical and Experimental Investigations (StratCom)

ANR "Tremplin-ERC" Grant awarded in December 2016 for a duration of 18 monthes

Awardee : Eduardo PEREZ-RICHET


The importance of hard information for communication has been growing with recent technological evolutions as information is becoming more easily verifiable, and more data becomes available to individuals, firms and public institutions. I seek to increase our understanding of strategic communication and information design, both from a theoretical and an experimental perspective, with a focus on hard information.

The first part of this proposal is concerned with the design of mechanisms with evidence. In practice, individuals often have access to evidence, yet most of the mechanism design literature assumes cheap talk communication between the privately informed participants and the principal. I will assume that privately informed agents can communicate with evidence. I will study implementation of a social choice function, with applications to several familiar mechanism design problems, including matching, bilateral trade and auctions.

The second part develops an experimental approach to strategic communication with evidence. In a first project I will study a series of sender-receiver games with varying incentives for the sender, with the goal of understanding the determinants of sender and receiver behavior. In a second project, I will study deliberation with evidence before voting, with the goal of understanding how voting rules and incentives affect communication, and how deliberation changes the effects of voting rules. Other projects will consider additional strategic situations, and introduce new aspects such as dynamics.

The last part analyses the value of additional information to decision makers that are already strategically informed by a biased adviser. In the absence of an adviser, any additional information benefits the decision maker. But an adviser who knows that additional information is available may decide to be less informative, so that the decision maker may end up worse off. I intend to characterize when this is the case.

More about Eduardo PEREZ-RICHET and his research

Read more about the StratCom project on ANR's website

University Technology Transfer & its Optimization (UTTO)

ANR Grant awarded in November 2015 for a duration of 36 monthes

Partner : Emeric HENRY


Economists, as well as policy-makers, agree nowadays that university-generated knowledge contributes decisively to the economic growth of nations and local economies. The Bayh-Dole Act introduced in the US in the early 80's, was the key policy initiative aimed at encouraging the commercialization of academic research results. Many observers suggest that the recent technological success of the USA owes a lot to this new “commercial model” of university technology transfer. Similar reforms have now been initiated in many advanced countries and most research universities and public research organizations have set up technology transfer offices (TTOs) which commercialize academic knowledge and manage the rights. France in particular, has adopted a series of policy reforms progressively introducing this new model, aiming at improving the social and economic returns of academic research.

We show in this proposal, thanks to a first investigation of the French data that we intend to expand and reliabilize in this project, that if public patenting has significantly raised in the last decade (up to 14% of all patent families in 2012), it is mainly due to a sharp modification in the ownership structure of academic patents that is accompanied by a contrasted evolution of their quality indicators. These first results stress a series of interesting questions that we will address in this project. Are traditional academic incentives aligned with this new goal of contributing to technology transfer? Are the different scenarios of technology transfer associated with different levels of effectiveness, and if so, why? What are the impacts of the recent changes of the legislation and of new policy instruments on technology transfer?

To answer these questions, we need to rely on a consistent micro-economic understanding of the new commercial model of university technology transfer, at the interplay between the three typical actors of the transfer: the professor (or researcher), the TTO and the company. On the empirics side, we need to rely on very recent, and very complete data. Therefore, we will match, at the professor and researcher level, individual information, patent data, publication data and project funding data. To some extent, France will be considered as a case study in itself. No such precise and complete empirical analysis has already been performed in any large industrialized country. A survey of academic inventors, interviews of TTO CEOs, as well as case studies on the Bordeaux and Strasbourg sites will complement our information when national wide data are not available.

So as to contribute to the policy debate on technology transfer, we will identify the impact of policy initiatives which target only some part of the reference population and evidence the differential behavior of “treated” and their controls. We will also expand our investigations to the European level and exploit cross-country policy variations in time. Our goal is to provide robust policy recommendations to improve (tentatively optimize) university technology transfer.The team members are experts on the issue of academic patenting and technology transfer. They are spread over four sites, but many of them have already collaborated in the past. The cohesiveness of the team, including the strong reliability of the connection with the OST (as data provider) will ensure a timely execution of the project. New collaborations will also be undertaken, by matching, in this project, expertises on microeconomic theory, professional practices, applied micro-econometrics, identification techniques for observational data, and different data collection methods. The project should, in addition, significantly contribute to building a strong French research base on university technology transfer, in connection with policy makers, practitioners and students.

More about Emeric HENRY and his research

Read more about the UTTO project on the ANR's website

Quantitative Public Policy Evaluation using ex-ante and ex-post techniques (EVALPOLPUB)

ANR Grant awarded in 2011 for a duration of 36 monthes

Coordinator : Etienne WASMER (with Yann ALGAN and Thierry MAYER)


Research in economics is divided somewhat artificially into two different strands of different but complementary logics.

On the one hand, ex-post evaluation methods generally use data collected from natural experiments. The typical approach is to use a difference-in-difference estimate of the causal impact before and after the exogenous event and in comparison with a control group (e.g. a region/state similar to Florida or Northern France labor markets). The approach, extensively used by prominent researchers at MIT (e.g. Esther Duflo for development policies or Joshua Angrist for labor and education policies) consists of two steps : first, find a natural experiment such as the two previous examples, or design an experiment with randomized groups, some receiving a “treatment” and others being a “placebo group” ; second, estimate a parameter of interest, e.g. the impact of the “treatment” on the average of a variable X of the treated group. Another example of this logic is the very rich set of evaluations of the Self-Sufficiency Project in New Brunswick and in British Colombia to estimate the impact of employment subsidies to poor workers.

These approaches are parsimonious in terms of the theory used: economic theory has traditionally only been invoked to describe the context and with simple demand and supply concepts, generally without complex intertemporal optimization behavior. In what follows, they are termed as “reduced-form approaches” even though this is obviously arbitrary or simplistic.

A second and different logic is to develop so-called structural models, that is models where agents make optimal choices under some constraints. These agents are consumers, workers, firms, families, or even government bodies. The equilibrium of the model is then computed and calibrated, that is, some key parameters are estimated or guessed from statistics or from estimates from other works. In the absence of a sound theoretical understanding, reduced-form approaches are typically unable to estimate general equilibrium effects. For example, an ex-post evaluation may isolate positive effects of a job training program on employment. However, the extra jobs may be obtained at the expense of the surrounding individuals. Generalizing this program on a national scale may not deliver similar results, if for example, the total quantity of jobs is determined at a national level. Moreover, reduced-form approaches are unable to deliver “counterfactual” experiments, ie what the outcomes could have been, had the reform been slightly different.

However, structural models alone are not always able to deliver the full answer raised by the need of policy evaluation, in particular due to a number of arbitrary choices. These models are often based on non-testable assumptions, and sometimes untransparent calibration exercises. The ex-ante estimates delivered by structural models are rarely compared to more rigorous ex-post reduced-form approaches, although this exercise could validate the model.

The overall logic of the project is to reconcile those two approaches.

More about Etienne WASMER and his research

Read more about the EVALPOLPUB project on the ANR's website

Risk-sharing and international portfolio decisions (INTPORT)

ANR "Chaire d'Excellence" awarded in 2010 for 36 monthes

Awardee : Nicolas CŒURDACIER


In the last two decades, financial globalization has led to a surge in cross-border capital flows, a large increase in countries gross foreign asset and liability positions, together with increasing global imbalances. Hence, understanding how private investors (and Sovereign Wealth Funds) structure their international asset portfolios has recently become a critical macro policy issue. This is especially true in the wake of the current crisis as we are expecting big changes in savings positions and large shifts in investor portfolios. This feature has generated a renewed attention by researchers to incorporate non-trivial portfolio choice models into standard dynamic model of the world economy. Indeed, while the real side of globalization has previously attracted a lot of attention, the financial aspect of globalization has been mostly neglected until recently. Dynamic models of the international macro-economy used by Central Banks or International Organizations do not incorporate international portfolio decisions. This is an important issue as cross-border financial flows in turn might endogenously affect the real side of the economy, in particular the way shocks are transmitted internationally and the degree of synchronization of business cycles. The main objective of this research is to incorporate such portfolio decisions in an otherwise standard macro-model and confront the model predictions to the data.

Such a contribution would allow one to better analyze the adjustment of external global imbalances, the joint dynamics of exchange rates and asset prices, as well as the international transmission of shocks. This is particularly relevant regarding the recent macroeconomic developments since international financial linkages have been playing a key role in propagating globally the US financial shock.

An important aspect of the modelling strategy will be to extend existing research in the field along three main dimensions.

First, I will allow for a broader class of assets to be traded internationally and in particular incorporate cross-border debt positions in existing models (Task 1). Most of the literature has been focusing on equity positions but in the data cross-border debt positions in different currencies are large and generate significant wealth transfers across countries following movements in exchange rates. The empirical implications of the model will be tested using a new constructed dataset on cross-border investment positions for a large sample of countries across various types of assets (equities, public and private debt, bank loans).

Second, I will introduce financial market incompleteness by allowing limited participation in asset markets within countries (Task 2). These restrictions in the access to international financial markets to some households will bring existing models closer to the data as most people do not have the possibility of insuring themselves internationally against bad shocks. An empirical test of the model will involve extending the standard tests of international risk sharing to allow for heterogeneous agents by using household level surveys on consumption and income. In particular, tests of international risk-sharing will be performed by looking at the cross-country consumption growth of participants versus non-participants.Third, I plan to provide new methodologies to solve these models even in a presence of large macroeconomic shocks, large risk premia on financial assets and/or incomplete financial markets (Task 3). Indeed most macro models rely on ‘local’ approximations around a deterministic steady-state and might not be accurate in such contexts. This last issue is particularly relevant in the context of the current financial crisis.

More about Nicolas CŒURDACIER and his research

Read more about the INPORT project on the ANR's website

Innovation and Diffusion of Knowledge : Do We Need Patents ? (INNOV)

ANR "Chaire d'excellence", awarded in 2009 for a duration of 36 monthes

Awardee : Emeric HENRY


Innovation is one of the essential engines of growth. In this context, patents have been viewed as the main instrument to both encourage investments in innovative activities and facilitate their diffusion. However, recently, some academics and outside observers have started arguing in favor of a weakening of patent protection. In parallel, certain sectors, such as software have witnessed the emergence of an open innovation movement founded on the idea that innovation is more susceptible to flourish in the absence of intellectual property rights. The project I propose aims both at studying mechanisms that generate profits for innovators in the absence of patent protection and at examining some inefficiencies in the diffusion of technologies when intellectual property rights exist.

The first part of the project will examine how licensing can lead to large rents for innovators even in the absence of patent protection. Initial results suggest that the profits could be close to monopoly in certain situations. The basic mechanism is the following: competition on the market for licenses decreases the price of entry for later imitators who thus have an incentive to wait before imitating the invention.  If these results are confirmed, this would be a radical challenge to the traditional view on the need for patent protection.

The second part of the project will focus on a different mechanism that could generate profits for innovators in the absence of patents. This idea is motivated specifically by the observation of the software open source movement. It seems that imitators, although they can legally copy inventions, limit their imitation activity to preserve the incentives of the initial innovator to improve her product. This interaction between innovator and imitator seems to follow the model of a parasite that optimally chooses to preserve the health of its prey. We will attempt to confirm this intuition in a theoretical model.

Finally the last part will examine the timing of diffusion of technology. This part will be both theoretical and empirical. The objective is to show that even under full patent protection, deviations from the socially optimal timing of licensing can occur due to asymmetric information. The results will be tested on data from the pharmaceutical industry.

More about Emeric HENRY and his research

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