The overall objective of this project is to understand the real, monetary, and regulatory economic transformations induced by globalization. We study economic issues more closely related to social issues. Thus, we consider the effect of globalization on the regional dynamics, macroeconomic stability, and the legal and regulatory system. The main feature of our approach is to treat these issues as a single question about the effect of globalization on the organization of societies. We emphasize the integration of these three research avenues. The submission page requires to choose one main theme and one secondary theme. However, in our project the monetary and real themes are part of a single body with the institutional and regulatory issues.

Over the last 50 years, industrialized countries have undergone major economic and demographic changes that affected both the distribution of earnings across individuals and the family structure in which these individuals live. Since the 1970s, inequality in the distribution of individual income has significantly increased in most OECD countries. Over the same period, family structure and behavior experienced deep changes. First, changes in demographic behavior have led to the emergence of new family models: decline in marriage and birth rates, delayed transitions into cohabitation, rise in divorce rates and single parenthood. Second, gender inequality has narrowed significantly in both educational attainment and labor force participation, leading to a significant increase in the share of skilled employed women and affecting household composition. In spite of its importance, the interplay between these economic and demographic trends has remained largely unexplored. Our research project develops innovative empirical and theoretical research that allows understanding the different facets of the family-inequality nexus. From a theoretical perspective, the project will contribute to the development of collective models of household decisions and marriage market models. Collective models of the household assume that each household member has specific individual preferences and that collective decisions made by the household results from bargaining and/or cooperation between household members. Such models are essential to (a) understand how better opportunities for women may have modified the balance of power within the household and to (b) measure changes in welfare, and thus inequality, at the individual level that result from recent economic and demographic trends. They will be generalized to incorporate household scale economies and to account for children. On the other hand, marriage market models start from the distribution of men and women in the population with some characteristics and describe who marries whom and why. They allow disentangling the respective roles of the individual mating preferences and the aggregate distribution of potential partners’ characteristics in observed mating patterns. Finally, the project will also contribute to merge these two fields of research that are among the most dynamic in recent applied microeconomics. From an empirical perspective, the project will help reveal the fundamental mechanisms behind rising inequalities. One of the objectives is indeed to provide a comprehensive assessment of assortative mating in France and other countries, focusing not only on assortativeness by education and social origin but also by economic characteristics, in particular earnings and labor supply. Traditional reduced-form techniques but also more sophisticated structural-approaches based on marriage market models will be used to this end. Understanding mating behavior will therefore contribute to evaluate inequality between households. Another objective is to analyze how family characteristics determine the intergenerational transmission of economic advantages. Using collective models, it is possible to evaluate what parents spend for children. More generally, the influence of family background on individual success (measured by various indicators) and inequality will be evaluated using until now under-exploited data sources. The ultimate objective is to measure the changes in economic inequality in France and other comparable countries over the last decades, and go beyond state-of-the-art research by relying on more adequate models and better data. The project will focus on individual welfare (and not household welfare) and examine key stages of the production of inequality and its recent changes (changes in mating behavior and family composition, intergenerational transmission, changes in the intra-household balance of power.

The current crisis was initially generated by a decrease of housing prices in the US. The subprime crisis had a global impact because toxic assets entered portfolios of private institutions. Today, we can note their financial and real effects, through the implications on the financial and real activities of many countries. The second main point that we learn from the current crisis is that it started as a local phenomenon, but propagated quite quickly all around the world. Because we live in a globalized world and markets are interdependent, it facilitated the transmission of the crisis, which started locally in the US, to the other countries. In this sense this crisis appears as quite different to the previous crises that occurred in the second half of the 20th century and that were much more local as affecting a limited number of countries (e.g. the Asian crisis of the 2000’s). There are however some similarities with the Great Recession of the 30’s with the notable difference that the propagation has been much faster nowadays as a consequence of a much stronger international market integration. The third main instruction concerns economic policies. While monetary and fiscal authorities first reacted using standards instruments and rules, there is now a consensus to conclude that we are in an exceptional economic situation, meaning that new economic policies should be considered. We can for instance have in mind the definition of new monetary rules or the design of fiscal policies with high levels of public debt. These three important aspects require us to understand more deeply the interdependencies between the financial and real spheres of economies. The real effects of asset volatility and bubble bursting should be investigated in the presence or not of financial imperfections. The transmission mechanisms to a globalized economy should be examined taking into account both real and financial spheres. Of course, in this context, new monetary and fiscal policies need to be designed. In this perspective, this project that focuses on the financial and real interdependencies will be organized according to the following three parts: Part 1 / Task 1. Real effects of bubbles and financial assets We focus on the valuation of financial assets and rational bubbles. We are concerned in their volatility and their real effects. A special attempt will be devoted to the implications of heterogeneous behaviors and financial frictions. This last part is addressed providing appropriate microeconomic foundations of the financial frictions. Part 2 / Task 2. Transmission mechanisms of international trade and openness We study the interplay between the financial and real spheres in open economies. We especially focus on the role of openness on asset valuation, bubbles and growth. Our goal is to examine the arbitrages that take place between the financial and good markets, the existence and propagation of speculative bubbles and the effects of capital inflows through international financial markets on growth. Part 3 / Task 3. The role of monetary and fiscal policies We aim to design the role of monetary and fiscal policies when the economy experiences business cycles and financial crises. One focuses on their stabilizing virtues, but also on the optimality of such policies. We are in particular concerned with economies characterized by strong levels of public debt and exceptional events, as it happens following a crisis.

This collaborative project analyzes the transition process toward a greener economy by studying the potential consequences of, and reactions of our societies to, environmental changes. This topic being very broad, the project mainly focuses on two important objects of analysis, which are emblematic of issues related to environmental changes: pollution (as a main cause of environmental changes) and aquatic resources (which are severely impacted by changes in the environment). The project will benefit from complementary methodologies developed by GREQAM and LAMETA researchers, and from their integration within networks of interdisciplinary collaborations. The analysis of these two objects are tackled by relying on three work packages (WPs) which correspond to the required stages of a comprehensive economic analysis of environmental issues: (i) the identification of the issue and its assessment in economic terms (ii) the definition of short to medium-term solutions by developing dynamic environmental regulatory instruments and (iii) the study of the society's long term adaptation capacity to sustain an environmentally friendly development process. The first step of the analysis (WP1) is to provide a quantitative estimate of the costs resulting from pollution and of the costs and benefits related to the management of aquatic resources. Specifically, we focus on four main issues: (i) the assessment of the consequences of atmospheric pollution on human health, in particular the monetary gain obtained by the reduction of a long term exposure (ii) the benefit (on human health) from the change in the energy mix proposed by ADEME, (iii) the operational problems generated by the valuation of aquatic ecosystem services and (iv) a methodology to assess the costs and benefits related to the management of invasive species in aquatic ecosystems. The second step (WP2) is dedicated to the design of appropriate regulatory instruments to correct, in a short to medium term, the related environmental externalities. We not only focus on market-based instruments (curbing individual behaviors) but also on new institutional designs (definition of appropriate property rights, or new management methods exploiting spatial features) which all take into account the dynamic nature of the problem. A particular emphasis will be put on: (i) the regulation of the interaction between a polluting industry and the pollution abatement sector, (ii) the spatially-dynamic regulation of air pollution (iii) the dynamic regulation of common resources (mainly fisheries), and (iv) the management of invasive species which endanger ecosystems and economic activity. The third step (WP3) adopts a long term perspective. Since policy instruments remain short to medium term adjustment rules to environmental problems, it is thus crucial to understand how a society improves its own resilience to environmental changes and may reach a sustainable development path. This requires to identify ways to “green” the production process and raises the issue of sustainable growth under environmental goals. In the context of the present project, we focus on (i) the incentives that induce, in the agricultural sector, to adopt organic farming or at least less pollution-intensive modes of production (less use of polluting inputs such as fertilizer and pesticide), (ii) the problem of waste management and recycling, and the choice of an energy mix, (iii) the sustainable management of aquatic resources accounting for the threats raised by long-term environmental changes due to potential regime shifts (affecting the availability of these resources or their spatial distributions) or by the emergence of invasive species.