Working papers
"Living with Covid-19. Optimal pandemic-related lockdown policies". May 2022.
Co-written with Stéphane Rossignol.
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Abstract
We study optimal lockdown decisions taken by a policymaker facing a pandemic modelled according to the standard SIR deterministic model. The policymaker trades off between the economic costs and the mortality record of the pandemic which depend on the strictness and duration of the lockdown. We contrast the short-sightedness versus the far-sightedness of the policymaker. Peaks and rebounds are characterized and explain why a zero-Covid policy is self-defeating. The shortest duration consistent with a given health goal is not the less costly. We address the impact of hospital capacity constraints and vaccination on the optimal choice of a lockdown.
Sovereign Defaults and Debt Sustainability: the debt recovery channel". March 2022.
Co-written with Ibrahima Diarra and Michel Guillard.
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Abstract
This paper focuses on the debt recovery channel linking the dynamics of public debt to partial sovereign defaults. We build a simple model which incorporates sovereign default and a debt recovery rule. It depends on a parameter that allows for partial debt recovery. We show that the maximum debt-to-GDP ratio that a country can sustain without defaulting is increasing, nonlinear, and sensitive to the debt-recovery parameter. A higher debt recovery parameter increases the fiscal space but worsens the financial position of a borrowing country after a default epidode. We show the empirical relevance of this channel for estimating country-specific fiscal spaces.