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Alternative solutions to the odious debt problem

The doctrine of state succession requires that governments honor the international commitments of their predecessors. Even if a dictator borrows to oppress his own citizens, future generations are required to service the debts and commitments contracted by the dictator. This paper starts by briefly describing possible exceptions to this doctrine by focusing on war and hostile debts....

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English / 12/04/2021

The COVID-19 and bond spreads

Financial markets reacted with a vengeance to the COVID-19 pandemic. We argue that while the spread of the pandemic is statistically significant in explaining changes to bond spreads, it has little additional explanatory power over variables that capture financial stress. Financial markets reacted as in any international financial crisis by penalizing emerging economies exposing...

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English / 12/04/2021

Income inequality and economic growth: known unknowns

There is an emerging consensus that inequality is adversely related to growth. However, the empirical literature on the links between inequality and growth does not align with this simple narrative, especially because the channels through which inequality may affect growth remain poorly understood.

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English / 30/03/2021

India's lockdown

On March 24, 2020, the Government of India ordered a nationwide lockdown for 21 days as a preventive measure against the spread of the coronavirus. The lockdown - in full force as we write - restricts 1.3 billion people from leaving their homes. Transport services are suspended, educational institutions are closed, and factories are shut down. This is in line with the measures...

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English / 24/04/2020

Searching for trade partners in developing countries: testing firms in the "fast fashion" industry

An integral part of global supply chains is the selection by international buyers of trading partners in developing countries. However, our understanding of how buyers find a suitable long term supplier is limited. I use unique buyer-seller customs data to directly observe experimentation activity in a large market - the "fast fashion" industry in Bangladesh. I study how buyers of...

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Français, English / 07/04/2020

Political connections and financial constraints: evidence from Central And Eastern Europe

We examine whether political connections ease financial constraints faced by firms. Using firmlevel data from six Central and Eastern European economies, we show that politically connected firms are characterized by: (i) higher leverage, (ii) lower profitability, (iii) lower capitalization, (iv) lower marginal productivity of capital, and (v) lower levels of investment than...

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English / 24/03/2020

Increasing trust in bankers to enhance savings: experimental evidence from India

According to economic theory, repeated interactions can play a crucial role in shaping trust. We randomly allocated people to treatments that promote interactions with bankers. Next, these people play incentivised trust games with their own banker and with an anonymous other banker. While the effect on trust in the own banker is limited, the impact on trust in other bankers is...

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Français, English / 13/03/2020

When government promise to prioritize public debt: do markets care ?

During the European sovereign debt crisis of 2011-13, some nations faced with rising borrowing costs adopted commitments to treat bondholders as priority claimants. That is, if there was a shortage of funds, bondholders would be paid first. In this article, we analyze the prevalence and variety of these types of commitments and ask whether they impact borrowing costs. We examine a...

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English / 10/03/2020

Inflation expectations: review and evidence

This paper presents a comprehensive examination of the determination and evolution of inflation expectations, with a focus on emerging market and developing economies (EMDEs). The results suggest that long-term inflation expectations in EMDEs are not as well anchored as those in advanced economies, despite notable improvements over the past two decades. Indeed, in EMDEs, long-term...

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English / 10/03/2020

BigTech and the changing structure of financial intermediation

We consider the drivers and implications of the growth of "BigTech" in finance – ie the financial services offerings of technology companies with established presence in the market for digital services. BigTech firms often start with payments. Thereafter, some expand into the provision of credit, insurance and money management products, either directly or in cooperation with...

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English / 06/03/2020

Does leverage predict delinquency in consumer lending?: evidence from Peru

This paper examines to what extent household leverage—as measured by the debt-to-income (DTI) ratio—predicts delinquency in Peru’s consumer credit market. A model is estimated to assess the relation between delinquency and the DTI ratio. The initial and current DTI ratios are assessed as delinquency predictors. The results confirm that the current DTI ratio is effective for...

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Français, English / 05/03/2020

Globotics and development: when manufacturing is jobless and services are tradable

Globalization and robotics (globotics) are transforming the world economy at an explosive pace. While much of the literature has focused on rich nations, the changes are quite likely to affect developing nations in important ways. The premise of the paper - which should be regarded as a thought-piece - is based on an extreme thought experiment. What does development look like when...

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Français, English / 03/03/2020

China's offshore corporate dollar bonds

China's bond market is destined to play an increasingly important role, both at home and abroad. And the inclusion of the country's bonds in global indexes will be a milestone for its financial market integration, bringing big opportunities as well as challenges for policymakers and investors alike. This calls for a good understanding of China's bond market structure, its unique...

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English / 24/02/2020

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