Karine Gente - Academia.edu (original) (raw)

Papers by Karine Gente

Research paper thumbnail of Two-Sector Endogenous Growth Approach ∗

Should a country invest more in human or physical capital? The present paper addresses this issue... more Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990. .

Research paper thumbnail of Growth Effects of Integration in Two-Sector Economies with Non-tradable Goods

This paper deals with the effects of economic integration in a 2x 2x 2 model of overlapping gener... more This paper deals with the effects of economic integration in a 2x 2x 2 model of overlapping generations. We distinguish between a non-tradable and a tradable sector that use human and physical capital. As long as the sectors have different factor intensities, agents’ preferences for services and sectoral-TFPs disparities across countries influence the overall impact of economic integration. Since tradable good is used to accumulate physical capital, which is assumed to be perfectly mobile in an international context, traded-TFPs disparities are a crucial determinant of the growth effects of economic integration. By performing both a short and a long-term analysis, we show that integration leads to convergence in long-term growth rates in presence of cross-border externalities in human capital. This convergence can be accompanied by growth gains or looses for countries but does not presume of the short-term consequences

Research paper thumbnail of Production Network and International Fiscal Spillovers

This paper analyzes the impact of fiscal spending shocks in a multi-country model with internatio... more This paper analyzes the impact of fiscal spending shocks in a multi-country model with international production networks. In contrast to standard results suggesting that production network linkages are unimportant for the aggregate response to macro shocks in a closed economy, we show that network structures may place a central role in the international propagation of fiscal shocks, particularly when wages are slow to adjust. The paper first develops a simple general equilibrium multi-country model and derives some analytical results on the response to fiscal spending shocks. We then apply the model to an analysis of fiscal spillovers in the Eurozone, using the calibrated sectoral network structure from the World Input Output Database (WIOD). In a version of the model with sticky wages, we find that fiscal spillovers from Germany and some other large Eurozone countries may be large, and within the range of empirical estimates. More importantly, we find that the Eurozone production n...

Research paper thumbnail of Net Foreign Assets, Productivity and Real Exchange Rates in Constrained Economies∗

Abstract: Empirical evidence suggests that real exchange rates (RER) behave differently in develo... more Abstract: Empirical evidence suggests that real exchange rates (RER) behave differently in developed and developing countries. We develop an exogenous 2-sector growth model in which RER determination depends on the country’s capacity to borrow from international capital markets. The country faces a constraint on capital inflows. With high domestic savings, the country converges to the world per capita income and RER only depends on productivity spread between sectors (Balassa-Samuelson effect). If the constraint is too tight and/or domestic savings too low, RER depends on both net foreign assets (transfer effect) and productivity. We then analyze the empirical implications of the model and find that, in accordance with the theory, RER is mainly driven by productivity and NFA in constrained countries and exclusively by productivity in unconstrained countries. Key-words: Real exchange rate; capital inflows constraint; overlapping generations; exogenous growth. Classification J.E.L.: E...

Research paper thumbnail of Migration, remittances and accumulation of human capital with endogenous debt constraints

Math. Soc. Sci., 2021

This paper studies the impact of migration and workers’ remittances on human capital and economic... more This paper studies the impact of migration and workers’ remittances on human capital and economic growth when young individuals face debt constraints to finance education. We consider an overlapping generations model a la de la Croix and Michel (2007). In this no-commitment setting, education is the engine of growth. Individuals may choose to default on their debt and be excluded from the asset market. We show that remittances tend to tighten the borrowing constraints for a given level of interest rate, but may enhance growth at the equilibrium. The model replicates both negative and positive impacts of migration and remittances on economic growth underlined by the empirical literature. We calibrate the model for 30 economies.

Research paper thumbnail of Production Networks and International Fiscal Spillovers

Research paper thumbnail of How crucial are preferences for non-tradable goods and cross-country sectoral TFP gap for integration?

Journal of Macroeconomics

Research paper thumbnail of Macroeconomic imbalances, financial stress and fiscal vulnerability in the euro area before the debt crises: A market view

Journal of International Money and Finance

Research paper thumbnail of Taux de change r�el et d�mographie dans une petite �conomie ouverte

Research paper thumbnail of Taux d�int�r�t et taux de change r�el dans un mod�le � horizons finis

Research paper thumbnail of Real Exchange Rate and Productivity in an OLG Model

Annals of Economics and Statistics, 2013

Research paper thumbnail of Should a Country Invest more in Human or Physical Capital? A Two-Sector Endogenous Growth Approach

Amse Working Papers, 2013

ABSTRACT Should a country invest more in human or physical capital? The present paper addresses t... more ABSTRACT Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990.

Research paper thumbnail of How does the world interest rate affect the real exchange rate?

This paper develops a two goods overlapping generations model (OLG) of a semi-small open economy.... more This paper develops a two goods overlapping generations model (OLG) of a semi-small open economy. Due to the OLG structure, the world interest rate and the domestic rate of time preference need not to be equal. Consequently, this setting represents the minimal real framework to study the effects of a world interest rate shock on the real exchange rate (RER).We show that both medium and long-run effects of a positive interest rate shock depend on the net financial position of the domestic country vis-�-vis the rest of the world. The path of the RER is non monotonic (undershooting) in the case of a creditor country, while the RER simply appreciates in a debtor country.

Research paper thumbnail of The Balassa-Samuelson effect in question: the case of a developing country

We analyze the real exchange rate response to a productivity shock in a small open economy faced ... more We analyze the real exchange rate response to a productivity shock in a small open economy faced by a constraint on capital inflows. An increase in tradable productivity leads to a real exchange rate appreciation even though the Balassa-Samuelson analysis does not run.

Research paper thumbnail of Public debt and exchange rate dynamics in the new open economy macroeconomics framework

This paper investigates the e¤ects of a debt-…nanced tax cut in a New Open Economy Macroeconomics... more This paper investigates the e¤ects of a debt-…nanced tax cut in a New Open Economy Macroeconomics setting (NOEM). We show that the traditional Mundell-Fleming results may not emerge in an overlapping generations framework. We …nd the Redux Model results despite the departure from Ricardian Equivalence: a debt-…nanced tax cut leads to a monotonic depreciation of nominal exchange rate in both short-run and long-run.

Research paper thumbnail of Integration, real exchange rate and growth

This paper deals with the relationship between real exchange rate and growth in the process of ec... more This paper deals with the relationship between real exchange rate and growth in the process of economic integration. Using a 2x2x2 model of overlapping generations, we show that growth depends on the real exchange rate (RER) through human capital accu- mulation. Integration leads to convergence in growth rates only in presence of cross-border externalities in human capital. Otherwise, divergence is likely to occur and integration may be good (bad) for growth if the integrated RER is higher (lower) than the autarky's RER. In reality, since capital mobility prevents the real exchange rate from adjusting, economic inte- gration may lead to income divergence if countries are too different in terms of preference, altruism or productivity.

Research paper thumbnail of La transition démographique au cours du développement explique-t-elle l'appréciation du taux de change réel?

Résumé Selon l'analyse Balassa-Samuelson, le taux de change réel ne dépend que du di¤éren-tie... more Résumé Selon l'analyse Balassa-Samuelson, le taux de change réel ne dépend que du di¤éren-tiel de productivité entre les secteurs échangeable et non échangeable. Or, les pays en développement font face à une contrainte d'endettement sur le marché international des capitaux. Lorsque l'on tient compte d'une telle contrainte, la pyramide des âges apparaît comme un déterminant essentiel du taux de change réel. Nous montrons dans ce contexte que le phénomène de transition démographique -baisse du taux de natalité -qui accom-pagne le développement permet d'expliquer l'appréciation réelle du change dans les pays en développement. Mots-clé : Taux de change réel, générations imbriquées, e¤et Balasa-Samuelson, économie dépendante.

Research paper thumbnail of External constraints and endogenous growth: Why didn't some countries benefit from capital flows?

Journal of International Money and Finance, 2015

Empirical evidence on the growth benefits of capital inflows is mixed. The growth benefits accrui... more Empirical evidence on the growth benefits of capital inflows is mixed. The growth benefits accruing from capital inflows also appear to be larger for high savings countries. We explain this phenomenon using an OLG model of endogenous growth in open economies with borrowing constraints that can generate both positive and negative growth effects of capital inflows. The amount an economy can borrow is restricted by an endogenous enforcement constraint. In our setting, with physical capital and a pay-as-you-go pensions system, the steady state is unique. However, it can either be constrained or unconstrained. In a constrained economy, opening up to equity and FDI inflows can be bad for growth because it makes the domestic interest rate too low, which endogenously tightens borrowing constraints. Agents decrease savings and investment in productivity-enhancing activities resulting in lower growth. Results are reversed in an unconstrained economy. We also provide a quantitative analysis of these constraints and some policy implications.

Research paper thumbnail of Should a country invest more in human or physical capital?

Mathematical Social Sciences, 2015

ABSTRACT Should a country invest more in human or physical capital? The present paper addresses t... more ABSTRACT Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990.

Research paper thumbnail of Taux d’intérêt et taux de change réel dans un modèle à horizons finis

Dans cette étude, il s'agit de caractériser le taux de change réel d'équilibre de long ... more Dans cette étude, il s'agit de caractériser le taux de change réel d'équilibre de long terme d'une petite économie ouverte à deux secteurs de production, dans laquelle les agents ont une durée de vie finie au sens de Blanchard (1985). Ce cadre théorique permet de relâcher l'hypothèse d'égalité entre le taux de préférence pour le présent et le taux d'intérêt mondial. Par ce biais, l'écart entre le taux d'intérêt et le taux de préférence pour le présent détermine la position financière nette de l'économie domestique vis-à-vis du reste du monde. Celle-ci conditionne en retour la réaction des principales variables économiques à une modification exogène du taux d'intérêt. L'impact d'une hausse du taux d'intérêt sur le taux de change réel d'équilibre dépend de la valeur des élasticités de la production par rapport au capital dans les deux secteurs, tandis que la consommation et le stock de capital se comportent différem...

Research paper thumbnail of Two-Sector Endogenous Growth Approach ∗

Should a country invest more in human or physical capital? The present paper addresses this issue... more Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990. .

Research paper thumbnail of Growth Effects of Integration in Two-Sector Economies with Non-tradable Goods

This paper deals with the effects of economic integration in a 2x 2x 2 model of overlapping gener... more This paper deals with the effects of economic integration in a 2x 2x 2 model of overlapping generations. We distinguish between a non-tradable and a tradable sector that use human and physical capital. As long as the sectors have different factor intensities, agents’ preferences for services and sectoral-TFPs disparities across countries influence the overall impact of economic integration. Since tradable good is used to accumulate physical capital, which is assumed to be perfectly mobile in an international context, traded-TFPs disparities are a crucial determinant of the growth effects of economic integration. By performing both a short and a long-term analysis, we show that integration leads to convergence in long-term growth rates in presence of cross-border externalities in human capital. This convergence can be accompanied by growth gains or looses for countries but does not presume of the short-term consequences

Research paper thumbnail of Production Network and International Fiscal Spillovers

This paper analyzes the impact of fiscal spending shocks in a multi-country model with internatio... more This paper analyzes the impact of fiscal spending shocks in a multi-country model with international production networks. In contrast to standard results suggesting that production network linkages are unimportant for the aggregate response to macro shocks in a closed economy, we show that network structures may place a central role in the international propagation of fiscal shocks, particularly when wages are slow to adjust. The paper first develops a simple general equilibrium multi-country model and derives some analytical results on the response to fiscal spending shocks. We then apply the model to an analysis of fiscal spillovers in the Eurozone, using the calibrated sectoral network structure from the World Input Output Database (WIOD). In a version of the model with sticky wages, we find that fiscal spillovers from Germany and some other large Eurozone countries may be large, and within the range of empirical estimates. More importantly, we find that the Eurozone production n...

Research paper thumbnail of Net Foreign Assets, Productivity and Real Exchange Rates in Constrained Economies∗

Abstract: Empirical evidence suggests that real exchange rates (RER) behave differently in develo... more Abstract: Empirical evidence suggests that real exchange rates (RER) behave differently in developed and developing countries. We develop an exogenous 2-sector growth model in which RER determination depends on the country’s capacity to borrow from international capital markets. The country faces a constraint on capital inflows. With high domestic savings, the country converges to the world per capita income and RER only depends on productivity spread between sectors (Balassa-Samuelson effect). If the constraint is too tight and/or domestic savings too low, RER depends on both net foreign assets (transfer effect) and productivity. We then analyze the empirical implications of the model and find that, in accordance with the theory, RER is mainly driven by productivity and NFA in constrained countries and exclusively by productivity in unconstrained countries. Key-words: Real exchange rate; capital inflows constraint; overlapping generations; exogenous growth. Classification J.E.L.: E...

Research paper thumbnail of Migration, remittances and accumulation of human capital with endogenous debt constraints

Math. Soc. Sci., 2021

This paper studies the impact of migration and workers’ remittances on human capital and economic... more This paper studies the impact of migration and workers’ remittances on human capital and economic growth when young individuals face debt constraints to finance education. We consider an overlapping generations model a la de la Croix and Michel (2007). In this no-commitment setting, education is the engine of growth. Individuals may choose to default on their debt and be excluded from the asset market. We show that remittances tend to tighten the borrowing constraints for a given level of interest rate, but may enhance growth at the equilibrium. The model replicates both negative and positive impacts of migration and remittances on economic growth underlined by the empirical literature. We calibrate the model for 30 economies.

Research paper thumbnail of Production Networks and International Fiscal Spillovers

Research paper thumbnail of How crucial are preferences for non-tradable goods and cross-country sectoral TFP gap for integration?

Journal of Macroeconomics

Research paper thumbnail of Macroeconomic imbalances, financial stress and fiscal vulnerability in the euro area before the debt crises: A market view

Journal of International Money and Finance

Research paper thumbnail of Taux de change r�el et d�mographie dans une petite �conomie ouverte

Research paper thumbnail of Taux d�int�r�t et taux de change r�el dans un mod�le � horizons finis

Research paper thumbnail of Real Exchange Rate and Productivity in an OLG Model

Annals of Economics and Statistics, 2013

Research paper thumbnail of Should a Country Invest more in Human or Physical Capital? A Two-Sector Endogenous Growth Approach

Amse Working Papers, 2013

ABSTRACT Should a country invest more in human or physical capital? The present paper addresses t... more ABSTRACT Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990.

Research paper thumbnail of How does the world interest rate affect the real exchange rate?

This paper develops a two goods overlapping generations model (OLG) of a semi-small open economy.... more This paper develops a two goods overlapping generations model (OLG) of a semi-small open economy. Due to the OLG structure, the world interest rate and the domestic rate of time preference need not to be equal. Consequently, this setting represents the minimal real framework to study the effects of a world interest rate shock on the real exchange rate (RER).We show that both medium and long-run effects of a positive interest rate shock depend on the net financial position of the domestic country vis-�-vis the rest of the world. The path of the RER is non monotonic (undershooting) in the case of a creditor country, while the RER simply appreciates in a debtor country.

Research paper thumbnail of The Balassa-Samuelson effect in question: the case of a developing country

We analyze the real exchange rate response to a productivity shock in a small open economy faced ... more We analyze the real exchange rate response to a productivity shock in a small open economy faced by a constraint on capital inflows. An increase in tradable productivity leads to a real exchange rate appreciation even though the Balassa-Samuelson analysis does not run.

Research paper thumbnail of Public debt and exchange rate dynamics in the new open economy macroeconomics framework

This paper investigates the e¤ects of a debt-…nanced tax cut in a New Open Economy Macroeconomics... more This paper investigates the e¤ects of a debt-…nanced tax cut in a New Open Economy Macroeconomics setting (NOEM). We show that the traditional Mundell-Fleming results may not emerge in an overlapping generations framework. We …nd the Redux Model results despite the departure from Ricardian Equivalence: a debt-…nanced tax cut leads to a monotonic depreciation of nominal exchange rate in both short-run and long-run.

Research paper thumbnail of Integration, real exchange rate and growth

This paper deals with the relationship between real exchange rate and growth in the process of ec... more This paper deals with the relationship between real exchange rate and growth in the process of economic integration. Using a 2x2x2 model of overlapping generations, we show that growth depends on the real exchange rate (RER) through human capital accu- mulation. Integration leads to convergence in growth rates only in presence of cross-border externalities in human capital. Otherwise, divergence is likely to occur and integration may be good (bad) for growth if the integrated RER is higher (lower) than the autarky's RER. In reality, since capital mobility prevents the real exchange rate from adjusting, economic inte- gration may lead to income divergence if countries are too different in terms of preference, altruism or productivity.

Research paper thumbnail of La transition démographique au cours du développement explique-t-elle l'appréciation du taux de change réel?

Résumé Selon l'analyse Balassa-Samuelson, le taux de change réel ne dépend que du di¤éren-tie... more Résumé Selon l'analyse Balassa-Samuelson, le taux de change réel ne dépend que du di¤éren-tiel de productivité entre les secteurs échangeable et non échangeable. Or, les pays en développement font face à une contrainte d'endettement sur le marché international des capitaux. Lorsque l'on tient compte d'une telle contrainte, la pyramide des âges apparaît comme un déterminant essentiel du taux de change réel. Nous montrons dans ce contexte que le phénomène de transition démographique -baisse du taux de natalité -qui accom-pagne le développement permet d'expliquer l'appréciation réelle du change dans les pays en développement. Mots-clé : Taux de change réel, générations imbriquées, e¤et Balasa-Samuelson, économie dépendante.

Research paper thumbnail of External constraints and endogenous growth: Why didn't some countries benefit from capital flows?

Journal of International Money and Finance, 2015

Empirical evidence on the growth benefits of capital inflows is mixed. The growth benefits accrui... more Empirical evidence on the growth benefits of capital inflows is mixed. The growth benefits accruing from capital inflows also appear to be larger for high savings countries. We explain this phenomenon using an OLG model of endogenous growth in open economies with borrowing constraints that can generate both positive and negative growth effects of capital inflows. The amount an economy can borrow is restricted by an endogenous enforcement constraint. In our setting, with physical capital and a pay-as-you-go pensions system, the steady state is unique. However, it can either be constrained or unconstrained. In a constrained economy, opening up to equity and FDI inflows can be bad for growth because it makes the domestic interest rate too low, which endogenously tightens borrowing constraints. Agents decrease savings and investment in productivity-enhancing activities resulting in lower growth. Results are reversed in an unconstrained economy. We also provide a quantitative analysis of these constraints and some policy implications.

Research paper thumbnail of Should a country invest more in human or physical capital?

Mathematical Social Sciences, 2015

ABSTRACT Should a country invest more in human or physical capital? The present paper addresses t... more ABSTRACT Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors drastically shapes the welfare analysis: two laissez-faire economies with the same global capital share may generate physical capital excess or scarcity, with respect to the optimum. The model for the Japanese economy, that experienced a factor intensity reversal after the oil shock, is then calibrated. It is shown that Japan invested relatively too much in human capital before 1975, but has not invested enough since 1990.

Research paper thumbnail of Taux d’intérêt et taux de change réel dans un modèle à horizons finis

Dans cette étude, il s'agit de caractériser le taux de change réel d'équilibre de long ... more Dans cette étude, il s'agit de caractériser le taux de change réel d'équilibre de long terme d'une petite économie ouverte à deux secteurs de production, dans laquelle les agents ont une durée de vie finie au sens de Blanchard (1985). Ce cadre théorique permet de relâcher l'hypothèse d'égalité entre le taux de préférence pour le présent et le taux d'intérêt mondial. Par ce biais, l'écart entre le taux d'intérêt et le taux de préférence pour le présent détermine la position financière nette de l'économie domestique vis-à-vis du reste du monde. Celle-ci conditionne en retour la réaction des principales variables économiques à une modification exogène du taux d'intérêt. L'impact d'une hausse du taux d'intérêt sur le taux de change réel d'équilibre dépend de la valeur des élasticités de la production par rapport au capital dans les deux secteurs, tandis que la consommation et le stock de capital se comportent différem...