Working Papers

Higher Dividend Taxes, No Problem! Evidence from Taxing Entrepreneurs in France, joint with Charles Boissel
This paper investigates how the 2013 three-fold increase in the dividend tax rate in France affected firms' investment and performance. Using administrative data covering the universe of firms over 2008-2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments. Firms use this tax-induced increase in liquidity to invest more, particularly so when facing high demand and high return on capital. For every euro of undistributed dividends, firms increase their investment by 0.3 euro, leading to higher sales growth. Heterogeneity analysis fails to find any group of firms cutting their investment, thereby rejecting models in which higher dividend taxes increase the cost of capital. Overall, our results suggest that entrepreneurs are credit constrained, despite paying dividends and hold insufficient liquidity to seize all profitable investment opportunities.

Misallocation and Capital Market Integration: Evidence from India, joint with Natalie Bau
NBER Working Paper 27955
We show that foreign capital liberalization reduces capital misallocation and increases aggregate productivity in India. The staggered liberalization of access to foreign capital across disaggregated industries allows us to identify changes in firms' input wedges, overcoming major challenges in the measurement of the effects of changing misallocation. For domestic firms with initially high marginal revenue products of capital (MRPK), liberalization increases revenues by 25%, physical capital by 57%, wage bills by 27%, and reduces MRPK by 35% relative to low MRPK firms. There are no effects on low MRPK firms. The effects of liberalization are largest in areas with less developed local banking sectors, indicating that foreign capital partially substitutes for an efficient banking sector. Finally, we develop a novel method to use natural experiments to bound the effect of changes in misallocation on treated industries' aggregate productivity. Treated industries' Solow residual increases by 4-17%.
Vox Dev Column ; VoxEU
Media Coverage: Ideas for India

Where Has All the Big Data Gone?, joint with Maryam Farboodi, Laura Veldkamp and Venky Venkateswaran
R&R RFS
As financial technology improves and data become more abundant, do market prices reflect this growing information and allocate capital more efficiently? While a number of recent studies have documented rises in aggregate price efficiency, we show that there are large cross-sectional differences. The previously-documented increases are driven by a rise in the informativeness of large, growth stocks. The informational efficiency of smaller assets' prices or prices of asset with less growth potential are either flat or declining. We document these new facts and use a structural model to decompose changes in price informativeness into the effects of changes in information and in growth or volatility characteristics of the assets. Finally, by computing the initial value of data implied by our structural model, we show that these findings could be explained partly by the fact that large firms have grown relatively larger. Since growth magnifies the effect of changes in size, processing data about large-growth firms has becoming more and more valuable, relative to other firms.

Private Credit Under Political Influence: Evidence from France, joint with Anne Laure Delatte and Noémie Pinardon Touati
Formally independent private banks change their supply of credit to the corporate sector for the constituencies of contested political incumbents in order to improve their reelection prospects. In return, politicians grant such banks access to the profitable market for loans to local public entities among their constituencies. We examine French credit registry data for 2007--2017 and find that credit granted to the private sector increases by 9%-14% in the year during which a powerful incumbent faces a contested election. In line with politicians returning the favor, banks that grant more credit to private firms in election years gain market share in the local public entity debt market after the election is held. Thus we establish that, if politicians can control the allocation of rents, then formal independence does not ensure the private sector's effective independence from politically motivated distortions.
Media coverage: Le Monde, France Culture, Liberation, Alternatives Economiques ; Les Echos

Technology Boom, Labor Reallocation, and Human Capital Depreciation, joint with Johan Hombert
During the late 1990s boom, one-third of skilled labor market entrants joined the Information and Communication Technology (ICT) sector. We use French linked employer-employee data to study their wage dynamics. Despite starting with 5% higher wages, these workers experience lower wage growth and end up with 6% lower wages fifteen years out, relative to similar workers who started in other sectors. The long-run wage discount is not explained by selection, job losses or persistently low demand for ICT services. It is concentrated in STEM occupations, consistent with obsolescence of technical skills accelerating during a technological boom.
Media coverage: Voxeu, Frankfurter Allgemeine Zeitung

Bank Deposits and Redistributive Effects of Monetary Policy, joint with Anne Duquerroy and Farzad Saidi
This paper documents that accommodative monetary policy can have contractionary effects on a large part of the real economy if it does not translate to lower funding cost for banks. For identification, we exploit the existence of regulated-deposit accounts offered to households in France the rate on which is not a direct function of the monetary-policy rate but, instead, guaranteed and set by the government. This introduces a funding-cost gap among deposit-funded banks. Using administrative credit-registry data, covering the universe of loans in France, we find that when regulated-deposit dependent banks face higher funding cost following monetary-policy changes, they contract their lending to large firms, but engage in greater risk taking by shielding small firms and entrepreneurs. We argue that this impairment of the transmission of monetary policy to deposit rates has redistributive effects by favoring more constrained borrowers especially in areas that are on weaker growth paths.

Work in Progress

The Real Effects of Banking the Poor: Evidence from Brazil, joint with Julia Fonseca

Labor Misallocation Between Private and Public Sector: Evidence from Public Pension Reform in Brazil, joint with Julia Fonseca

Does Trade Increase the Misallocation of Innovation? The Role of Financial Frictions, joint with Johan Hombert and Chenzi Xu

Financial Shock and the Misallocation of Trade in the Long Run, joint with Chenzi Xu

Should you Open or Close? Foreign Investors and Domestic Misallocation: the Encaje Experiment, joint with Chenzi Xu

Foreign Capital Access and Structural Change, joint with Natalie Bau and Manisha Sha

Firms' Market Power and The Pattern of Trade, joint with Johan Hombert and Paul Beaumont