To build close ties between the academic world and the more institutional one of the Banque de France

Marc Joëts is an economist and researcher in the International Macroeconomics Division of the Economics and International and European Relations Directorate since 2015. He has a PhD in economics (Paris Nanterre), and is an associate researcher at Paris Nanterre University. He also teaches econometrics at the Institut Français du Pétrole et des Énergies Nouvelles (French Institute for Oil and New Energies). His research work focuses particularly on commodity price dynamics and systemic risk, and has been published in journals such as Energy Economics, Economic Modelling, European Journal of Operational Research, Journal of Economic Integration, International Economics.

1. Can you briefly sum up your professional career?

After my PhD, I first embarked on an academic career at a business school. My aim was then to go deeper into a number of research topics and to develop new ones. Subsequently, with the idea of combining my research work with more operational issues, I opted for the Banque de France, which is a good fit for my new direction. I am now an economist and researcher in the International Macroeconomics Division in the Economics and International Relations DG (DGEI), where I try to reconcile my academic research goals with work to support policy-making.

2. What are your areas of research?

My research topics are quite varied. They mainly relate to macroeconomics, international finance, energy economics and the econometrics of time series. Understanding the causes and effects of fluctuations in commodity prices, against a backdrop of climate change and dwindling resources, has been one of my main focuses for research over the past few years. More recently, I have investigated phenomena relating to the interconnectedness of financial markets, seeking to identify the elements liable to weaken the international financial system. This has led me to pose the question of the central role of uncertainty in the propagation of global financial shocks and systemic risk.

3. Are these new topics or the continuation of work on previous research topics?

As I mentioned, they are mainly projects undertaken in a longer-term perspective. They relate either to past work or to ideas that I had already and that have recently taken form. Obviously, the operational context in which I'm working, the issues of interest to a central bank, and the different encounters I have had have informed the way I view certain projects. I'm thinking in particular of the issue of the role of uncertainty in the financial sphere. I would perhaps have adopted a different angle of analysis if I hadn't had this "institutional research" perspective in mind.

4. Uncertainty has been the subject of many publications recently. How would you position your work with respect to the recent literature on this topic?

The literature on uncertainty is actually quite old as it goes back to the theoretical work by Knight (1921). He proposed a distinction between the concept of risk and that of uncertainty. His popularity gradually grew with the development of "sophisticated" econometric approaches capable of formally modelling this concept: macroeconomic, political or financial uncertainty (see Bloom 2014; and Ferrara et al. 2016 for a survey of the recent literature). Essentially, the academic literature on this topic can be divided into two broad categories. There are studies that model uncertainty in order to understand its causes (see in particular Scotti, 2016, and Baker et al., 2016), then there are those that attempt to comprehend its effects on the economy (for example, Bloom, 2009, and Bussière, Ferrara and Milovich, 2015). My work more or less straddles the division between these two categories, proposing a measure of uncertainty for oil and commodity prices (Joëts, Mignon and Razafindrabe, 2017), and more recently, showing that international financial contagion tends to increase when the global economy is in a phase of high uncertainty (Candelon, Ferrara and Joëts, 2018).

5. How would you define your objectives? As solely academic? Support for policy-making or a contribution to general debate? A mix of the academic and institutional-type research?

I don't have a predefined career plan, but let's say that having this dual role as an economist and researcher is an intellectually stimulating and satisfying position as it allows me to bridge the academic world and the more institutional aspects of research in the broad sense. As far as possible, a mix of academic and institutional-type research is certainly the kind of balance I seek.

6. How have you managed to meet the demands of work of an operational nature as well as your academic goals?

My experience at the Bank has taught me that the operational-type work and more academic research are in fact inextricably linked. Even if they are sometimes subject to different analytical frameworks and time horizons, the institutional and academic aspects of the work of a researcher at a central bank inevitably feed into one another. This is precisely, I think, the role of a central bank to enable these two worlds to coexist. At a more individual level of the researcher, the objective is to adapt their argument, make sometimes technical and complex elements clear and intelligible, and put their analysis into context. Reconciling these two demands is not easy, but I think that the International Macroeconomics Division and, more generally, the DGEI are organised in such a way as to stimulate institutional and academic exchanges, notably via the different seminars they organise.

7. What are your future research projects?

Most academic work on uncertainty has highlighted its negative effect on economic activity, and particularly the decisions taken by businesses and households. However, the literature on issues relating to its impact on finance (financial markets or assets, etc.) is still limited. Following on from my latest work, I'm hoping to be able to explore in greater depth the link between uncertainty and financial stability. First, by extending the discussion to include different asset classes (derivatives, bonds, real estate, etc.), types of players (banks, insurance companies, and so on), and geographical areas. Then, by formally identifying whether the level of uncertainty can constitute an early warning signal for systemic risk. And lastly, the reverse question needs to be asked, i.e. whether uncertainty is not a latent feature of the financial system.

8. What should one hope or expect (on both sides) from a relationship between the Banque de France and an experienced researcher like you?

It is crucial that the close ties between the academic world and the more institutional one of the Banque de France continue and are strengthened. As I mentioned before, these two worlds are often subject to different but complementary rationales and levels of discourse. In my view, both of these levels of discourse are essential in examining the complex economic and financial phenomena that govern today's globalised economy. With respect to research, the Banque de France should take advantage of longer-term analysis of phenomena and methods that help to understand them, especially since it has extraordinary databases. Academic research can take advantage of the operational dimension to improve its understanding of the issues at stake, put its analysis into context, better anchor its models in economic reality and reach a wider audience.

9. To conclude, what advice would you give to a researcher wishing to do research at the Banque de France?

I would say without hesitation: combine research with the more operational work of an economist. This inevitably requires the ability to adapt to different analytical frameworks and time horizons for reflection.

References

Baker S., N. Bloom, and S. Davis, (2016), “Measuring economic policy uncertainty”, Quarterly Journal of Economics 131, pp. 1593-1636.

Bloom, N. (2009), “The impact of Uncertainty Shocks”, Econometrica 77, pp. 623-685.

Bloom, N. (2014), “Fluctuations in Uncertainty”, Journal of Economic Perspectives 28, pp. 153-176.

Bussière, M., L. Ferrara, and J.Y. Milovich, (2015), “Explaining the Recent Slump in Investment: the Role of Expected Demand and Uncertainty”, Banque de France Working Paper No. 571.

Candelon, B., L. Ferrara, and M. Joëts, (2018), “Global financial interconnectedness: A non-linear assessment of the uncertainty channel”, Banque de France Working Paper No. 661.

Ferrara, L., S. Lhuissier, and F. Tripier, (2017), “Uncertainty fluctuations: Measures, effects and macroeconomic policy challenges”, CEPII Policy Brief No. 20.

Joëts, M., V. Mignon, and T. Razafindrabe, (2017), “Does the volatility of commodity prices reflect macroeconomic uncertainty?”, Energy Economics 68, pp. 313-326.

Scotti, C., (2016), “Surprise and Uncertainty Indexes: Real-Time Aggregation of Real-Activity Macro Surprises”, Journal of Monetary Economics 82, pp. 1-19.

Updated on: 04/16/2018 17:05