arXiv subjects

Jordan Roulleau-Pasdeloup

Publications and source records attributed to Jordan Roulleau-Pasdeloup.

7 recordsLinked to original sources

arXiv2026

An Arbitrarily Precise Global Closed Form Approximation for the Neoclassical Growth Model

I consider a neoclassical growth model with a constant absolute risk aversion (CARA) utility function and derive a global closed form approximation that is arbitrarily precise as the discount rate $ρ$ is close to the population growth rate $n$. I use it to show that the consumption function is strictly concave and that countries can have two different paths converging to the steady-state: front-loading and back-loading.

econ.GN↗

arXiv2026

The Response of Consumption to Interest Rates with Borrowing Constraints: An Analytical Approach

I derive an explicit mapping from initial assets, income and the real interest rate to consumption for an income fluctuation problem with a borrowing constraint and CARA utility. I show that there exists a threshold of initial wealth over which the partial equilibrium consumption response to a permanent increase in the real interest rate is positive, consistent with recent empirical evidence. I further show that precautionary savings reinforce the possibility of crowding in and that the possibility of a positive response extends to a more standard CRRA utility whenever the elasticity of intertemporal substitution is strictly less than 1.

econ.TH↗

arXiv2026

A Step Towards a Solution to the Confidence-Driven Liquidity Trap Morass

Depending on the persistence of a one-off shock bringing the economy to the Effective Lower Bound (ELB), the standard New Keynesian model predicts starkly different conclusions. We offer a potential solution to this morass by assuming that the one-off shock is such that the economy necessarily leaves the ELB in finite time. Under these assumptions, we prove that the confidence-driven liquidity trap à la \cite{mertens2014fiscal} doesn't arise as an equilibrium outcome and that there is a unique path back for a given steady state. Furthermore, under our shock specification the effect of government spending on consumption is necessarily positive and does not switch signs but may grow unbounded \textemdash a puzzle.

econ.GN↗

arXiv2025

Explicit Consumption Functions with Borrowing Constraints: a Continuous Time Approach

There is no known explicit global closed form solution for the standard income fluctuation problem with a borrowing constraint and where wealth accumulates with a constant interest rate $r$. Using a continuous time formulation, I derive an explicit global closed form solution for the case $r=0$ using the Lambert W function. For the case $r>0$, I derive an explicit global closed form approximation that is valid for $r\sim 0$. I then use these to derive explicit expressions for the marginal propensity to consume out of assets and permanent income. I show that the cross-derivative between the two is strictly positive: the consumption consumption is supermodular.

econ.TH↗

arXiv2025

Endogenous Persistence at the Effective Lower Bound

We develop a perfect foresight method to solve models with an interest rate lower bound constraint that nests OccBin/DynareOBC and \cite{Eggertsson2010}'s as well as \cite{Mertens2014}'s pen and paper solutions as special cases. Our method generalizes the pen-and-paper solutions by allowing for endogenous persistence while maintaining tractability and interpretability. We prove that our method necessarily gives stable multipliers. We use it to solve a New Keynesian model with habit formation and government spending, which we match to expectations data from the Great Recession. We find an output multiplier of government spending close to 1 for the US and Japan.

econ.GN↗

arXiv2023

Simple Analytics of the Government Investment Multiplier

What are the effects of investing in public infrastructure? We answer this question with a New Keynesian model. We recast the model as a Markov chain and develop a general solution method that nests existing ones inside/outside the zero lower bound as special cases. Our framework delivers a simple expression for the contribution of public infrastructure. We show that it provides a unified framework to study the effects of public investment in three scenarios: $(i)$ normal times $(ii)$ short-lived liquidity trap $(iii)$ long-lived liquidity trap. We find that calibrations commonly used lead to multipliers that diverge with the duration of the trap.

econ.GN↗

arXiv2023

Analyzing Linear DSGE models: the Method of Undetermined Markov States

I show that a class of Linear DSGE models with one endogenous state variable can be represented as a three-state Markov chain. I develop a new analytical solution method based on this representation, which amounts to solving for a vector of Markov states and one transition probability. These two objects constitute sufficient statistics to compute in closed form objects that have routinely been computed numerically: impulse response function, cumulative sum, present discount value multiplier. I apply the method to a standard New Keynesian model that features optimal monetary policy with commitment.

econ.GN↗