Tax havens represent the largest financing hub for financial institutions. For banks, they account for more than 20% of all cross-borders banking debt worldwide. Yet, our understanding of the underlying drivers remains limited. Drawing on a unique global dataset covering major international banks and tax havens – and employing a novel approach to isolate regulatory arbitrage – this paper finds that the location of cross-border intra-group debt held by multinational banks is shaped by tax considerations, even when regulatory differences are taken into account. For the first time, we provide direct evidence of profit shifting via debt shifting on a global scale, overcoming a key limitation of existing studies which typically rely on single-country data. Based on our sample data, we show that the magnitude of “excess” offshore banking debt globally recorded in tax havens is significant.

This article intends to examine the border carbon adjustment mechanism as a potential complement to existing macro-environmental policies in light of the European Union’s reaffirmed climate goals. Rather than solely targeting greenhouse gas emissions produced by manufacturing, the border carbon adjustment mechanism aims to address all greenhouse gases associated with consumption, which could enhance their effectiveness with regard to international trade. The European Union will have to select among various types of border carbon adjustment mechanisms, each with its own environmental and economic objectives, if it decides to go down this path. Moreover, the decision must take into account the legal constraints of the multilateral trade framework within which the European Union operates - they are significant but not insurmountable.

This article intends to examine the border carbon adjustment mechanism as a potential complement to existing macro-environmental policies in light of the European Union’s reaffirmed climate goals. Rather than solely targeting greenhouse gas emissions produced by manufacturing, the border carbon adjustment mechanism aims to address all greenhouse gases associated with consumption, which could enhance their effectiveness with regard to international trade. The European Union will have to select among various types of border carbon adjustment mechanisms, each with its own environmental and economic objectives, if it decides to go down this path. Moreover, the decision must take into account the legal constraints of the multilateral trade framework within which the European Union operates - they are significant but not insurmountable.

While multinational enterprises (MNEs) shift hundreds of billions in profits to low-tax jurisdictions annually, how they do remains disputed. Using firm-level data for France in 2018, we provide the first joint quantification of the three main profit-shifting channels: transfer mispricing in goods trade, intangible assets and services traded with tax havens, and intra-group debt. We find empirical evidence for all three instruments, but transfer mispricing dominates quantitatively (€10 billion, 0.4% of GDP), followed by services (€6 billion) and debt (€2 billion). However, these direct estimates account for only half of total missing profits in France, as estimated indirectly from the location of MNE profits. We document two key blind spots likely to close this gap: cross-border digital payments and understudied debt instruments (e.g., securities).

We use matched employer-employee data on the universe of French firms to study the role of multinational enterprises’ (MNEs) presence in tax havens in determining within-firm wage inequalities. We implement a difference-in-differences and a panel event-study design to analyze the effect of firm entry in tax havens on firms’ wage variance. We find that the average firm wage variance experiences a drop by 4.7% over the immediate years following the establishment in a tax haven. We argue that wage inequality within MNEs with presence in tax havens is underestimated, due to the “salary split” for the highest wages of the firm. Indeed, we find that top 1% wages of the firm decline on average by 3.1% after the tax haven entry. On top of this, when we decompose the effects on the top 1%, we find a stronger wage decline due to the tax haven entry for the top salaries, as follows: a 4.4% decline for the top 0.5% and 4.8% for the 0.1% of top wages. The drop in wage variance is explained by a decline in wages at the top of the distribution and not by an effect on the rest of wages, on which there is no statistically significant effect. We show that these developments are exclusively related to tax haven foreign investment and not to other foreign investments. Finally, we introduce a methodology to estimate the macro-level effect of firm-level use of tax havens and we find that it represents around 2% of the observed change in the aggregate variance of wages

This project presents a detailed analysis of EU‐China trade and investment relations, and of the associated dependencies and traditional trade policy concerns. At the macroeconomic level, the intensity of relations exhibits stark contrasts across EU’s member states, for both trade and investment. Trade relations are also strongly imbalanced, and increasingly so. We then characterize exposure to the Chinese market, measured as its weights in producers’ revenue. We show that it is significant for many large firms, and for several sectors, when activity of foreign affiliates in China is considered; in contrast, firm‐level data for France shows that exposure to the Chinese market remains limited when focusing on exports. We finally discuss traditional trade policy issues, linked to market access, forced technology transfers and industrial subsidies, and emphasize that serious concerns remain in these areas.

Based on an analysis of over 100,000 bank accounts of French micro‐enterprises and SMEs, this project analyzes the effects of the health crisis and the subsequent government programs on their financial situation. We find that the liquidity of firms in the sample has improved significantly over the course of the pandemic, suggesting that corporate bankruptcies should not rise in the coming months. However, there is heterogeneity in the financial situation of businesses, with SMEs in so‐called S1 sectors (sectors most affected by health restrictions) and Ile-de-France region firms being more vulnerable than others. We also note that businesses that took out State-Guaranteed Loans were already in a worse financial position before the pandemic, and about 40% to 50% of the loans were used to absorb losses rather than to finance investment or savings. Finally, we recommend to monitor the financial position of businesses in the coming months to determine whether the economic recovery offsets the fall in government support and how quickly accumulated debt can be repaid.

The article discusses the potential for public procurement to stimulate the relocalization of economic activity in France, either by encouraging “local” purchases or by gaining market share in foreign public procurement markets. We find that there is limited room for improvement in domestic public procurement, since it results in only a small amount of imports (approximately 8%). If we exclude intra-European imports, this figure decreases to 3-4%, which is similar to the proportions observed in Germany, the United States, or China. As for foreign public procurement markets, we observe that France’s performance is significantly lower than that of Germany, with Germany exporting nearly twice as much as France. However, this difference can be explained by the fact that the ratio between German and French exports to non-European countries is much higher, indicating that France narrows the gap when it comes to public procurement abroad. Furthermore, the remaining gap in export performance could be attributed in part to the structure of French multinational companies, which tend to prioritize having affiliates abroad rather than focusing on domestic operations.

This article intends to examine the border carbon adjustment mechanism as a potential complement to existing macro-environmental policies in light of the European Union’s reaffirmed climate goals. Rather than solely targeting greenhouse gas emissions produced by manufacturing, the border carbon adjustment mechanism aims to address all greenhouse gases associated with consumption, which could enhance their effectiveness with regard to international trade. The European Union will have to select among various types of border carbon adjustment mechanisms, each with its own environmental and economic objectives, if it decides to go down this path. Moreover, the decision must take into account the legal constraints of the multilateral trade framework within which the European Union operates - they are significant but not insurmountable.