Conventional and unconventional economic policies in an econometric SFC model of the French economy

A new version of an econometric stock-flow consistent model of the French economy is presented, including an impact of demand pressure on firms’ investment described via an output gap. The dynamic simulations on the past over the period 1996–2019 provide acceptable results. A comparison with a previous version of the model, without output gap effect on investment, gives rather close results. The model is used to study the effects of different forms of unconventional economic policies, distribution of helicopter money in favor of the government to finance public investments or social transfers, recapitalization of the central bank, repurchase by the central bank of public debt, partial cancellation of the public debt held by the central bank and taxation of wealthy households to finance social transfers in favor of the bottom income brackets. Imported inflationary shocks are studied with various policy responses. Finally, a simple endogenization of the interest rate, based on the balance of the public bonds market, was tested.