We look at how the increased trade openness and correspondingly higher marginal propensity to
import has resulted in weaker Keynesian multipliers, hence explaining the lower efficiency of
economic policy in the context of economic openness. Using an empirical stock-flow consistent model
for the French economy (SFC FR), we find that the fiscal multiplier is 1.3 in 1981 while it is only 0.8
in 2023. We then look at the macroeconomic impacts of the measures via a series of relevant shocks
on public investment and confirm that the “globalization effect” plays a non-negligible role in
explaining the weakening of macroeconomic policy efficiency. Last, we look at the implications of
climate policy as detailed in the Pisani-Ferry & Mahfouz (2023) report to the French Prime Minister.
