The situation may be different, however, if growth is boosted by a combination of higher public investment and structural reforms creating incentives for higher private investment, which will induce a rise in permanent income. This could be a major confidence boost to the economy  11  See Cœuré, B. (2015), “Paradigm lost: Rethinking international adjustments”, Egon and Joan von Kashnitz Lecture, Clausen Center for International Business and Policy, Berkeley, 21 November. 12  See Carcea, M.C., Ciriaci, D., Cuerpo, C., Lorenzani, D. and Pontuch, P. (2015), “The economic impact of rescue and recovery frameworks in the EU”, EC Discussion Paper, No 004, September. 13  See https://www.bundesbank.de/Redaktion/EN/Reden/2014/2014_03_17_weidmann.html. 14  This line of thinking has been formalised in a recent paper by Olivier Blanchard and co-authors which looks at the effect of higher government spending and inflation in core countries on those in the periphery. They find that, in normal times, the benefits for periphery countries are minimal as terms-of-trade gains are offset by the central bank raising rates. In a liquidity trap situation, however, the effects are markedly different. Crucially, if monetary policy is expected to not raise rates for a couple of years or more – as it is the case today – the stimulus for the periphery can be large. See Blanchard, O., Erceg, C.J. and Lindé, J. (2015), “Jump starting the euro area recovery: would a rise in core fiscal spending help the periphery? “, NBER WP 21426.
But in an uncertain world, France appears as a rather stable country, seen from the resilience of its economy, the strength of its financial sector, as well as the solidity of its political institutions. 3/3  BIS central bankers' speeches