Exploring Finance and Policy: A Conversation with Economist Adrien Matray

Adrien Matray, an applied macroeconomist, developed his interest in how financial systems impact well-being while growing up in the economically challenged northern suburbs of Paris. With academic positions at Princeton, Stanford, and now Harvard, his research focuses on income inequality, credit constraints, and the role of institutions in promoting equitable economic growth. Professor Matray holds a Ph.D. from HEC Paris, and his work informs both academic and policy discussions on how financial systems can better serve low-income communities and foster inclusive growth.

What inspired you to pursue a career in applied macroeconomics, particularly focusing on how finance impacts economic growth?

Adrien Matray:  There’s a positive and a negative side to that. On the positive side, my dad spent his career in public service, working in various financial institutions in France, which showed me early on how finance can be a powerful tool for governments to promote growth and entrepreneurship. As we say in French, "Dogs do not produce cats."

On the negative side, I grew up witnessing the harmful effects of IMF austerity programs in the 90s and later saw the tech bubble burst in 2001. These events made it clear how financial markets can be irrational and have real-world consequences. Around that time, Joseph Stiglitz’s work on financial deregulation also left a strong impression on me, fueling my desire to understand why some countries remain poor and inequality persists. This led me to work briefly at the World Bank, where I saw firsthand both the risks and potential of finance as a driver of development. While those institutions weren’t the right fit for me, my interest in the connection between finance, growth, and inequality remains deeply rooted.

Can you tell us more about your decision to pursue a research career rather than a business path after your education?

Adrien Matray:  This was a decision I struggled with. After being admitted to one of France’s top elite universities, I initially thought I was set on an academic path. But during my studies, I second-guessed myself and considered the more common routes my classmates were taking—consulting, investment banking, or start-ups. I tried different options, working in consulting, for the French Ministry of Economics, and the World Bank. Each had its pros and cons, especially the fast-paced, team-oriented environment of the private sector. But ultimately, I realized I enjoy the intellectual freedom of academia too much. I love working on challenging problems that interest me. After business school, I chose academia with a focus on development, inspired by the practical, on-the-ground research of Esther Duflo and Abhijit Banerjee. Though my research has shifted, I still aim to collaborate more with NGOs, especially as my interests in financial inclusion grow. Teaching personal finance at Harvard this year has also made me think about ways to help low-income and minority communities avoid common financial pitfalls, perhaps through developing tools like an app or website.

What inspired your dedication to teaching and mentoring students?

Adrien Matray:  My dedication to teaching started long before grad school. I’ve always loved the magic of seeing someone understand a new idea—it’s like reliving that “eureka” moment every time. How lucky are we to get to do that? Teaching also fulfills my need to feel useful and have a positive impact on others.

Mentoring came later, once I was more established, but I love it for similar reasons. Having grown up in a deprived city and later navigating elite academic environments where I often felt like an outsider, I know the pain of feeling misplaced. Mentoring lets me help others, especially those in vulnerable positions, feel like they belong, and that’s incredibly meaningful to me.

What are your thoughts on the surge of industrial policies in countries like the US? When can they be justified?

Adrien Matray:  Growing up in France with civil servant parents who believed strongly in the government’s role to improve lives, I’ve always found the U.S. opposition to industrial policies puzzling, especially among economists. Thankfully, we’re starting to rediscover that industrial policies can be useful when markets fail—something we’ve known for a long time in Europe.

The idea is simple: when markets don’t allocate resources efficiently, like in cases of pollution or underinvestment in research, governments can step in. Even many private success stories, like Tesla, owe a lot to public investment. Yet, we hold government initiatives to an unfair standard, expecting them to succeed at rates no venture capitalist would ever be held to.

My research on the U.S. Export-Import Bank (EXIM) shows that it helps firms to export by providing financing when private banks won’t. EXIM supports productive firms that would otherwise be financially constrained, creating more jobs and growth. Instead of asking if government intervention is always justified, maybe we should be asking why private banks are failing to support so many businesses.

Can you elaborate on the consequences of the increase in tariffs across countries, particularly in the US? Who is bearing the cost?

Adrien Matray:  The term "tariff" can be incredibly misleading. People often think tariffs are paid by foreign producers, but in reality, it’s the domestic consumers who bear the cost. The logic is simple: if a foreign firm’s product is sold at $10 and a tariff raises its price to $12, domestic firms will match that price to increase their profit. So, the consumer ends up paying more. Research around the Trump tariffs, using detailed retail price data, shows this clearly—a $1 increase in tariffs leads to a $1 increase in domestic prices.

What’s the most fulfilling part of your career so far?

Adrien Matray:  There are two parts that come immediately to mind. The first is whenever I get a chance to meet one of the intellectuals who had an impact on my life and how I think about the world. I guess this is a bit like being a player in the college basketball league and getting a chance to meet and interact with Lebron James. 

The second, and to be honest at this point in my career probably the main, part is mentoring. Being able to mentor someone and being able to help him or her achieve what they want to achieve in life, becoming who they want to become, or simply offering some comfort and reassurance when things get tough, I just cannot think of anything more fulfilling.