Macroeconomics

An interconnected economic reality Part 2 Dynamic change and complexity in economics and modelling Dennis Venter This article is a continuation of part 1, by…

Krishan Shah, Phil Bunn and Marko Melolinna An important way in which monetary policy impacts the economy is through its effects on the capital expenditure of firms. When policy rates are raised (and as long as risk-premia remain unchanged) firms’ cost of capital increases. A higher cost of capital should lead firms to increase their … Continue reading High hurdles: evidence on corporate investment hurdle rates in the UK →

Tomas Key Nominal wage growth has increased markedly in the UK in recent years, reaching levels that haven’t been seen for more than 20 years. Although growth has moderated a little in recent months, it remains significantly above its pre-pandemic level. An assessment of whether this strong rate of wage growth will persist is a … Continue reading Using sectoral data to estimate the trend in aggregate wage growth →

The future is not evenly distributed Greg Reid It has been assumed by most western economists that as China develops, its rate of growth will…

Marco Garofalo, Giovanni Rosso and Roger Vicquery Most international trade is denominated in dominant currencies such as the US dollar. What explains the adoption of dominant currency pricing and what are its macroeconomic implications? In a recent paper, we explore a rare instance of transition in aggregate export invoicing patterns. In the aftermath of the … Continue reading Selling England (no longer) by the pound: currency-mismatches and the dollarisation of UK exports →

MMT sees America through rapid economic recovery Stephanie Kelton and Steven Hail Modern monetary theory has been influential in helping America rise out of the…

Julian Reynolds Policymakers and market participants consistently cite geopolitical developments as a key risk to the global economy and financial system. But how can one quantify the potential macroeconomic effects of these developments? Applying local projections to a popular metric of geopolitical risk, I show that geopolitical risk weighs on GDP in the central case … Continue reading Quantifying the macroeconomic impact of geopolitical risk →

Jelle Barkema, Maren Froemel and Sophie Piton Record-high firm exits make headlines, but who are the firms going out of business? This post documents three facts about the rising number of corporations dissolving using granular data from Companies House and the Insolvency Service. We show that the increase in dissolutions that have already materialised reflected … Continue reading Three facts about the rising number of UK business exits →

Samuel Smith and Marco Pinchetti Recent events in the Middle East, as well as Russia’s invasion of Ukraine, have sparked renewed interest in the consequences of geopolitical tensions for global economic developments. In this post, we argue that geopolitical risk (GPR) can transmit via two separate and intrinsically different channels: (i) a deflationary macro channel, … Continue reading The transmission channels of geopolitical risk →

Ecological economics and modern monetary economics need each other Steven Hail Here are three things that ecological economists often do not get quite right about…