Economics research topics
Our Economics department is renowned for the quality of its research. We are delving into economic theory, econometrics, public and experimental economics, and much more. Here is just a sample of what we are currently working on:
What causes fluctuations in economic activity, such as the recession?
Dr Joao Madeira aims to answer this important question through his research into business cycles, monetary policy and Macroeconomics. As he explains, “better understanding these fluctuations and how to mitigate them has a great beneficial impact for our society.” His research focuses predominantly on understanding what drives fluctuations in economic activity and what should be the role of policy makers, in particular of monetary policy, to mitigate these fluctuations.
Right from the birth of Economics as a scientific discipline, Public Economics has always been one of its core branches. Public Economics considers how the choices of governments are made and how these choices can improve or hinder economic efficiency. Public Economics also investigates the extent to which it is possible, or desirable, for the government to change the distribution of income and wealth. To undertake this analysis, Public Economics draws upon influences from many areas of Economics. Professor Gareth Myles conducts leading research in this area, and has written numerous papers on the subject.
To border tax-adjust or not?
Professor Christos Kotsogiannis’ current research explores the role of trade instruments in globally efficient climate policies, focusing on the central issue of whether border tax adjustment (BTA) is warranted when carbon prices differ internationally. This line of research shows that tariff policy has a role in easing cross-country distributional concerns that can make non-uniform carbon pricing effcient, and that Pareto-efficiency requires a form of BTA when carbon taxes in some countries are constrained, a special case being identified in which this has the simple structure envisaged in practical policy discussion. It also stresses|a point that has been overlooked in the policy debate|that the case for BTA depends critically on whether climate policies are pursued by carbon taxation or by cap-and-trade. Professor Kotsogiannis is also interested in the design of Pareto-efficient carbon-tax reforms, as well as issues that relate to fiscal federalism, insecure resources and international trade, and the relationship between foreign direct investment and taxation.
On pollution externalities
Dr. Sushama Murty’s research on externalities such as pollution concerns problems that characterize both victims and generators of externalities. Technologies of victim firms violate the commonly evoked convexity assumption leading to failure of markets where the rights-to-pollute are traded, while the technologies of generating firms do not exhibit free-disposability of pollution. Sushama proposes a new equilibrium concept that satisfies the conclusions of the two fundamental theorems of welfare in non-convex economies with externalities. She proposes a new axiom, costly-disposability, and shows that, if an emission-generating firm’s technology satisfies this axiom, then it’s technology can be decomposed into a standard neoclassical intended-production technology and a nature’s emission-generating set (and vice-versa). This decomposition can be very helpful in both empirical and theoretical works, such as the design of welfare-improving externality policies, measurement of green GDP, and explanation of phenomena such as the environmental Kuznets curve.
Professor Vailakis’s research interests cover general equilibrium theory, macroeconomics and optimisation with applications to economic theory. His work on general equilibrium includes the exploration of models with asymmetric information, transaction costs, endogenous borrowing constraints, default and collateral. His work on macroeconomics involves the analysis of dynamic general equilibrium models that depart from the standard neoclassical framework in various aspects (endogenous and embodied technological progress, heterogeneous agents, recursive preferences). His work on optimisation covers dynamic programming and fixed point theory.
The major benefit of theoretical econometrics research is that it brings mathematical rigour to the analysis of relationships between economic variables, and provides statistical tools that practitioners can easily implement in practice. Dr Paulo Parente’s current research is focused on studying the properties of the generalised method of moments estimator, alternative estimators based on divergence measures, such as empirical likelihood, and on developing new bootstrap re-sampling methods for time series.
Econometric time series analysis
Professor James Davidson is interested in all aspects of econometric time series analysis, asymptotic theory, and bootstrap methods in time series. His recent research has been largely concerned with long memory models and fractional integration. His Time Series Modelling (TSM) program is widely used for teaching at Exeter. While developed primarily as a tool for econometrics research, TSM is also used for data analysis by students and practitioners worldwide.
Dr. Andreea Halunga is working on time series problems, currently extending the recently completed ESRC project with James Davidson on model specification testing. Dr Halunga and Professor Davidson are looking particularly at dynamic models in this work. Andreea is also working on the analysis of structural breaks and changes in persistence, and on testing for contemporaneous correlation in dynamic panels.
Financial structure and macroeconomic stability
During a time when governments around the world consider more carefully how to regulate their financial sectors, it should also be important to consider what kind of financial structure is better or worse for macroeconomic stability. Dr Jack Rogers is using contemporary standard macroeconomic modelling techniques (DSGE) to analyse normative monetary policy implications of fixed versus variable rate mortgage structure. Empirical work related to this also investigates the dynamic link between base interest rates and high-street mortgage rates in the UK.
Macroeconomics, history of economics and the economics of elections.
Professor John Maloney's research in Macroeconomics has included a project funded by the Nuffield Foundation to look at the effects of central bank independence, or lack of it, on 20 Western economies. In the history of economics thought, Professor Maloney has published books on Alfred Marshall and on Robert Lowe (classical economist and 19th century Chancellor) and is currently writing up the results of a Leverhulme-funded project on economic voting and the economic modelling of voting.
The Political Economy of Sovereign Debt
The decision to repay government debt is a political decision taken by political leaders who aim at being reelected in a principal-agent game with citizen-voters. Dr. Giancarlo Ianulardo investigates to what extent domestic debt can be considered the relevant variable in debt repayment decisions and to what extent foreign creditors can interfere in domestic political decisions. Dr Ianulardo’s view is that “current research on sovereign debt is rightly focusing on the political determinants of a fragmented decision process, instead of considering the debtor as unitary actor”.
Applied International Economics
Dr Carlos Cortinhas interests are in International Economics, especially in applying contemporary econometric techniques to analyse the policy implications of different monetary regimes around the world. Another area of interest is international trade policy with special emphasis on trade policy in developing countries. Dr Cortinhas welcomes research proposals in these areas by students interested in pursuing a dissertation
Macroeconomic theory, central banks and monetary policy
Professor Damjanovic’s research is relevant to many aspect of the design of macroeconomic policy. Itseeks to improve actual monetary, fiscal and regulatory policies trying to understand and improve the methodology the central banks use to conduct monetary policy. Professor Damjanovic’s current research is on the interconnection between the banking sector and macroeconomics, a topic that has become a central issue for both academic economists and policymakers. She is also working on macroeconomic models that incorporate banks and insolvency, with the aim to provide a framework for developing macro-prudential regulation. She intends to apply this framework to a various policy questions, such as what is the benefit to the economy as a whole of increased competition in banking sector?, what are the major costs and benefits of separating commercial and investment banking?, how might an increase in capital and liquidity requirement affect the risk and default frequency in the macroeconomy?, how should monetary policy react to a negative systematic shock to the financial sector?, and what is the welfare gain from deposit insurance provided by the government?
Decision theory, uncertainty and its applications
Professor Zvi Safra’s work is focused on the foundations of decision theory under risk, both at the individual and society levels. His recent works with Segal demonstrate that, at the individual level, the widely held assumption about individuals holding well defined global preference relation is at best questionable. As a result, more sophisticated theories need to be developed. At the society level, his works with Grant, Kajii and Polak indicate which assumptions are necessary for societies to behave rationally and, furthermore, clarify the intrinsic tension existing between ex post and ex ante optimization.
Professor David Kelsey’s researchs is concerned with choice under uncertainty and its applications in economics and finance, and, in particular, with ambiguity (decisions where some or all of the relevant probabilities are unknown). A major area of research has been the impact of ambiguity in games. Applications include partnerships, asset pricing and the law of liability. Currently, Professor Kelsey is working on experimental tests of these theories. In the coming academic year, he will be working on a Leverhulme funded project on decision-making within firms. Topics studied will include how corporate governance influences behaviour in the product market. In particularly Professor Kelsey is interested in the factors which influence the way firms are organised e.g. the choice between for-profit firms, cooperatives and partnerships. This isrelevant for issues such as mergers and corporate governance.
Professor Robin Mason’s area of expertise is Microeconomics. As he explains, thiswork involves “understanding the decisions made by individuals and firms… and offers an incredibly powerful way to understand the behaviour that we observe: such as, why is popcorn so expensive in cinemas? Why does Legoland charge in the way that it does? What is the role of government in ensuring that markets work correctly?”
Professor Melkonyan has developed methods for preference elicitation and applied various non-expected utility models (including models of decision-making under ambiguity and incomplete and reference-dependent preference structures) to examine willingness to pay/willingness to accept gaps, contests, regulation, pollution behavior, risk communication, the Precautionary Principle and precautionary trade policies, religious choice, and food scares and consumption behavior. He has also used experimental and naturally occurring data to estimate decision-makers’ perceptions of ambiguity and attitudes toward ambiguity. Another substantial part of Professor Melkonyan’s research agenda is applied game theory. The specific applications include entry deterrence and post-entry competition, public policies designed to jump-start multi-firm industries, contests that are hybrids of “all pay” and “only winner pays” allocation mechanisms, determinants of vertical contractual relationships, international trade under asymmetric information, allocation of decision rights in organizations, and strategic incentives to make remittances and their microeconomic implications.
Professor Dieter Balkenborg’s research centres on game theory and its foundations. A substantial part of his work addresses evolutionary game theory and the long-run outcomes of learning and evolutionary processes. He has also worked on epistemic game theory, environmental economics, contract theory and experimental economics.
Trade and commodity market issues
Professor Steve McCorriston aims to “provide detailed insights into new aspects of policy and policy reform when market structure and competition issues are prevalent.” His research focuses on a wide range of policy issues, including trade policy, and trade policy reform when market structure is a characteristic of markets. He has also been investigating the issue of de-regulation of state enterprises and their impact on food security and trade, particularly in the context of the reform agenda in India. Currently, the impact of events arising on world commodity markets on domestic economies has attracted research funding from the European Commission. Collaborative research on tax issues and foreign direct investment is also in progress.
Theoretical, Computational and Experimental Economics
Professor Todd Kaplan’s research spans all of these areas. His theoretical work includes research on price competition, cost sharing and patent races. Todd has also made earlier contributions to the computational field. Probably his best known work is what is known as the ‘Kaplan’ strategy. This was a simple computer strategy that was written to compete in a double auction, a well studied environment in Experimental Economics which is a simplified environment of a stock exchange. It won a well advertised tournament sponsored by the Santa Fe Institute.
Dr Miguel A Fonseca believes that, “economics experiments are useful to test the validity of economic theories, test-bed new market mechanisms and better understand the fundamental principles behind individual and strategic decision-making.” He is currently using experimental methods to study behaviour in Microeconomic models, and specifically in issues relating to Industrial Economics, Public Economics and Game Theory.