Rebuilding Macroeconomics asks a number of Big Questions which address the most pressing “real world” macroeconomic challenges facing us today. These are chosen after extensive discussions with policy makers, economists and scholars from related disciplines, representatives from business and civic society and the general public. If you would like to suggest an alternative question, please get in touch with us here.
If you would like to come to one of our ‘Discovery Meetings’, where we discuss which aspects of a particular question researchers should address, please get in touch with us here.
See the full list of our Big Questions below
Can globalisation benefit all?
Economists have long argued the case that trade is beneficial. But the gains from trade do not necessarily benefit all without a complementary domestic policy. We look for research which offers a richer integration of macroeconomics and international trade and explores what constitutes fair and effective compensation. Global finance may intensify rather than diminish risks and capital market movements may limit traditional policy options. We also look for research which examines the legitimacy and political economy of the Nation State in the world economy when the domain of domestic policy making is diminished. We welcome rigorous proposals which may take a completely different perspective.
Why are economies unstable?
Modern macroeconomic models assume that businesses and households make optimal decisions and markets co-ordinate activity to a pre-defined optimal use of resources. This concept appears to be questionable in the wake of the Great Recession. We envisage that insights from economics, sociology, social psychology, and anthropology and network theory can extend our understanding of preference formation and endogenous instability mechanisms. Perhaps agent-based models can provide better predictions of policy outcomes or more robust policy options in unstable economies? Or perhaps some entirely new approach will emerge that we have not yet foreseen?
Do we have confidence in economic institutions?
There is a low level of public knowledge in economic policy and a lack of trust in our institutions. This may reflect conservatism within institutions, a disconnect between academic macroeconomics and policymakers or simply a lack of progress in creating new ideas. Given the poor record of economics management over the last decade, why is there not more incentive to change? How can a more constructive relationship between institutions, academic macroeconomics and the public be created? Do we need more coordinated policies between economic institutions? Do we need to overcome barriers to innovation and monocultures within academic macroeconomics?
How do we achieve a sustainable economy?
Economic policy is aimed at sustainable growth. Yet science and politics suggest our economy has physical and social limits.Our biosphere, atmosphere and energy supplies are almost certain constraints on future output. How can we include limits on physical resources into macroeconomics so as to create a more nuanced understanding of sustainability? Measures of well-being are diverging from economic growth, including rising health concerns and disengagement from economic activity. How can we create new measures of the standard of life? We welcome macroeconomic research proposals, building on other disciplines, which look beyond economic growth.
Is the financial system fit for purpose?
To many the financial system seems to act more as a casino, instead of providing capital for welfare improving projects. What is the role for finance and how do we judge its success? How do we make changes so that it better fulfils its function? Is risk created within economic systems and can this be modelled to generate helpful predictions? Households are managing more economic risks than ever, to income, housing, pensions, education costs, etc. Does our financial system support households in managing these risks? This is an opportunity for fresh thinking about finance in light of the crisis.
Does inequality undermine macroeconomic performance?
Inequality is not fully integrated into standard macroeconomic models. What are the implications for human and physical capital accumulation and sustainable growth? Should economists focus on unequal income, wealth or consumption? Can psychologists and anthropologists help us understand different perceptions about distribution according to different sources e.g., trade or innovation and what does this imply for the legitimacy of policies? How does inequality affect personal decision making and how is it linked to mental health and other life chances? Is taxation the only policy tool available to address this issue?
Will technology be fundamentally disruptive to our way of work?
Technologists believe we are living in the third Industrial Revolution. Will automation make a large fraction of the work force unemployable, or are new technologies more about how and what we consume than how we produce? Given the extraordinary wave of innovation, why are corporate profits and investment low? Is the Invisible Hand enough to reap the full productivity benefits? How can society enjoy some of the extraordinary returns if entrepreneurs benefited from public education and investment? What effect will changes at the work place have on work experience?
How can we improve macroeconomic models for policy?
Macroeconomic policy making requires detailed forecasting models. Yet traditional models have a chequered record and have largely fallen from academic interest. Are there better methods of modelling to support policy makers, and how can we decide which models to use and in which circumstances? Can we have a more constructive approach to radical uncertainty in the context of macroeconomic forecasting? What should be the role of model forecasts alongside other methods of analysis? Can we integrate finance with macroeconomic models at the deepest levels?
What is modern Industrial and Regional Policy?
Recent electoral outcomes are being met by renewed interest in industrial and regional policies. What will these look like in the twenty first century? Are services necessarily less productive or less value added than industrial processes? Is our education system ready to deliver the necessary labour force in the right locations? What is the optimal level of centralisation and devolution of economic decision making? Why is economic activity particularly centralised in the UK, and what does this mean for support for our national institutions? Is there an economic, psychological or sociological case for more dispersed regional activity?