Rebuilding Macroeconomics is a research network structured around a concept of Research Hubs. Each Hub addresses a specific “real world” macroeconomic issue, chosen after extensive consultation with academics and the public. Hubs are settings for scholars and practitioners to explore and learn from each other, and to consider possible new methods of investigation.
We expect to have between six and eight Research Hubs which will each run for two years. The hubs will provide a setting for scholars, policy makers and practitioners to coalesce around a substantive macroeconomic policy question.
We will design each hub to exploit the potential for new policy relevant ideas that can flow from interdisciplinary engagement. There may be traditional and heterodox economists, practitioners and policy makers as well as a range of academics from different branches of psychology, anthropology, sociology, neuroscience, economic history, political science, biology and physics. Hubs will issue calls for pilot research projects to be funded by the Rebuilding Macroeconomics network. Hubs will have sufficient resources to fund innovative and risky research ideas.
Macroeconomists typically approach globalisation in terms of greater market access. More goods and services are available for consumption, budget constraints are loosened by the ability to borrow and lend overseas and access to external asset markets allows greater diversification of risk. Yet the domain of economic policy is primarily the nation state; fiscal and monetary policies operate mostly through the domestic economy. At this simple level, globalisation can be shown to lead to higher standards of living. Economists also have specialised models for specific markets, which can raise challenges to this macroeconomic approach.
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. Why should changes in relative prices from trade as opposed to, for example, technology justify a policy intervention and what would constitute fair and effective compensation? Is financial compensation enough or is something else required? 2. Macroeconomics does not fully integrate international trade and international finance theories. Can the distributional and spatial consequences of trade be incorporated into standard macroeconomic models? Does global finance intensify rather than diminish risk, and is the comovement of capital markets preventing countries from operating an independent monetary policy? 3. Macroeconomics takes its primary objective to be the nation state. Is this appropriate in a globalised economy and what might be the welfare benefits? 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.
Second hub: “Why are economies unstable?”
Modern macro models are based on the premise that agents will respond to any unforeseen disturbance in such a way that their actions will co-ordinate activity toward the optimal use of resources. The task for policy makers is then merely to reduce economic volatility. This self-stabilising structure appears to be at best questionable in the wake of the Great Recession. In recovery, the spectre of ‘secular stagnation’ has emerged, with no self-correcting mechanism.
We expect scholars to being insights from sociology, psychology, anthropology and network theory in order to extend our understanding of preferences and decision making, and the implications for stability. Economists may ask how an inherent instability hypothesis can be usefully incorporated into models and used as a guide to policy. Scientists may query whether agent-based models can be revised, so that they may 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.
Summary Note – Coming Soon
Hub Lead Advert – Closed
Discovery Meeting Invite – Coming Soon
Third hub: “Do we have confidence in economic institutions?”
Fourth hub: “How Do We Achieve a Sustainable Economy?”
Hub Leader Advert – Coming Soon
Discovery Meeting Invite – Coming Soon