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In 2010, the new Conservative government established the Office for Budgetary Responsibility (OBR) to provide independent and authoritative analysis of the UK's public finances. The economic case for an independent body to monitor fiscal policy was based on research by Professor Simon Wren-Lewis and his co-authors into fiscal policy rules and optimal debt policy. This research has provided important inputs to policymakers' thinking about fiscal councils, both in the UK and overseas. Work by Professor Wren-Lewis has strongly influenced and shaped the design and subsequent development of the UK's Office for Budgetary Responsibility.
Giancarlo Corsetti has a long-term engagement with monetary authorities (the European Central Bank and since 2010 the Bank of England) where his research has had an impact on the development of frameworks for analysing stabilization policies in open economies. Since September 2010, his research has specifically focused on: (a) monetary policy trade-offs between internal objectives and exchange rate misalignment and external imbalances; (b) macroeconomic stabilization with high and variable sovereign risk; (c) the design of a monetary backstop to government debt. The research has had an impact through setting policy research agendas; through the inputs into scenario and econometric analyses; through forming the basis of Giancarlo's contribution to high-level policy seminars and the basis of his training of central bank officers.
Research by Surrey's Centre for International Macroeconomic Studies (CIMS) has had significant impact on monetary policy in several emerging economies.
This case study highlights impact in Nigeria and Pakistan. Both are important emerging economies: Nigeria is the second largest economy in Africa and ranks 30th by world GDP (adjusted for purchasing power parity), while Pakistan ranks 27th; yet GDP per capita is relatively low in both.
Since 2008, Surrey research has: (1) led to the establishment of a new Centre for Survey Research at the State Bank of Pakistan, collecting data that have directly influenced the Bank's monetary policy; (2) steered reform of the macroeconomic models used by the State Bank and the Central Bank of Nigeria; and (3) helped develop a new approach to monetary policy Nigeria.
Research published between 2003 and 2010 on central bank design has established Sibert as an internationally-recognised authority whose ideas have changed the way that policy makers, academics and the public think about monetary policy committees and have influenced efforts to increase the accountability of these committees and the call to increase female participation, particularly at the Bank of England and the European Central Bank. Recognition of the practical value of this research-based understanding is evident in her 2009 appointment to the newly-formed Icelandic five-member monetary policy committee.
Sibert's research investigates the structure of central banks and monetary policy committees, as well as other decision-making groups, and on how their design affects their performance. In particular, she focuses on how it matters that monetary policy is made by a group rather than an individual and how a monetary policy committee can be designed to produce the best possible outcome for monetary policy. She communicates her research through refereed journal articles, invited publications; policy articles, speeches and opinion pieces.
University of Glasgow research into public sector governance has influenced planning and investment in major transport and infrastructure projects. Transport Scotland's Strategic Transport Projects Review was the first nationwide, multi-modal, evidence based review of Scotland's transport system; as a member of the Board, Professor Iain Docherty contributed to its recommendations, adopted by the Scottish Government in December 2008. His research also shaped the Commission for Integrated Transport's negotiations with the Westminster Government on the White Paper which underpinned the Planning Bill 2008 and subsequent Planning Act 2009; informed the Cabinet Office's 2009 Urban Transport strategy and recommendations; and influenced 2012 investment planning discussions by Edinburgh City Council.
Economic models with adaptive learning developed in Mitra's research are increasingly being adopted by policy authorities and in the training of graduate students. The usual paradigm in economics, rational expectations (RE), unrealistically assumes complete knowledge on the part of policymakers and households. Mitra's work has emphasised informational limitations faced by policymakers and provides guidance for policies in these situations. Monetary policy is an area where different types of models are heavily used and their results are one input to the policy decisions. The impact of this case study should be seen by virtue of pioneering an approach that has come to be accepted by the economics profession as the realistic one to analyse macroeconomic policy changes under bounded rationality; this approach has led to a large outgrowth of applied models used in policy making in recent times. These policy oriented works have provided support for the aggressive monetary and fiscal stimulus packages that have been adopted in the wake of the financial crisis in 2007. They have been disseminated widely through presentations at numerous conferences sponsored by central banks in the presence of senior policymakers. The research has also influenced the teaching of macro and monetary economics; it is part of reading lists of leading MPhil/PhD programmes and has in part contributed to PhD students specialising in this broad area of research.
Professor Michael Keating has worked on various aspects of public policy-making in Scotland and abroad, supported primarily by the ESRC and Leverhulme Trust. Impact has taken the form of a series of collaborative academic-practitioner engagements, involving civil servants, politicians, and civil society actors. These events have focused on establishing a common vocabulary and core concepts, while exploring difficult issues in public policy and facilitating mutual learning between academics and practitioners. Insights from these encounters have been institutionalised in the Scottish Policy Innovation Forum, as well as ongoing seminars, public lectures, innovative training courses for civil servants, and informal discussions.
Research conducted by John Turnpenny shaped the recommendations of the House of Commons Environmental Audit Committee (EAC). In 2010, the EAC addressed the need to embed sustainable development across government policy-making. This followed the closure of the Royal Commission on Environmental Pollution (RCEP) and the end of funding for the Sustainable Development Commission (SDC). The EAC determined to change how it engaged with experts, while reaffirming and expanding its role in the overall scrutiny of government sustainability policy. Turnpenny's findings formed the basis of two of the thirteen headline recommendations in the EAC's 2011 report Embedding Sustainable Development Across Government. In addition his suggestions helped influence significant changes in the way that the EAC operates, and contributed to its wider impact among other policy actors.
Research at Oxford by members of the International Growth Centre (IGC), funded by the Economic and Social Research Council (ESRC) and the Department for International Development (DFID), has played an important role in shaping two key areas of monetary and exchange rate policy formulation in East Africa.
Research on food prices and inflation in Tanzania is providing the technical basis for the discussions of the Monetary Policy Committee (MPC) of the Bank of Tanzania, and has contributed to current thinking by the African Development Bank (ADB) on policy responses to global food price volatility in East Africa.
Work on exchange rate policy has helped shape the Draft Protocol on East African Monetary Union currently being negotiated between the East African Community (EAC) partner states (Kenya, Uganda, Tanzania, Rwanda and Burundi).
The world financial crisis and recession of 2007- 2009, and the continued stagnation of global economies, has raised the question of how governments and central banks should respond in deep recessions. Prof. Evans and colleagues have shown using macroeconomic models with adaptive learning that after large pessimistic shocks, a rapid switch to aggressive monetary easing is required and aggressive fiscal policy may be needed. To achieve policy impact this work has been presented in numerous central bank conferences, and it has caught the attention of several members of the US Federal Reserve Open Market Committee (FOMC). The policies of the FOMC since 2008 have been consistently aggressive, despite public criticism and even dissension within the FOMC itself. This research has provided important academic support for the application of these policies.