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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).
In the wake of the 2007 financial crisis, Schenk's expertise on the history of the international monetary system influenced debates and discussions in the International Monetary Fund and the G20 about international monetary reform as a means of achieving global financial stability. Schenk's work was also used to inform discussions about the potential role for gold as a strategic response to the financial crisis conducted by Chatham House (Royal Institute for International Affairs).
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.
The role and operations of the IMF are of central importance to the efficient functioning of the world economy. Via a US$360 billion budget, its policies exert a significant effect on the well-being of billions of people worldwide.
Research at Surrey has challenged conventional thinking at the IMF and has been a key influence on changes to several of its policies involving participation in IMF programmes, their implementation, and their effects on other international capital flows. This case study focuses in particular on policy relating to IMF conditionality and lending, as well as the Fund's relationship with low income countries. It is often cited in IMF documents and has been used extensively by the IMF, central banks and aid agencies.
Paul De Grauwe developed and tested the theory that financial markets in the Eurozone can push countries into a vicious circle of economic recession, increasing government debt levels and banking crises in a self-fulfilling way. One of the main policy conclusions of this analysis is that the European Central Bank (ECB) is the only institution that can prevent countries from being pushed into such a vicious circle. This can be achieved by the ECB becoming the lender of last resort in the government bond markets of the Eurozone.
After much hesitation the ECB accepted this analysis and decided in September 2012 to become the lender of last resort in the government bond markets of the Eurozone. It called this "Outright Monetary Transactions" (OMT). This decision was of great importance and led to a quick stabilization of the government bond markets in the Eurozone. De Grauwe's research influenced this policy reform as well as the wider policy debate on reform of Eurozone governance.
The focus of this impact is the effect of the Global Vector Autoregressive (GVAR) project on international organisations such as the International Monetary Fund (IMF) and the European Central Bank (ECB) as well as its use by commercial organisations such as the Economist Intelligence Unit and the Asian Development Bank. The impact has enhanced the tools used by the ECB for communicating its policies. It has also allowed the IMF to demonstrate the effects of oil prices. The Economist Intelligence Unit found it an effective framework for assessing a wide-range of scenarios. The Asian Development Bank uses the GVAR model for forecasting in Asia.