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Countries with substantial non-renewable natural resource wealth face special opportunities and challenges. Research undertaken by Oxford economists has contributed to understanding these challenges and to improving policies for resource management, particularly in developing economies. The key impact is based on a central component of the research — resource revenue management, including long-run decisions about saving, investing, and consuming revenues, and short- and medium-run management of instability. Oxford research has been influential in shaping policy positions of the International Financial Institutions, particularly the IMF, and in influencing the policy debate in-country. It has thereby influenced policies for resource revenue management, particularly in the newly resource-rich countries of Africa.
Professor David Leece's research on household decision making, risk and mortgage design had a significant influence on a fundamental review of the United Kingdom's mortgage market carried out in 2003-4, and consequently has had a major continuing impact on: (i) understanding the role of mortgage market economics in the financial crisis of 2007-8; and (ii) the ability of a global investment bank (and the banking sector more widely) to understand, value and hedge risk in securitised mortgage debt.
Research by Professor Mark Casson and colleagues at the University of Reading demonstrated that the net benefits of inward investment to the UK economy had been systematically overstated by HM Treasury (HMT) up until 2007. The research findings overturned the Treasury's view that all foreign direct investment (FDI) by multinational enterprises (MNEs) was equally beneficial to the UK economy, and so equally merited special efforts to attract it. Instead the University of Reading research was able to show that UK-located SMEs would provide a bigger return to any subsidy either by increasing export sales, or by building stronger links within the supply chains of overseas MNEs. The research team's report led to a change in Government policy after 2007, with measures to attract FDI since that date being targeted only towards those types of investment which are most likely to unambiguously benefit the UK economy.
Chang's research has covered a wide range of public policy, including industrial policy, trade policy, privatisation, and agricultural policy, as well as theories of state intervention. By successfully challenging the then prevailing orthodoxy on economic development, his research has had significant influence on the actions of many national governments, multilateral institutions (e.g., the UN, the World Bank) and NGOs (e.g., Oxfam). Chang's research has also had substantial impact on public debate concerning economic policies, especially but not exclusively those regarding development issues. He has had two best-selling mass-market books (together sold 1.15 million copies as of December 2012) and gained worldwide media exposure for his views.
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.