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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.
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.
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.
Since the global financial crisis triggered by the collapse of the subprime mortgage market in the United States, a key issue for central banks has been the extent to which they should use monetary policy, along with macroprudential tools, to promote financial stability. University of Manchester (UoM) research has developed small theoretical models, and more detailed quantitative macroeconomic models, to help address this issue. This analytical work has helped to: firstly, influence the policies and operations of several major central banks (Brazil, Turkey and Morocco); and secondly, fuel the debate about global reform of bank regulation in international forums, such as the Financial Stability Board, the Basel Committee on Banking Supervision and annual meetings of central banks from Latin America. Impact has been achieved through presentations to these forums, alongside discussions with senior policymakers from other countries.
The European Central Bank (ECB) uses forecasting tools to make predictions about the Eurozone economy as a whole. The University of Leicester has worked with the ECB to modify its main forecasting tool to improve its ability to take effective and timely action to keep inflation low and minimise deflation.
Similarly, the United Nations prepares a submission to each G8 Summit which includes forecasting and policy analysis based on the economies of the 193 member states. The forecasting tool used to create this submission has also been created in collaboration with the University of Leicester. These modelling tools help the world's most powerful leaders - both political and financial - to make informed and timely decisions about issues affecting economic stability, global food security and international safety.
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).
Since the financial crisis of 2007-8, many failing banks have had to be rescued. Rescue has taken different forms, including acquisition by rivals, public subsidies, and nationalisation.
Research at University of Leicester contributed to the changing of perceptions on the relative merits of these options, by showing that the cost of bank nationalisation had previously been over-estimated. This work paved the way for a wave of bank nationalisations that occurred during the financial crisis of 2007-8. Demetriades directly applied the findings of his research in the rescue of the crisis-hit Cypriot banking sector, following his appointment as Governor of the Central Bank of Cyprus and member of the European Central Bank governing council in 2012.
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.
The demise of Lehman Brothers in 2008 marked the start of the current financial crisis and illustrated some of the adverse consequences of linkages between banks. The prospect of systemic crises has concerned bank regulators and monetary policy authorities for many years. Research by Professor Altunbaş at Bangor Business School, in close collaboration with the European Central Bank (ECB), has had substantial impact over 2008-2013 by influencing priorities in the international policy debate on how bank innovation can influence the conduct of monetary policy. It shows that the effectiveness of traditional monetary policy transmission mechanisms (such as the bank lending channel) is reduced by securitization activity and this also exacerbates the risk-taking channel of monetary policy. Evidence of the impact and overall scope of Professor Altunbaş' research is reflected in reference to his research at the highest monetary policy levels in Europe as well as widespread recognition in official central bank and international organization publications.