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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.
The banking crisis that followed the collapse of Northern Rock in 2007 resulted in an urgent need to inject liquidity into the financial system. In order to resolve these issues, the Bank of England asked Professor Klemperer, an expert in auction theory, to help re-dseign its long-term market operations to allow the Bank of England to auction loans backed by financial collateral of varying quality. Since 2010, this has been adopted as the Bank of England's standard mechanism for its long-term repurchase operations. The potential impact of the new auction design extends beyond the Bank of England to other central banks, private industry and to industry regulators.
Andrew Scott and co-authors have examined how government debt should respond to economic shocks. Their research shows incomplete debt markets should show large and long-lasting re-sponses: a 3-4 year financial crisis should generate a swing in debt over 20-30 years. This work has impacted European governments, Finance Ministers and Permanent Secretaries of the G7, the UK Debt Management Office, and others. In summary: cutting-edge research has impacted the contemporary thinking of policymakers as they formulate government debt management.
An economic theory of entrepreneurship developed by the University of Reading's Mark Casson (at Reading since 1969) clarified the case for UK Government business support to small to medium- sized UK exporters and provided new research instruments with which to measure its impact. UK SMEs had previously received subsidies from UK Trade and Investment (UKTI) but the economic rationale was contested. Casson's work addressed the need for more evidence and better analysis. Under Casson's leadership, the University identified a critical role played by the Government in supporting trade, and developed key methods to evaluate the impact of policy support on UK business performance. In the words of the UKTI Director of Economics and Evaluation at the Department of Business, Innovation and Skills, these have made `a major contribution to UK policy thought'.
The making of monetary policy requires accurate forecasts of key monetary variables, and in particular of the inflation rate. Research conducted by Charemza has led to the development of new methods of forecasting inflation. The relevant information is summarised in a Monetary Policy Indicator (MPI) that can be used to identify the optimal timing of active monetary policy. Since June 2006, the MPI has been applied by the Monetary Policy Council (MPC) of Poland in the process of deciding on the levels of monetary instruments (interest rates and reserve levels). The use of these methods has contributed to Poland's economic stability and helped to ensure unprecedented growth of the Polish economy in the last decade.
BU economic modelling research has driven increased profits for leading international consultants Maxwell Stamp PLC, to the tune of £12 million to date. Simultaneously, the research has benefited the company's clients, including several governments. For example, the research was used to provide advice critical in helping Namibia safeguard revenues of US$700 million annually from the Southern African Customs Union (SACU).
Independent of Maxwell Stamp, the same techniques have been used to strengthen the research capabilities of the Institute for Scientific Research on Economic Reforms, Azerbaijan. This has been integral in the successful development of new, internationally competitive industries and the World Bank naming Azerbaijan one of the top 10 economic reformers.
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).
Property market investors (from large institutional investors to potential home buyers) need to have confidence on the level of risk and returns associated with their transactions. Without such confidence, property markets will fail to operate efficiently.
This case study reports on the development of a number of different property indices by Aberdeen-based researchers which have increased information on, and therefore the transparency of, specific markets. The commercial real estate and urban regeneration indices have been widely adopted by industry and influence investment portfolio decisions. The residential indices are used by surveyors, mortgage lenders and influence the housing choices of the general public.
George Kapetanios's research on macroeconomic modelling and forecasting has influenced both the operational practices of the Bank of England and its conduct of UK monetary policy. His work has:
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.