Macroeconomics asks all the interesting questions
What are the engines of growth in an economy? Why do financial bubbles occur? Should the government bail out the banking sector in a financial crisis? What are the causes of and remedies for financial failures? Why does unemployment vary so widely not only across countries but also over the business cycle? Is austerity the right policy for the UK in times of COVID-19?
Macroeconomics at Essex covers a broad and complete range of macro-topics. The Finance and Banking sub-cluster focuses on failures in financial markets where, for example, collateral constraints (e.g. pay a 10% deposit for a mortgage) are a response to borrowers being unable to commit to fully repaying their debts in the future. This constraint then leads to lending, too little investment and so too few jobs. Or noting that people trade using money (to borrow / lend and buy stuff) monetary economics instead asks how monetary policy can be used to improve macroeconomic outcomes.
Recent work in agent based trading models assesses the effectiveness of government policy on market outcomes. A more traditional approach instead notes that imperfect competition in the product market means firms raise prices above (marginal) cost which leads to lower sales and reduced employment. But reduced employment then leads to lower aggregate demand, which further lowers firm sales, which leads to lower employment and so on: the modern day Keynesian multiplier. And it is well known that a Keynesian multiplier implies fiscal policy becomes important. So using modern macroeconomic principles, we can properly assess whether austerity is a good policy.
The Search and Matching sub-cluster instead focuses on the macroeconomics of unemployment: why don't wages clear the market, why in the UK is the average duration of unemployment around 6 months, why is unemployment so persistently high following a recession? Research in macroeconomics at Essex is multi-faceted, high level with many recent publications in the very best Economics journals. Essex is well placed to provide students with a first class, modern training in macroeconomics.
Please browse our list of members below and visit their academic staff profiles to discover individual details of their research and supervision status.