Department of Economics

The dangers of the global trade war for the UK

Since 2016, two of the world’s largest economies – those of the US and the UK – have made major shifts away from global economic integration. First, the British electorate voted to leave the EU. Since then, the Trump administration has sparked a global trade war which currently shows no signs of dissipating, with tariffs having already been imposed […]

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    Currency unions do little to boost trade among established commercial partners

Currency unions do little to boost trade among established commercial partners

Currency unions are an important institutional arrangement to facilitate international trade and reduce trade costs. In the period since World War II, a total of 123 countries have been involved in a currency union at some point. By the year 2015, 83 countries continued to do so. In addition, various countries are considering to form new currency unions or […]

Why do large companies pay higher salaries?

Why do small establishments pay employees less than large establishments? The final pieces of this puzzle have not been found yet. This paper suggests the joint role of the division of labour and employee characteristics as an additional explanation for the firm-size wage gap.

The intuition is that individuals who work for large firms focus on a limited number of […]

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    When a large company enters a local market, it stimulates local innovation

When a large company enters a local market, it stimulates local innovation

Cross-country investment flows are a peculiar trait of the modern economy and have been progressively increasing in the last two decades. Even with a substantial decline after the Great Recession, there were 2.86 trillion of dollars net flows in 2016, according to data published by the World Bank. There has been an intense debate on the effects of this investment on […]

How the Blitz enhanced London’s economy

The Blitz lasted from Sept 1940 to May 1941, during which the Luftwaffe dropped 18,291 tons of high explosives and countless incendiaries across Greater London. Although these attacks have now largely faded from living memory, our recent paper shows that the impact of the Blitz remains evident to this day in both London’s physical landscape and economy.

Using recently digitised National […]

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    Christopher Pissarides: ‘I’d like to see a UK equivalent of Germany’s Work 4.0 white paper’

Christopher Pissarides: ‘I’d like to see a UK equivalent of Germany’s Work 4.0 white paper’

In late 2016, the German government published the white paper ‘Work 4.0’, the result of 18 months of discussion with academia, trade unions, employer organisations and the public. The paper was a blueprint for how society should face the technological disruption taking place in the world of work and business. This is what Sir Christopher Pissarides thinks the UK should do if it wants to […]

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    What Twitter reveals about a company’s reputation and productivity

What Twitter reveals about a company’s reputation and productivity

Reputation plays an important signalling role in an imperfect information world and companies endeavour to preserve it. In this study, I evaluate empirically the role of reputation for companies that engage in Twitter. The results confirm that getting negative tweets, many expressing grievances, strongly correlates with low firm performance, suggesting the importance of social media (SM) in times when […]

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    Why the Bank of England should stay put and not raise rates now: the view of leading economists

Why the Bank of England should stay put and not raise rates now: the view of leading economists

Ahead of the May 2018 interest rate decision of the Bank of England’s Monetary Policy Committee, more than two-thirds of leading economists surveyed by the Centre for Macroeconomics (CFM) agree that in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy-makers can afford to wait for greater certainty about real wage […]

The trade impact of the transatlantic telegraph

How do exporters gather information about overseas markets and forecast consumer demand for their products? What do they do if technology suddenly makes it possible to get access to better and more timely information? And what is the overall impact on prices, market integration and trade flows? These are challenging questions in the modern world of the internet and […]

Do apprenticeships increase earnings?

Is there an earnings differential for starting an apprenticeship over and above the pay of young people who have already had a full-time school or college-based education? Our research looks at people who finished their GCSE exams in 2003 and who were therefore 28 years of age in 2015. We use administrative data to follow them from 2003 through […]

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    Analysing the distributional effects of higher education funding reforms in the UK

Analysing the distributional effects of higher education funding reforms in the UK

Over the last two decades, the financing of higher education in England has been transformed. The system has gone from one that offered free-of-charge, full-time undergraduate studies to being one of the most expensive in the OECD. The amount of direct public expenditure on higher education has been reduced from 80 per cent to around 25 per cent (see […]

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    Governments play a key role in our happiness, but how do we get them to care?

Governments play a key role in our happiness, but how do we get them to care?

The Global Happiness Council, which I am honoured to direct on behalf of the United Arab Emirates, has just issued the first Global Happiness Policy Report (GHPR) as a companion volume to the annual World Happiness Report (co-edited by John Helliwell, Richard Layard, and me). The purpose of the GHPR is to help governments to promote happiness by showcasing […]

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    Why a customs union is key for multinationals to stay in the UK

Why a customs union is key for multinationals to stay in the UK

Some members of Theresa May’s Cabinet are pushing for a “soft” Brexit, which would allow remaining close to the EU’s single market and customs union. Others favour a “hard” Brexit and aim to strike a trade deal similar to CETA, the agreement concluded between the EU and Canada. Multinational corporations with plants in the UK favour a soft Brexit. […]

Exposure to innovation influences who becomes an inventor

Relatively little is known about the factors that induce people to become inventors. Using data on the lives of over one million inventors in the US, this column sheds light on what policies can be most effective in increasing innovation. In particular, it shows that increasing exposure to innovation among women, minorities, and children from low-income families may have […]

Why economists are relaxed about bitcoin

Cryptocurrencies have been a staple of news headlines in 2017. As the price of one bitcoin has risen 12-fold in sterling terms during the course of 2017, the number of Google searches for bitcoin has increased 14-fold. There are now more than 2,000 cryptocurrency ATMs across the globe, with the United States (1,107), Canada (293), the UK (97) and […]

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    If we want to create jobs in local areas, the idea of ‘local’ needs to be revisited

If we want to create jobs in local areas, the idea of ‘local’ needs to be revisited

Place-based policies that target disadvantaged areas are widespread in both high-income and developing countries. Their impact depends crucially on the effective size of local labour markets. If labour markets are very local, an effective intervention needs to be targeted to the disadvantaged areas themselves and more distant interventions will not benefit the target group. If labour markets are not […]

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    Budget 2017: productivity is the focus, but ‘fixes’ are unlikely to be enough

Budget 2017: productivity is the focus, but ‘fixes’ are unlikely to be enough

Budget 2017 began with a bleak assessment of the UK’s growth prospects. For those of us following the economic trends and policy debate, there was little surprise at the downgrade of future productivity growth by the Office for Budget Responsibility. Productivity has flat-lined since the financial crisis as successive budgets have failed to have much discernible effect on the […]

Work, joblessness and what they mean for our happiness

Since most of us spend much of our lives working, it is inevitable that work plays a key role in shaping our levels of happiness. In a chapter of the World Happiness Report 2017 – which is published annually to coincide with the United Nations’ International Day of Happiness – we look more closely at the relationship between work […]

Dark web: The economics of online drugs markets

Like many other consumer transactions, the buying and selling of drugs are increasingly moving online. This is one very visible dimension of cybercrime – and it has been receiving growing attention from researchers as the online drugs markets have expanded rapidly.

A key feature of online drugs platforms is that they are located on the so-called ‘dark web’, which is […]

Global risks from rising debt and asset prices

Wolfgang Schäuble, the outgoing German finance minister, warned in an FT interview last week that ‘economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt.’ This follows an assessment by the Bank of International Settlements, whose chief economist, Claudio Borio, […]