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Research on Economic Fluctuations and Globalization

Objective

The first strand of the proposal seeks to study housing market fluctuations. Housing markets play a prominent role in the economy and in the conduct of monetary policy and yet standard DSGE models often ignore them. In a first project, we will study both empirically and theoretically seasonal fluctuations in housing markets. We view this as an important first step to shed light on the models needed to describe housing markets. A second project will build on these modelling implications to develop a macroeconomic framework that accounts for lower-frequency fluctuations in housing markets; in particular, we will study the effects of different economic shocks and optimal policy responses, with particular attention to the mechanism through which initial shocks get amplified and transmitted to the rest of the economy. The second strand will seek to understand and quantify the role of international trade, and in particular the emergence of China and India, in explaining the sharp decline in the volatility of aggregate fluctuations experienced by most advanced economies since the mid 1980s. Concretely, the project will ask both theoretically and empirically the extent to which counting on a wider pool of input suppliers from non-traditional trading partners has mitigated the effect of economic shocks on output and prices. As an auxiliary tool, a second project will develop a new econometric test for model selection. The final strand has two main branches. In the first, we will propose a model to study the role of optimality of employment relations in the transmission mechanism of monetary policy. In the second, we will develop a model to asses the role of liquidity in the transmission mechanism. Testable implications from these two models will be empirically assessed.

Field of science

  • /social sciences/economics and business/business and management/commerce
  • /social sciences/sociology/industrial relations

Call for proposal

ERC-2009-StG
See other projects for this call

Funding Scheme

ERC-SG - ERC Starting Grant

Host institution

LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE
Address
Houghton Street 1
WC2A 2AE London
United Kingdom
Activity type
Higher or Secondary Education Establishments
EU contribution
€ 544 581,60
Principal investigator
Maria Silvana Tenreyro (Dr.)
Administrative Contact
Jane Ellison (Ms.)

Beneficiaries (1)

LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE
United Kingdom
EU contribution
€ 544 581,60
Address
Houghton Street 1
WC2A 2AE London
Activity type
Higher or Secondary Education Establishments
Principal investigator
Maria Silvana Tenreyro (Dr.)
Administrative Contact
Jane Ellison (Ms.)