After the crash: influencing economic policy
Developing new economic models to stimulate international recovery from the 2007 crash.
Following the global economic crisis of 2007, there has been focus on macroeconomic policies in the UK and wider European Community.
Clear rules to generate growth
Researchers from the Julian Hodge Institute of Applied Macroeconomics at Cardiff Business School developed models that showed how a series of measures, for example, clear monetary rules which target inflation, could benefit the UK economy.
The team's models emphasise the need for clear fiscal planning, with limits on money supply growth to curb inflation. The team also identified key reforms in tax policy which, together, could lead to substantial benefits to the UK economy.
Professor Patrick Minford proposed the abolition of the top rate of income tax, the revenue loss from which he demonstrated would be offset by broadening the base of taxation and by its positive effects on labour supply, innovation and productivity growth.
In 2012, Professor Patrick Minford was introduced by the Chair of the House of Commons Foreign Affairs Committee as "one of the most prominent economists advocating British withdrawal from the EU". Professor Minford went on to make direct reference to research findings highlighting the "considerable cost [of] being inside the European Union" as a result of its "protectionist" nature and specifically to the "3% of GDP" that would be gained by "moving to free trade".
Informing UK policy debates
The research has been used directly and indirectly, via MPs and intermediaries, to inform policy debates around such major issues as Britain's membership of the European Union (EU), as well as contributing to the wider public debate.
- Le, V. P. M. et al. 2011. How much nominal rigidity is there in the US economy? Testing a new Keynesian DSGE model using indirect inference. Journal of Economic Dynamics and Control 35 (12), pp.2078-2104. (10.1016/j.jedc.2011.08.009)
- Minford, A. P. L. , Mahambare, V. and Nowell, E. 2005. Should Britain leave the EU?: an economic analysis of a troubled relationship. Cheltenham: Edward Elgar.