Across major Western economics interest rates have been at historic lows since the financial crisis of 2008. This has rightly motivated a great deal of research into theoretical implications of the zero lower bound (ZLB) on nominal interest rates. I plan to challenge the emerging consensus that a binding ZLB provide a good explanation for poor macroeconomic performance since the crisis. My research will test several restrictions common to ZLB models. The aim is to apply this analysis to fiscal policy; including debate about the size of spending multipliers and the desirability of austerity and fiscal stimulus measures. I feel my research could have powerful implications for public policy; as well as how we model macroeconomic fluctuations in good times and bad.
Start date:October 2012
Research Topic:Austerity, Stimulus and Inflation in a Low Interest Rate Environment
Research Supervisor:Professor Huw Dixon (primary), Professor Patrick Minford, Professor James Foreman-Peck (secondary supervisors)
Supervising school:Cardiff Business School, Cardiff University
Primary funding source:ESRC Studentship