Financial frictions can arise through various channels, implying different methodologies to account for these disruptions. One standard method is the introduction of collateral constraints. Households and entrepreneurs accumulate real estate which is used as collateral to acquire loans. This requires banks to act as intermediaries between savers and borrowers.

My research is based on the Iacoviello (2015) framework, focussing on the ownership structure of households in the light of financial frictions. Households are now able not only to accumulate real estate as collateral but also to us it to generate income by leasing it to other households. This enables me to analyse the macroeconomic effect of taxes (i.e. stamp-duty), subsidies (help-to-buy) or buy-to-let schemes. Furthermore, I intend to investigate the impact of these factors on rental rates, quantity of loans and housing shares over the business cycle.

For many developed economies, basic wages have more or less stagnated in the last few decades. This means the effect of economic growth has been cancelled out due to the portion of national income going to basic (or unskilled) labour declining, while skilled labour and capital shares have increased by most measures.

These developments are resonant of the industrial/agricultural revolutions, where wage growth trailed output growth. Though wages did eventually increase, inequality remained high until the two world wars and the great depression. As such there is little indication as to what the terminal outcome of these measures are.

The aim of this research is to assess what core factors are most prominent in causing the stagnation in basic wages experienced and so evaluate what the likely future outcome is for basic wages. This research uses new insights through modern theoretical models based on old Ricardian and Malthusian ideas. It emphasises the effects of different types of technology growth, population growth as well as the price of oil and other finite natural resources.

I am adapting the paper by Gertler, Kiyotaki and Queralto to include a default risk by banks, which is currently subsidized by the central bank’s lender of last resort policy so as to prevent bank runs as modelled by Diamond-Dybvig.

I intend to show that equity funding increases welfare as compared to this current deposit insurance regime.

There have been numerous developments in the literature on fiscal federalism since Tiebout’s (1956) seminal contribution, suggesting that people “vote with their feet” and arguing that, through this mechanism, competition among subnational jurisdictions would promote efficiency in the provision of public goods.

This topic is of particular relevance if we look at current political debate in Europe. Fiscal devolution is seen as a central issue in many countries across the European Union. More generally, the current movement towards fiscal federalism is grounded in a more general decentralising wave that has been taking place around the world from the 1980s.

Over the past few years, a global trend towards fiscal devolution has been advocated in order to promote efficiency gains and a higher economic growth (Rodríguez-Pose and Ezcurra, 2011). However, this promised increase in economic performance is hardly a matter of consensus and efficiency gains predicted in the first generation models are not a direct consequence of fiscal decentralization, as different types of decentralization will certainly have different causes and effects (Rodden, 2004). A vast empirical literature tested the impact of fiscal federalism on economic growth and the results have been, at the best, inconclusive. Furthermore, there are several theoretical arguments that appear to have contradictory effects on decentralized systems of governance.

One further matter of intrinsic discrepancy is that the most important taxes are naturally collected at higher levels of government, in order to avoid a “race to the bottom”.
Hence, fiscal devolution typically leads to some degree of vertical fiscal imbalance. In this concern, there are risks that asymmetric fiscal devolution may undermine fiscal discipline and lead to unbalanced budgets at the local level.

This question comes together with the notion of soft budget constraints, initially introduced by János Kornai (1979). Similarly, Pettersson-Lidbom (2010) identifies the soft budget constraint as a significant incentive problem, pointing out the substantial challenges in its empirical verification and summarizing it as an intrinsic agent’s expectation that the principal will provide a bailout in case of financial distress, and thus weakening the agent’s incentives to behave in fiscally responsible way.

This project intends to explore how subnational governments responded to the Great Recession and which factors may have influenced subnational reactions. We will then follow our research, by developing a model in order to capture the implications and effects of soft budget constraints. The results of this project can have wide-ranging implications for the policy design of fiscal devolution, and also draw more general lessons for policymaking.

Macroeconomic data is nonstationary; normally economists filter macro time series to induce stationarity. I conjecture that using nonstationary data can improve modelling. Working with nonstationary data causes mathematical and computational problems.

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.

One of the most important questions in modern economics is “Why some countries are poorer than others?” Many theories have tried to answer this question, but a few succeeded to explain a small part of these differences between countries. In my research, I will try to explore in depth the subject of economic growth and evaluate the importance of institutions, both economic and political, in the shaping of the performance of economies.