Results

Journal article

Journal of International Economics:

How to grow an invoicing currency: micro evidence from Argentina

We study the internationalization of the Chinese renminbi (RMB) leveraging a unique policy experiment. In 2023, amid a dollar shortage, Argentina expanded a currency swap line with China. The share of imports from China ...Read more...

CEP discussion paper

How to grow an invoicing currency: micro evidence from Argentina

How can a currency achieve more widespread international use? We study the internationalization of the Chinese renminbi (RMB) through the lens of a unique policy experiment in Argentina. In 2023, amid a severe dollar sho...Read more...

Blog

Financial Times:

How should central banks respond to US tariffs? (Podcast)

US tariffs have sent financial markets into a frenzy in recent weeks, but how much should central bankers be taking trade into account when setting monetary policy? To find out, Soumaya Keynes sits down with Bank of Engl...Read more...

CEP discussion paper

Firm dynamics and growth with soft budget constraints

We develop a model of endogenous growth and firm dynamics with soft budget constraints, where firms differ in their innovation speed and slower firms need additional financing in order to eventually innovate. As creditor...Read more...

Blog

Bank Underground:

Forbearance lending as a crisis management tool

The Bank of England Agenda for Research (BEAR) sets the key areas for new research at the Bank over the coming years. This post is an example of issues considered under the Prudential Architecture Theme which focuses on ...Read more...

CEP discussion paper

Empirical welfare analysis with hedonic budget constraints

We analyze demand settings where heterogeneous consumers maximize utility for product attributes subject to a nonlinear budget constraint. We develop nonparametric methods for welfare-analysis of interventions that chang...Read more...

Blog

The Rest is Money (podcast):

Bank of England Economist: Interest rates must be cut (podcast)

Economist and external member of the Bank of England's Monetary Policy Committee, Swati Dhingra talks to Robert and Steph about why she thinks the time has come to lower Bank Rate, the interest rate set by the Bank of En...Read more...

Government consultation

Bank of England Monetary Policy Reports

The Bank of England publishes a Monetary Policy Report four times a year. After publication, the Treasury Committee holds sessions with the Governor of the Bank of England and members of the Monetary Policy Committee to ...Read more...

CEP discussion paper

The signaling value of legal form in debt financing

We examine if a startup's legal form choice is used as a signal by credit providers to infer its risk to default on a loan. We propose that choosing a legal form with low minimum capital requirements signals higher defau...Read more...

Blog

LSE Business Review:

Autumn Statement: 'no one will be spared the pain'

Chancellor Jeremy Hunt faces a difficult balancing act to try and delay many measures while doing enough in the short run to appease the markets. John Van Reenen comments briefly on what can be expected in the Autumn Sta...Read more...

Blog

Harvard Business Review:

The UK economic crisis might not be a one-off

Markets have reacted poorly to the UK government's new "mini-budget" combining energy price caps with tax cuts for the well off. The government's search for a quick fix to economic growth is a mistake. In fact, restartin...Read more...

Blog

LSE British Politics and Policy:

Government policy fails to join the dots on the key challenges of innovation, net zero, and levelling up

Anna Valero writes that funding clean technologies, such as ocean and wind energy, can be a triple win, helping to address climate change, generating growth, and contributing to levelling up. Yet the 2021 Budget failed t...Read more...

Blog

LSE British Politics and Policy:

Sink or swim time? Social mobility and the 2021 Budget

Lee Elliot Major assesses the prospects for social mobility and economic recovery in Rishi Sunak's 2021 Budget....Read more...

Journal article

Journal of Political Economy:

Are bigger banks better? Firm-level evidence from Germany

The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in postwar Germany. I show that firms did not grow faster after ...Read more...

Journal article

European Economic Review:

Global banking: endogenous competition and risk taking

When banks expand abroad, their riskiness decreases if foreign expansion happens in destination countries that are more competitive than their origin countries. We reach this conclusion in three steps. First, we develop ...Read more...

Journal article

Journal of Urban Economics:

The local economic impacts of regeneration projects: evidence from UK's single regeneration budget

Many governments aim to improve the labour market outcomes of people living in deprived areas through "place-making" initiatives. Economists are often sceptical about the effectiveness of such policies, but empirical evi...Read more...

CEP discussion paper

Are bigger banks better? Firm-level evidence from Germany

The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in post-war Germany. I show that firms did not grow faster after...Read more...

Journal article

Journal of Development Economics:

The belt and road initiative: reshaping economic geography in Central Asia?

This paper develops a computable spatial equilibrium model of Central Asia and uses it to analyze the possible effects of the Belt and Road Initiative on the economy of the region. The model captures international and su...Read more...

Blog

LSE British Politics and Policy:

Budget 2020: will it move the economy onto a sustainable and inclusive growth path?

The UK's challenges around productivity, regional disparities and the transition to net zero emissions are complex and interconnected, made even more so by the coronavirus outbreak and Brexit. Anna Valero argues that whi...Read more...

Blog

LSE British Politics and Policy:

Budget 2020: a bold response to coronavirus, but more must be done if it becomes widespread in the UK

While the 2020 Budget offers an overall adequate response to the challenges currently posed by coronavirus, there are three issues that need to be addressed further, especially as the outbreak becomes more widespread, wr...Read more...

Blog

UK in a Changing Europe:

New chancellor, new challenge: evaluating the coronavirus budget

Thomas Sampson examines the first UK budget to balance the shocks of Covid-19 and Brexit....Read more...

CEP election analysis

Policing and crime

A long period of austerity and budget cuts in policing that started when Theresa May became Home Secretary may be coming to an end. As austerity bit and budget cuts were implemented, this considerably reduced the size of...Read more...

CEP discussion paper

Trade shocks and credit reallocation

The effect of trade liberalization on welfare and economic activity remains one of the most important questions in economics. The literature identifies a number of key determinants that reduce the potential gains from tr...Read more...

Journal article

Economics of Education Review:

The threat of competition and public school performance: evidence from Poland

Theoretical literature on whether school competition raises public school productivity is ambiguous (e.g. MacLeod & Urquiola, 2015) and empirical evidence is mixed (e.g. Hsieh and Urquiola, 2006). Moreover, competition m...Read more...

CEP discussion paper

Financial markets and the allocation of capital: the role of productivity

The efficient allocation of credit is a key element for the success of an economy. Traditional measures of allocative efficiency focus on the Q-theory of investment and, in particular, on the elasticity of finance to inv...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Local Economic Impacts of Regeneration Projects: Evidence from UK's Single Regeneration Budget

We study the local economic impacts of a major regeneration programme aimed at enhancing the quality of life of local people in deprived neighbourhoods in the UK. The analysis is based on a panel of firm and area level d...Read more...

Journal article

Research Policy:

The long-term effect of digital innovation on bank performance: an empirical study of SWIFT adoption in financial services

We examine the impact on bank performance of the adoption of SWIFT, a network-based technological infrastructure and set of standards for worldwide interbank telecommunication. We construct a new longitudinal dataset of ...Read more...

CEP discussion paper

Global banking: risk taking and competition

Direct involvement of global banks in local retail activities can reduce risk-taking by promoting local competition. We develop this argument through a model in which multinational banks operate simultaneously in differe...Read more...

Blog

LSE British Politics and Policy:

Summer budget 2015: Osborne is right to raise wages, but a clearer productivity plan is required

Yesterday, George Osborne delivered the new government?s first budget in which he surprised many by hiking the minimum wage significantly. John Van Reenen reviews the measures introduced, writing that the Chancellor is r...Read more...

Blog

LSE British Politics and Policy:

Budget 2015: What the Chancellor said and didn?t say

Who would have thought an election was around the corner? John Van Reenen looks at what George Osborne had to say in the budget speech as well as what he didn?t say; the Chancellor neither mentioned the productivity prob...Read more...

Journal article

The World Bank Economic Review:

The political economy of trade policy: gone for good? Subsidies with export share requirements in China: 2002-13

This paper presents a simple model of subsidies with export share requirements (ESR) in a heterogeneous firm environment. A two-country general equilibrium version of the model with a single 100% ESR is calibrated using ...Read more...

Blog

LSE European Politics and Policy Blog:

UK Spending Review 2013: A triumph of politics over reason?

The UK?s Spending Review has been forced on the British Chancellor because weak economic growth has blown a hole in the deficit reduction programme. John Van Reenen welcomes the partial reversal of the hugely damaging cu...Read more...

CEP discussion paper

Recursive Contracts

We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization (sup) problems non recursive. Our approach consists of ...Read more...

Blog

LSE British Politics and Policy:

From `Plan B? to `Plan V?: what the UK economy needs to reboot and rebalance growth

With the threat of stagflation and interest rate rises, the current economic climate shows little sign of improvement in the near future. John Van Reenen finds that the government?s severe austerity programme, with its v...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Capitalization of Central Government Grants into Local House Prices: Panel Data Evidence from England

We explore the impact of central government grants on local house prices in England using a panel data set of local authorities (LAs) from 2001 to 2008. Electoral targeting of grants to LAs by the incumbent national gove...Read more...

CEP discussion paper

The long-term effect of digital innovation on bank performance: an empirical study of SWIFT adoption in financial services

We examine the impact on bank performance of the adoption of SWIFT, a network-based technological infrastructure for worldwide interbank telecommunication. We construct a new longitudinal dataset of 6,848 banks in 29 cou...Read more...

Blog

LSE British Politics and Policy:

LSE Centre for Economic Performance ? all election analyses are now available

The complete series of Election Analyses from the Centre for Economic Performance (CEP) is now available, summarising research evidence on some of the key policy battlegrounds of the 2010 UK General Election. The followi...Read more...

CEP discussion paper

Central Bank's Two-Way Communication with the Public and Inflation Dynamics

Using a model of island economy where financial markets aggregate dispersed information of the public, we analyze how two-way communication between the central bank and the public affects inflation dynamics. When inflati...Read more...

CEP discussion paper

Delayed Doves: MPC Voting Behaviour of Externals

The use of independent committees for the setting of interest rates, such as the Monetary Policy Committee (MPC) at the Bank of England, is quickly becoming the norm in developed economies. In this paper we examine the i...Read more...

CEP discussion paper

Talking Less and Moving the Market More: Is this the Recipe for Monetary Policy Effectiveness? Evidence from the ECB and the Fed

This paper examines and compares the communication strategies of the Federal Reserve and the European Central Bank, and their effectiveness. First we do a comparative study exercise. We find that on monetary policy commi...Read more...

CEP discussion paper

Does the Underground Economy Hold Back Financial Deepening? Evidence from the Italian Credit Market

The paper investigates the relationship between underground activities and financial deepening. The access to external finance requires entrepreneurs to disclose credible information through formal documentation. This re...Read more...

CEP discussion paper

Seigniorage

In this paper I analyse four different but related concepts, each of which highlights some aspect of the way in which the state acquires command over real resources through its ability to issue fiat money. They are (1) s...Read more...

CEP discussion paper

The Impact of Central Bank Announcements on Asset Prices in Real Time: Testing the Efficiency of the Euribor Futures Market

This paper examines the effect of European Central Bank communication on the price discovery process in the Euribor futures market using a new tick-by-tick dataset. First, we show that two pieces of news systematically h...Read more...

CEP discussion paper

Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve

When central banks are transparent about their decision making, there may be clear benefits in terms of credibility, policy effectiveness, and improved democratic accountability. While recent literature has focused on al...Read more...

CEP discussion paper

Regional Influences on U.S. Monetary Policy: Some Implications for Europe

This paper looks at the monetary policy decisions of the U.S. Federal Reserve and asks whether those decisions have been influenced solely by national concerns, or whether regional factors have played a role. All of the ...Read more...

CEP discussion paper

A Simple Model of the Transformational Recession Under a Limited Mobility Constraint

This paper considers the impact on sectoral outputs and employments of rapid and large changes in relative prices, such as those which occurred in transition economies during the 1990s. A simple general equilibrium model...Read more...

CEP discussion paper

The Fallacy of the Fiscal Theory of the Price Level

It is not common for an entire scholarly literature to be based on a fallacy, that is, 'on faulty reasoning; misleading or unsound argument'. The 'fiscal theory of the price level', recently re-developed by Woodford,...Read more...