Results

Journal article

Journal of Political Economy:

The economic dynamics of city structure: evidence from Hiroshima's recovery

We provide new theory and evidence on the resilience of the internal city structure after a large shock by analyzing the atomic bombing of Hiroshima. Exploiting newly digitized data, we document that the city structure r...Read more...

Blog

VoxEU:

Why inflation may respond faster to big shocks: The rise of state-dependent pricing

Macroeconomic models distinguish time-dependent pricing, where firms change prices at fixed intervals, from state-dependent pricing, where firms change prices in response to changing demand or costs. This column presents...Read more...

Blog

Economics Observatory:

Can we explain why inflation in the UK is higher than in the Euro Area?

Swati Dhingra of the Bank of England's Monetary Policy Committee argues that UK inflation is more similar to Europe than it seems, and therefore rate cuts are possible without threatening the return of inflation to targe...Read more...

CentrePiece article

Hiroshima: urban resilience after the atomic bomb

Why the city centre re-emerged from destruction....Read more...

Blog

Vox EU:

Inflation on Wall Street versus Main Street

Since 2021, developed countries have experienced a significant inflation episode. This column uses Decision Maker Panel data from UK CEOs and CFOs to study firms' inflation perceptions and expectations around monthly off...Read more...

Journal article

Small Business Economics :

Realizing expectations? High-impact entrepreneurship across countries

Comparative international entrepreneurship research has often used measures of high-growth expectations entrepreneurship to proxy for the construct of high-impact entrepreneurship. We revisit this practice by assessing t...Read more...

Blog

Vox EU:

Distributional consumer price indices and the measurement of inequality

Differences in consumption patterns between lower- and higher-income households suggest the potential for inflation inequality, but evidence on the scale and drivers of this disparity remains scarce. This column uses 'di...Read more...

Blog

LSE Politics and Policy:

Trump's tariffs will put post-Brexit trade policy to the test

With Donald Trump's inauguration imminent, there are questions over the potential consequences of one of his signature policies: tariffs. While during the first Trump administration the UK wasn't too affected by the impo...Read more...

Blog

Vox EU:

The speed of firm response to inflation

Firm inflation expectations are a key driver of future price growth. This column uses a large economy-wide business survey to understand the response of firms to monthly CPI inflation releases in the UK. Firms' CPI infla...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...

CEP discussion paper

Production function estimation using subjective expectations data

Standard proxy methods for estimating production functions in the Olley and Pakes (1996) tradition require assumptions on input choices. We introduce a new method that exploits (increasingly available) data on firms' exp...Read more...

CEP discussion paper

The economic dynamics of city structure: evidence from Hiroshima's recovery

We provide new theory and evidence on the resilience of the internal city structure after a large shock by analyzing the atomic bombing of Hiroshima. Exploiting newly digitized data, we document that the city structure r...Read more...

Journal article

Journal of Economic Behavior & Organization:

House price expectations

This study examines short-, medium-, and long-run price expectations in housing markets. At the heart of our analysis is the combination of data from a tailored in-person household survey, past sale offerings, satellite ...Read more...

Journal article

The Quarterly Journal of Economics:

Measuring growth in consumer welfare with income-dependent preferences: nonparametric methods and estimates for the United States

How should we measure changes in consumer welfare given observed data on prices and expenditures? This article proposes a nonparametric approach that holds under arbitrary preferences that may depend on observable consum...Read more...

Blog

Vox EU:

Price-setting in a high-inflation environment

Since 2021, inflation rates have increased sharply in many advanced economies. Philip Bunn, Nicholas Bloom, Paul Mizen, Ozgen Ozturk, Gregory Thwaites and Ivan Yotzov study firm pricing strategies during the recent perio...Read more...

Blog

The Conversation:

Inflation may be coming down but its unequal effects can still have a big impact on wellbeing

Inflation is coming down across developed economies, although not as much as governments and central banks would like. Price hikes hurt everyone, but research into inflation inequality shows the effects are more pronounc...Read more...

Government consultation

House of Commons Treasury Committee: Pre-appointment hearing of Dr Swati Dhingra to the Monetary Policy Committee

In oral evidence, Dr Dhingra was questioned about her personal suitability for the post and the UK's economic outlook....Read more...

CentrePiece article

In brief... The wellbeing costs of inflation inequalities

Some people face sharper increases in the prices they pay than others - and since inflation makes everyone miserable, they also experience greater loss of happiness. Alberto Prati assesses the costs of such inflation ine...Read more...

CEP discussion paper

The shift to remote work lessens wage-growth pressure

The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanis...Read more...

Blog

Vox EU:

Accounting for imported and domestically generated inflation: Supply chains, monetary policy, and the UK's cost of living crisis

Inflation has increased sharply since the start of 2021 as the global economy grapples with the aftermath of the COVID-19 pandemic and Russia's invasion of Ukraine. Swati Dhingra and Jack Page draw on a long tradition of...Read more...

Journal article

Review of Income and Wealth :

The well-being cost of inflation inequalities

In terms of well-being, how costly is inflation? To answer this question, empirical evaluations have typically studied average inflation rates at the national level, thus disregarding the role of inflation inequalities w...Read more...

Blog

Vox EU:

Firm inflation expectations in quantitative and text data

Inflation rates and short-term inflation expectations in the UK have increased significantly since 2021. This column uses quantitative and text data from the Decision Maker Panel to analyse the factors affecting inflatio...Read more...

Blog

BBC Radio 4:

Understand The Economy: 1. Inflation (podcast)

Understanding inflation can help understand why our shopping is getting more and more expensive and why prices rarely seem to come down. Tim Harford explains why the inflation figure we see on the TV might not reflect th...Read more...

Blog

LSE Europp:

The well-being cost of inflation inequalities

Inflation is not distributed equally across society. Alberto Prati assesses the wellbeing cost of inflation inequalities in France, showing why measuring them is important for a policy agenda that places citizens' wellbe...Read more...

Blog

Vox EU:

Energy costs: views of leading economists on windfall taxes and consumer price caps

Proposed policy responses to steeply rising energy costs include windfall taxes, and caps on consumer energy prices. Asked whether an energy price cap would be a more appropriate immediate response to inflation than rais...Read more...

CEP discussion paper

The well-being cost of inflation inequalities

In terms of well-being, how costly is inflation? To answer this question, empirical evaluations have typically studied average inflation rates at the national level, thus disregarding the role of inflation inequalities w...Read more...

Blog

Economics Observatory:

Is inflation avoidable?

Inflation in the UK is at a 40 year high, with prices rising across the economy. Shoppers can look for cheaper products, but many are already buying the lowest-cost options and the prices of those bargains are going up f...Read more...

Blog

Vox EU:

Firming up price inflation

Inflation rates in the UK and US are currently at their highest levels in over 30 years. This column uses firm-level data from the Decision Maker Panel to study inflation dynamics in the UK, and in particular since the s...Read more...

Blog

Economics Observatory:

Are wages keeping up with the cost of living?

There is currently much debate about whether pay should keep pace with either productivity or inflation. How we measure price growth has a big influence on what we observe, shedding light on how different parts of the ec...Read more...

Journal article

The Quarterly Journal of Economics :

The slope of the Phillips Curve: evidence from US States

We estimate the slope of the Phillips curve in the cross section of U.S. states using newly constructed state-level price indices for nontradeable goods back to 1978. Our estimates indicate that the slope of the Phillips...Read more...

Journal article

Journal of Risk and Financial Management:

Pandemic-era uncertainty

We examine several measures of uncertainty to make five points. First, equity market traders and executives at nonfinancial firms have shared similar assessments about one-year-ahead uncertainty since the pandemic struck...Read more...

Blog

Economics Observatory:

Inflation update: what's driving the cost of living crisis?

Prices in the UK continue to rise, with the Consumer Price Index up 9.4% in June. A closer look at the underlying data shows that more items are going up in price than are going down, suggesting high inflation could be h...Read more...

Journal article

Labour Economics:

Slack and prices during Covid-19: accounting for labor market participation

Strong labor force participation cyclicality during the Covid-19 pandemic has put further into question the capacity of standard Phillips Curve (PC) models to fully capture labor market cyclical conditions. In this paper...Read more...

Blog

VoxEU:

Inflation, market power, and price controls: views of leading economists

With sharply rising US inflation prompting debate about the potential role of powerful firms in driving up prices and whether antitrust interventions and/or price controls may be an effective policy response, the IGM For...Read more...

CEP discussion paper

House price expectations

This study examines short-, medium-, and long-run price expectations in housing markets. We derive and test six hypothesis about the incidence, formation, and relevance of price expectations. To do so, we use data from a...Read more...

Journal article

Journal of the European Economic Association:

Vehicle currency pricing and exchange rate pass-through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter?s...Read more...

Journal article

International Economic Review:

The Brexit vote, inflation and UK living standards

This article studies how voting for Brexit affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the...Read more...

CEP discussion paper

Do well managed firms make better forecasts?

We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, prof...Read more...

Blog

LSE Business Review:

The risks of prolonged higher inflation

With consumer prices rising at the fastest pace for three decades, what are the risks of prolonged higher inflation as a result of the current stance of fiscal and monetary policy, and what is the likely impact of an eas...Read more...

Journal article

Journal of Behavioral and Experimental Finance:

Long-run expectations of households

The rational expectations assumption, e.g. in life-cycle models and portfolio-choice models, prescribes that all actions are in line with a well-structured and unbiased system of expectations. In reality, justification a...Read more...

Journal article

Annual Review of Economics:

Inflation inequality: measurement, causes, and policy implications

Does inflation vary across the income distribution? This article reviews the growing literature on inflation inequality, describing recent advances and opportunities for further research in four areas. First, new price i...Read more...

CEP occasional paper

Prices and inflation in the UK - A new dataset

This paper presents a new dataset of 41 million UK consumer prices, providing facts on the frequency, size and timing of price changes between 1988 and 2020. The micro data are the `price quotes? of individual consumer p...Read more...

CEP Covid-19 analysis

Prices and inflation in a pandemic - a micro data approach

The Covid-19 lockdowns and recession are the most exceptional economic events in living memory and will impact the economy for years to come. One vital channel is via price changes. Price rises and cuts alter real wages,...Read more...

Journal article

Journal of Public Economics:

The impact of Covid-19 on student experiences and expectations: evidence from a survey

In order to understand the impact of the COVID-19 pandemic on higher education, we surveyed approximately 1500 students at one of the largest public institutions in the United States using an instrument designed to recov...Read more...

CEP discussion paper

Exchange rates and consumer prices: evidence from Brexit

This paper studies how the depreciation of sterling following the Brexit referendum affected consumer prices in the United Kingdom. Our identification strategy uses input-output linkages to account for heterogeneity in e...Read more...

CEP discussion paper

Vehicle currency pricing and exchange rate pass-through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of transactions in our sample invoiced in neither sterling nor the exporter's cur...Read more...

Journal article

The Quarterly Journal of Economics:

The unequal gains from product innovations: evidence from the US retail sector

This article examines how product innovations led to inflation inequality in the United States from 2004 to 2015. Using scanner data from the retail sector, I find that annual inflation for retail products was 0.661 (std...Read more...

CEP Brexit analysis

The Brexit vote, inflation and UK living standards

The vote to leave the European Union (EU) was an unanticipated shock to the UK economy that increased uncertainty and reduced the country?s expected future openness to trade, investment and immigration with the EU. Our r...Read more...

Journal article

Journal of Economic Behavior and Organization:

Unmet aspirations as an explanation for the age U-shape in wellbeing

An emerging economic literature has found evidence that wellbeing follows a U-shape over age. Some theories have assumed that the U-shape is caused by unmet expectations that are felt painfully in midlife but beneficiall...Read more...

CEP real wages update

Slowing UK Wage Growth

We have previously examined the path of nominal and real wages in the UK (Blanchflower and Machin, 2014a, 2014b, 2014c). In that work, we expressed the view that in recent years there has been sufficient slack in the lab...Read more...

CEP discussion paper

Unmet aspirations as an explanation for the age U-shape in human wellbeing

A large literature in behavioral and social sciences has found that human wellbeing follows a U-shape over age. Some theories have assumed that the U-shape is caused by unmet expectations that are felt painfully in midli...Read more...

CEP discussion paper

The Great Stagnation: What Can Policymakers Do?

Although the economic recovery in the UK has been disappointing, it is inappropriate to either assert that Japan?s two lost decades illustrate the ineffectiveness of stimulative monetary policy or that the UK is predesti...Read more...

CEP discussion paper

Wishful Thinking

An experiment tested whether and in what circumstances people are more likely to believe an event simply because it makes them better off. Subjects observed a financial asset's historical price chart, and received both a...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...

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

Robustly Optimal Monetary Policy

This paper analyses optimal monetary policy in response to shocks using a model that avoids making specific assumptions about the stickiness of prices, and thus the nature of the Phillips curve. Nonetheless, certain robu...Read more...

CEP discussion paper

Inflation Persistence When Price Stickiness Differs Between Industries

There is much evidence that price-adjustment frequencies vary widely across industries. This paper shows that inflation persistence is lower with heterogeneity in price stickiness than without it, taking as given the deg...Read more...

CEP discussion paper

Intrinsic Inflation Persistence

It is often argued that the New Keynesian Phillips curve is at odds with the data because it cannot explain inflation persistence ? the difficulty of returning inflation immediately to target after a shock without any lo...Read more...

CEP discussion paper

Search Frictions, Real Rigidities and Inflation Dynamics

The standard New Keynesian model suffers from the so-called .macro-micro pricing conflict: in order to match the dynamics of inflation implied by macroeconomic data, the model needs to assume an average duration of price...Read more...

CEP discussion paper

The Beveridge Curve

The Beveridge curve depicts a negative relationship between unemployed workers and job vacancies, a robust finding across countries. The position of the economy on the curve gives an idea as to the state of the labour ma...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

Is Numerairology the Future of Monetary Economics? Unbundling numeraire and medium of exchange through a virtual currency and a shadow exchange rate

The paper discusses some fundamental problems in monetary economics associated with the determination and role of the numeraire. The issues are introduced by formalising a proposal, attributed to Eisler, to remove the ze...Read more...

Book

Unemployment: Macroeconomic Performance and the Labour Market

This book aims to provide a basis for better unemployment policy: showing how the lessons learned from experience and theory can be applied to greatly reduce the waste and misery of high unemployment. The book surveys th...Read more...

CEP discussion paper

Designing Target Rules for International Monetary Policy Cooperation

This study analyzes a two-country dynamic general equilibrium model with nominal rigidities, monopolistic competition and producer currency pricing. A quadratic approximation to the utility of the consumers is derived an...Read more...

CEP discussion paper

Inflation, Inequality and Social Conflict

This paper presents a political economy model of inflation as a result of social conflict. Agents are heterogeneous in terms of income. Agents? income levels determine their ability to hedge against the effects of inflat...Read more...

CEP discussion paper

Nominal Wage Rigidity and the Rate of Inflation

Using the accurate and extensive data available in the UK New Earnings Survey, this paper investigates the extent to which nominal wages are downwardly rigid and whether such rigidity interferes with necessary real wage ...Read more...

CEP discussion paper

Monetary Misconceptions

The paper identifies a number of misconceptions about the monetary policy process and the monetary transmission mechanism in the UK. Among the misconceptions about the process are the alleged lack of regional and sectora...Read more...

CEP discussion paper

UK Philips Curves and Monetary Policy

This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy u how policy-mak...Read more...