Our objective is to engage in world-leading innovative research that extends the frontiers of the discipline, enhancing our understanding of the operation of modern economies and their interrelationships with the broader society. We seek to have impact by informing and improving the design and the implementation of economic and public policy in the UK and world-wide. 

We are one of the largest groups of academic economists in Europe and this is reflected in the diversity of our research. We seek to maintain world-class expertise in the core discipline areas of microeconomics, macroeconomics and econometrics, while building clusters of research strength in more specialists subfields – notably applied microeconomics; behavioural economics and game theory; economic history; development economics.

In the 2014 Research Excellence Framework to evaluate the research output of UK Universities, Oxford was first for overall research strength in Economics and Econometrics, with more research ranked as ‘world-leading’ than any other participating institution. In a submission of 84 FTE academics, 56% of our research was rated as ‘world-leading’ (4*) and a further 33% rated as ‘internationally excellent’ (3*).

The recent Tilburg University ranking of Economics departments based on research contribution between 2015-2019, placed Oxford 11th in the world and 2nd in Europe.

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Policy and Impact

As one of Europe’s leading Economics departments, Oxford aims to inform and improve the development and implementation of economic and public policy in the UK and around the world. We do this by producing innovative research that extends the frontiers of the discipline and deepens our understanding of the operation of modern economies.

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Working Papers

Authors: Seán Kenny, Jason Lennard and Kevin Hjortshøj O’Rourke

Oct 2020

We construct an annual index of Irish industrial output for 1800-1921, the period during which the entire island was in a political Union with Great Britain. We also construct a new industrial price index. Irish industrial output grew by an average of 1.4 per cent per annum over the period as a whole, and by 1.8 per cent per annum between 1800 and the outbreak of World War I. Industrial growth was more rapid than previously thought before the Famine, and slower afterwards. While Ireland did not experience deindustrialization either before the Famine or afterwards, its industrial growth was disappointing when considered in a comparative perspective.

JEL Codes: E01, N13, N14

Keywords: Ireland, Industrial production, Famine, Historical national

Individual View

Authors: Jemima Peppel-Srebrny

Oct 2020

We find that bond markets charge significantly higher interest rates for deficits due to higher government current spending than for deficits due to higher government investment. Thus, from a sovereign risk perspective, not all government budget deficits are created equal. To show this, we use a panel regression approach on European Commission data for 31 advanced economies from 1990 onwards. Econometrically, we address potential endogeneity by using forecasts of fiscal variables and by instrumental variable methods. Based on our preferred specifications, a higher deficit solely due to higher government investment would in fact decrease long-term government bond yields. These findings suggest that the policy debate about fiscal sustainability and fiscal rules should, at the very least, distinguish budget deficits that are the result of investment from those that are not.

Revised September 2020

JEL Codes: E44, E62, H54, H62

Keywords: Government budget deficits, government investment, fiscal policy, long-term interest rates, OECD countries

Individual View

Authors: Howard Smith, Walter Beckert, Yuya Takahashi

Oct 2020

In many markets the buyer pays an individually-negotiated price. Theo­retically, relative to uniform-pricing, this has an ambiguous impact on market power and the effects of merger. To analyze competition in the UK brick industry—where individually-negotiated pricing is used, and the market is highly concentrated—we develop a model of negotiated pricing and discrete-choice demand which permits alternative specifications for how the buyer's runner-up product affects price negotiations. We derive a likelihood for observed choices and prices and estimate the model using transaction-level data. We use the model to re­ject the hypothesis of price-taking buyers, calculate the distribution of markups, and measure the effect on markups of multi-product ownership and buyer loca­tion. A counterfactual policy of uniform pricing increases average markups by about one-third, harms most buyers, and magnifies the price-increasing effect of merger. Average markups increase because uniform pricing is intrinsically less competitive and because it imposes buyer price-taking.

Keywords: individualized pricing, bargaining, price discrimination, spatial dif¬ferentiation, merger analysis, construction supplies

Individual View

Authors: Willemien Kets, Alvaro Sandroni

Oct 2020

We identify a new mechanism through which cultural diversity affects economic out­comes, based on a model of culture as shared cognition. Under this view, cultural diversity matters because it increases strategic uncertainty. The model can help better understand a variety of disparate evidence, including why homogeneous societies can be more con­formist, why diverse societies may get stuck in a low-trust trap, why companies with a strong culture may fail to adopt superior work practices, and why autocratic rulers in diverse societies may overinvest in state capacity.

Individual View

Authors: David S. Jacks, Kevin Hjortshøj O’Rourke, Alan M. Taylor

Oct 2020

We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that gravity exerted its pull as early as 1700, but the distance effect then attenuated and had almost vanished by 1800. Meanwhile the empire effect peaked sometime in the late 18th century before significantly declining in value. It was only after 1950 that distance would once again exert the same influence that it has today.

JEL Codes: F1, N7

Keywords: Distance, empire, gravity

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