Rebuilding Macroeconomics
Title: Rebuilding Macroeconomics
Sponsor: National Institute for Economic & Social Research (NIESR)
Description: A research hub co-led between Michael Grubb, Professor of Energy and Climate Change at UCL-ISR, and Dr Tiago Cavalcanti, a macro-economist at the Cambridge Faculty of Economics, with a highly inter-disciplinary advisory group from across these universities plus additional nominees agreed with NIESR.
Our strategic principles.
We believe that a few over-arching principles should define the programme:
- A two-way relationship between macroeconomics and sustainability. We need to understand not solely “how do we achieve a sustainable economy?” but also “how might consideration of sustainability advance understanding of macroeconomics?”. The former cannot be adequately answered without the latter. Relevant to this is the contention that different economic and decision-processes – and hence, associated theories – may dominate at different temporal and social scales, much as physics had to advance beyond Newtonian mechanics to accommodate quantum and relativistic effects at opposite extremes of scale. Sustainability requires us to consider the economics of large-scale social and technological trends over long time horizons.
- Centrality of empirical data. Good theories and models need to accord with evidence, not just to populate assumed structures but to test those structural assumptions in different contexts and scales.
- Significant linkage between the Sustainability hub and other hubs: perhaps most directly the hubs on the macroeconomics of social cooperation, and of the financial system, though others are also clearly relevant. Tackling sustainability implies social cooperation. The financial system raises classic concerns of short-termism, and the instabilities arising, but these are multiplied in the context of sustainability constraints including the physical, transition and liability risks as elucidated by the Financial Stability Board task force on climate change.
- Effective engagement with, but not constrained by, the existing macroeconomic research community. We see this as crucial if the programme is to meet the goal of Rebuilding Macroeconomics, rather than just critiquing it, and our co-leadership embodies this approach: combining the mainstream theoretical and macro-modeling experience of Dr Cavalcanti, with the empirical energy and climate expertise and pluralistic theoretical approaches of ‘multiple domains’ advanced in the book Planetary Economics by Grubb, Hourcade and Neuhoff (2014).
External website: https://www.rebuildingmacroeconomics.ac.uk/
