Objective 1:
Understand how the UK can position itself in the global network of trade and capital flows. Fundamental research is needed on what to expect from fluctuations in the exchange rate, on the proclivity to 'sudden stops' as a result of the large gross capital flows in and out of the UK, on the transmission of external shocks to the domestic economy, and on how policy must adapt to the volatility inherent in the transition process out of the European Union. The UK's challenges are specific and unique, given its size, proximity to a much larger trading partner, and role as a leading financial centre.
Objective 2:
Maintain and enhance the CFM's status as a world's leading centre for research on inequality in macroeconomic dynamics. The goals are to expand further research on the diversity of production networks, on how inequality feeds into the business cycles, and on how policies have new transmission mechanisms through the income and wealth distributions, together with an effort to develop benchmark models that spread into teaching curricula and are applied to a wider set of research questions.
Objective 3:
Understand how the related forces of automation, population ageing, trends in leisure, and concentration of economic activity will interact to pose unique challenges to the macroeconomy. Our research will highlight the macroeconomics of each of these topics, which are often studied at the micro level but which tend to miss out on the interlinkages that lead to a significant aggregate impact.
Objective 4:
Dig deep into the causes of stagnant productivity in the UK and elsewhere, understanding how the world income distributions will change, and explaining how to make growth inclusive with shared gains among different groups in the population. Our members include leading researchers and past policy-makers who will reflect on the desirable features of the new global financial architecture, and how to reshape the roles and competences of UK economic policy institutions. The central goal is to understand the design of the institutions of the future.
Objective 5:
Understand how to make the trade-off between the desire for redistribution and the role of social welfare programmes in the business cycle with the large and long maturity UK public debt. Choices of household mortgage debt interact with the choices regarding public debt and simultaneously affect macroeconomic stability. We aim to collect new data, apply new methods, and rethink fiscal policy well beyond current debates about austerity.
Objective 6:
Redefine the role of central banks after the financial crisis, considering the lessons from the past decade and the emergence of digital currencies and active macro prudential regulation. We aim to generate research that influences the active debates today on designing the central bank of the future.
Objective 7:
Complementary to these six objectives is a seventh objective that involves radical changes in the methods and traditions of macroeconomics. This requires developing and adopting tools from data science, creating new numerical tools to solve models, integrating micro data and macroeconomic models, exploring alternative models of expectations, and introducing new approaches to reliably identify economic mechanisms. We further aim to bring to the mainstream the radical approaches that survive scrutiny and debate.