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Paul Mizen

Professor of Monetary Economics, Faculty of Social Sciences

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Biography

Paul Mizen has been a member of the faculty in the School of Economics at the University of Nottingham since 1992 and is currently Professor of Monetary Economics and Director of the Centre for Finance, Credit and Macroeconomics. He has previously taught at the European University Institute, Florence; Princeton University; and University of Vienna. He has a wide interest in matters related to monetary policy, central banking, financial markets, corporate investment and productivity. Professor Mizen is a consultant to the Bank of England and has been a visitor to the Bank for International Settlements, the European Central Bank, the International Monetary Fund, the U.S. Federal Reserve, and a number of other institutions. He was the inaugural 200th Anniversary Visiting Professor at the Central Bank of Austria in 2016. He is the Chairman of the Money, Macro and Finance Research Group, a Fellow of the Royal Society of Arts, the Academy of Social Sciences and the Office for National Statistics. He is Principal Investigator on the ESRC funded Decision Maker Panel in collaboration with Bank of England and Stanford University and the Management and Expectations Survey projects in collaboration with the Bank of England, ESCoE and ONS. He has published 7 books and more than 120 articles on various aspects of economics. His work has been translated into Chinese, Japanese, Korean and Spanish.

Professor Mizen's complete cv can be downloaded here in pdf format. Paul's Facewall page.

Expertise Summary

Since 1997 I have worked closely with central banks - and particularly with the Bank of England - on monetary policy and monetary transmission addressing all aspects of growth in money and credit aggregates, credit channels of monetary policy, transmission of interest rate changes to the economy, power of policy near the effective lower bound for interest rates, and the effects of unconventional monetary policy.

My current work focuses on business surveys, expectations, uncertainty and productivity I am currently engaged in two major research projects:

Decision Maker Panel. Jointly with the Bank of England and Nick Bloom of Stanford University we aim to gather survey data on economic uncertainty and expectations around major events such as Brexit and Coronavirus (COVID-19). he results have been used extensively by the Bank of England's Monetary Policy Committee including in the official assessment of the Withdrawal Agreement presented to Parliament (Nov 2018).The findings to date have been reported in The Financial Times, The Sunday Times, The Times, The Independent, The Guardian, New York Times, The Economist and the Harvard Business Review.

Management and Expectations Survey. Our novel approach to surveys was embedded in a Management and Expectations Survey in 2017 in collaboration with John Van Reenen and Nick Bloom and the Office for National Statistics. The results of the MES survey were used to inform a 2018 call for evidence by BEIS and HM Treasury relating to the British Productivity Review. Data on UK productivity have been shared with the Industrial Strategy Council Chair, Andrew Haldane. The ESRC has awarded £1,102,171 in 2019 to conduct a second wave and enable analysis of the results.

I have been consulted as an expert by the United Nations, the Bank for International Settlements, the International Monetary Fund, the European Central Bank, and the UK Government Departments - HM Treasury, Business Energy and Industrial Strategy (BEIS).

Research Summary

Professor Mizen is Director of the Centre for Finance and Credit, and Macroeconomics (CFCM)

2019 - Fellow, Academy of Social Sciences

2019 Visiting Professor, Department of Economics, Stanford University

2018 - Fellow, Office for National Statistics & Member, Economic Experts Working Group

2017 - Research Associate, Economic Statistics Centre of Excellence

2016 Inaugural Austrian National Bank (OeNB) Visiting Professor at the University of Vienna

2015 - Consultant, Bank of England.

2011 - 2017 Visiting Advisor, Bank for International Settlements

2010 Visiting Professor, Department of Economics, Princeton University

2002 - 2003 Jean Monnet Fellow, Robert Schuman Centre for Advanced Studies, European University Institute, Florence, Italy

2001 Visiting Professor, European University Institute, Florence, Italy

1997 - 2000 Consultant, Bank of England.

1996 - 2000 Member, Centre for Economic Policy Research (CEPR) 'New Scholars' Programme

Economic and Social Research Council

2019- Member, ESRC Grant Assessment Board

2018-19 Member, ESRC Centres Competition Commissioning Panel

2011 - 2013 Member and Vice-Chair - ESRC Future Research Leaders Scheme Commissioning Panel and Member and Vice-Chair - ESRC Future Research Leaders Scheme Sift Panel

2010 - Member, ESRC/HMTreasury Postdoctoral Research Fellowships Commissioning Panel.

2010 - Member, Steering group, MMF Current Issues in Macroeconomic Policy

2009 - 10 Member, ESRC Macroeconomics Capacity Building Strategy Steering Group and Assessment Panel.

Money Macro and Finance Society

2019 - Trustee, Money Macro and Finance Society

2016 - Chairman, Money Macro and Finance Society

2011-2016 Treasurer, Money Macro and Finance Society

1996 - Member of Committee, Money, Macro and Finance Research Group.

Selected Publications

Past Research

Corporate finance and monetary policy.

Monetary economics has recognised the importance of accounting for heterogeneity of agents in models of monetary policy. In particular, when considering the effects of monetary policy through credit channels there can be substantial differences of policy for firms with different characteristics. I find that firms' access to bank and market finance when allowance is made for differences in firm-specific characteristics can result in greater (or lesser) tightening of credit when interest rates increase. An empirical evaluation of the predictions of the model is conducted on a large panel of UK manufacturing firms. We confirm that small, young and risky firms are more significantly affected by tight monetary conditions than large, old and secure firms. I have also considered other forms of finance besides bank finance.

Trade credit.

My work investigates the role of trade credit in the transmission of monetary policy. Most models of the transmission mechanism allow firms to access only financial markets or bank lending according to some net worth criterion. In my research I consider external finance from trade credit as an additional source of funding for firms that cannot obtain credit from banks. I predict that when monetary policy tightens there will be a reduction in bank lending relative to trade credit. When I separate small firms from medium and large firms, and compare the responses over tight and loose monetary policy I find that it is the small (financially weaker firms) that are excluded from bank loans and these firms resort to trade credit. This is the case even when I take into account the effects of solvency, age, credit rating, sales and demand side effects.

Bond finance.

I hypothesize that balance sheet indicators of creditworthiness could affect the external finance premium for bonds as they do for premia in for example loan markets. I find that during the period 1995-2005, among US firms issuing bonds, firms with better financial health, as measured by balance sheet indicators, face a lower external finance premium than other firms, but after separating firms into constrained and unconstrained categories using three different classification schemes I find no significant differences in premia. In another paper I examine whether firms are more likely to use bonds to finance their activities if they have reputation from strong balance sheets, a good loan history and private bond issuance. I find that reputation acquired in the public bond market makes firms 50% more likely to issue bonds.

Interest rate pass through by financial institutions.

Official interest rate changes should influence short rates on money market instruments and retail products, such as deposit accounts and mortgages, but complete pass-through is often taken for granted. My work provides a theoretical and econometric framework for assessing the evidence for this assumption using seventeen years of monthly data for rates on thirteen deposit and mortgage products offered by individual UK financial institutions. The methodology allows for asymmetries and non-linearities in adjustment and the results show that the speed of adjustment in retail rates depends on whether the perceived 'gap' between retail and base rates is widening or narrowing. Further work considers how financial institutions consider future official interest rates when setting retail rates. This work finds that future rates are very important in the determination of retail rate changes.

Monetary policy when interest rates are near zero.

My work offers a new approach that estimates the response of interest rates to inflation and the output gap at various points (quantiles) on the conditional distribution of interest rates. This offers an improvement on empirical estimates conducted only at the mean and also allows us to test the propositions that policy shows greater aggression to inflation in the reaction function in terms of a greater response coefficient as interest rates reach low levels, and increasing aggression as the lower bound is approached. We find support for the Taylor principle, a more aggressive response to inflation than under a Taylor rule, but no detectable evidence of increasing aggression as the zero lower bound is approached in the US and Japan. Due to the proximity of a zero lower bound (ZLB) on interest rates, coefficient estimates can be biased upwards. In further work on Japanese data I show the importance of measuring and correcting estimates for this bias using Japan's unique experience of prolonged low inflation/deflation.

International transmission through credit channels.

My recent work on credit channels explores whether firms that have access to international markets face different constraints when a financial crisis imposes a credit crunch. In two papers I consider firms that export and have pledgable collateral that is valuable to international lenders versus firms that have only domestic assets. The exporters ride out credit crunches more easily that firms with no hard currency assets to pledge. We confirm these findings using Korean firm level data around the Asian crisis and in a paper focused on Brazil when the real devalued in 1999.

Future Research

My current work focuses on surveys of real activity and productivity I am currently engaged in two major research projects:

Decision Maker Panel. Jointly with the Bank of England and Nick Bloom of Stanford University we aim to gather survey data on economic uncertainty and expectations around major events such as Brexit and Coronavirus (COVID-19). I head up a 50 strong team of researchers supported by the ESRC. and other contributing institutions with a £1.3m grant. The survey has been extensively referenced in the minutes of the Bank of England's Monetary Policy Committee, Inflation Report, Quarterly Bulletin, and reports to the Treasury Select Committee in Parliament. The results have been used extensively by the Bank of England's Monetary Policy Committee including in the official assessment of the Withdrawal Agreement presented to Parliament (Nov 2018).The findings to date have been reported in The Financial Times, The Sunday Times, The Times, The Independent, The Guardian and the Harvard Business Review.

Management and Expectations Survey. Our novel approach to surveys was embedded in a Management and Expectations Survey in 2017 in collaboration with John van Reenen and Nick Bloom and the Office for National Statistics. The results of the MES survey were used to inform a 2018 call for evidence by BEIS and HM Treasury relating to the British Productivity Review. Data on UK productivity have been shared with the Industrial Strategy Council Chair, Andrew Haldane. The ESRC has awarded £1,102,171 in 2019 to conduct a second wave and enable analysis of the results. Evidence suggests that firms that make greater use of management practices are more productive than firms that do not. More details can be found in a summary report here.

Office for National Statistics

ONS Fellow and member of the Economic Experts Working Group (six meetings per year) offering wide-ranging review at an operational level of the improvements to Blue Book 2019, missing capitals, price indices, time use surveys, faster indicators from digital data etc. working with various ONS units to deliver economic statistics research Research Associate, Economic Statistics Centre of Excellence Co-Principal Investigator joint ONS-ESCoE research grant.(ESRC £1.1m).

Bank of England

I am currently engaged in a major research project with the Bank of England and Nick Bloom of Stanford University on economic uncertainty and Brexit (the Decision Maker Panel). The project has recruited over 8,000 firms and recruited by a 120 strong team of researchers supported by £1.3m from various sources including the ESRC, the Bank of England, the University of Nottingham and Stanford University. The results show that greater economic uncertainty has subdued investment in the UK particularly among the most productive of UK firms. The results have been used extensively by the Bank of England's Monetary Policy Committee including in speeches, official publications and their assessment of the Withdrawal Agreement presented to Parliament (Nov 2018). The findings to date have been reported in The Financial Times, Wall Street Journal, Fortune, The Sunday Times, The Times, The Independent, The Telegraph, The Guardian, The Economist and Harvard Business Review. Further information is available on the DMP website www.decisionmakerpanel.co.uk .

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