Gregory Thwaites

I am an Associate Professor in Economics at the University of Nottingham, a Research Director at the Resolution Foundation and the Business Manager of the Review of Economic Studies. I am on sabbatical from the Bank of England, where my most recent job was as Head of International Research. I am a visiting fellow at the LSE Centre for Macroeconomics. I have also worked as an economist for the United Nations Mission in Kosovo and the Independent Commission on Banking (the ‘Vickers Commission’), inter alia.

My two main current projects are:

  • The Economy 2030 Inquiry, a collaboration between the Resolution Foundation and LSE to chart a new course for economic policy in the UK

  • The Decision Maker Panel, a collaboration between Stanford and Nottingham Universities to measure and understand how Covid and Brexit, inter alia, are impacting the UK economy

In 2015 I received my PhD in economics from LSE under the supervision of Silvana Tenreyro. I have broad theoretical and empirical research interests in the macroeconomics of demographic and structural change, firm-level data, macroeconomic policy and inequality and distribution. As well as teaching Monetary Theory and Practice at the University of Nottingham, I have taught macroeconomics at Cambridge (final-year undergraduate supervisions), international finance at LSE (PhD field course lectures), and several substantial technical assistance programmes in the Kosovo Ministry of Economy and Finance and the Bank of England's Centre for Central Banking Studies.

I am an experienced TV and radio interviewee on current economic affairs, on programmes for both general and specialist audiences. Here's an example. If you would like to book me in, please email me at the addresses below or contact the comms teams at the Resolution Foundation or the University of Nottingham.

My email addresses are gregorythwaites 'at' and gregory.thwaites 'at'

Google Scholar // Twitter // LinkedIn // Vox EU posts // Blogs and papers at the Resolution Foundation

Working papers

'Firming Up Price Inflation' BoE WP 993, August 2022 (with Philip Bunn, Lena Anayi, Nicholas Bloom, Paul Mizen and Ivan Yotzov) (also NBER WP 30505 Oct 2022) (Vox EU)

Abstract: We use data from a large panel survey of UK firms to analyze the economic drivers of price setting since the start of the Covid pandemic. Inflation responded asymmetrically to movements in demand. This helps to explain why inflation did not fall much during the negative initial pandemic demand shock. Energy prices and shortages of labor and materials account for most of the rise during the rebound. Inflation rates across firms have become more dispersed and skewed since the start of the pandemic. We find that average price inflation is positively correlated with the dispersion and skewness of the distribution. Finally, we also introduce a novel measure of subjective inflation uncertainty within firms and show how this has increased during the pandemic, continuing to rise in 2022 even as sales uncertainty dropped back.

'Covid-19 Uncertainty: A Tale of Two Tails' Becker Friedman Institute Working Paper 2021-135, November 2021 (with Philip Bunn, David Altig, Lena Anayi, Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent Meyer, Emil Mihaylov and Paul Mizen) (Non-technical summary) (Vox EU)

Abstract: Uncertainty about own-firm sales growth rates over the year ahead roughly doubled in reaction to the COVID shock, according to our surveys of U.S. and U.K. business executives. Firm-level uncertainty receded after spring 2020 but remains much higher than pre-COVID levels. Moreover, the nature of firm-level uncertainty has shifted greatly since the pandemic struck: Initially, business executives perceived an enormous increase in downside uncertainty, which has now dissipated. As of October 2021, almost all of the extra firm-level uncertainty is to the upside. In short, economic uncertainty associated with the pandemic has morphed from a tale of the lower tail into a tale about the upper tail.

'The Impact of Brexit on UK Firms' SIEPR WP 19-019, August 2019 (with Nick Bloom, Philip Bunn, Scarlet Chen, Paul Mizen and Pawel Smietanka) (Bank of England WP 818) (Financial Times) (Economist) (Vox EU)

Abstract: We use a major new survey of UK firms, the Decision Maker Panel, to assess the impact of the June 2016 Brexit referendum. We identify three key results. First, the UK’s decision to leave the EU has generated a large, broad and long-lasting increase in uncertainty. Second, anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years following the June 2016 vote. This fall in investment took longer to occur than predicted at the time of the referendum, suggesting that the size and persistence of this uncertainty may have delayed firms’ response to the Brexit vote. Finally, the Brexit process is estimated to have reduced UK productivity by between 2% and 5% over the three years after the referendum. Much of this drop is from negative within-firm effects, in part because firms are committing several hours per week of top-management time to Brexit planning. We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, firms have been more negatively impacted than less productive domestic firms.

'The balance of power: monopsony, unions and wages in the United Kingdom' CFM WP 2018-27 (with Will Abel and Silvana Tenreyro - updated version of 'Monopsony in the UK (2018)) (VoxEU post) (Economist article)

Abstract: We document the evolution of monopsony power in the UK private sector labour market from 1998-2018, how labour unions have counterbalanced this power, and the net effect on wages. Using linked employee-firm micro-data, we find that: (1) Measures of labour market concentration have not exhibited a time trend over the time period examined. (2) There is substantial cross-sectional variation in monopsony at the industry level. (3) Higher levels of labour market concentration are associated with lower pay amongst workers not covered by a collective bargaining agreement. (4) For workers covered by a collective bargaining agreement, the association between labour market concentration and pay disappears. (5) The effects of concentration and union coverage are generally larger for lower-paid workers, and workers in tradable industries. (6) Collective bargaining agreements weaken the impact of workers’ outside options in other labour markets, which nonetheless remain strong.

'Towards a new monetary theory of exchange rate determination' Bank of England WP 817 (with Ambrogio Cesa-Bianchi, Michael Kumhof and Andrej Sokol )

Abstract: We study exchange rate determination in a 2-country model where domestic banks create each economy’s supply of domestic and foreign currency. The model combines the UIP-based and monetary theories of exchange rate determination, but the latter with a focus on private rather than public money creation. The model features an endogenous monetary spread or excess return in the UIP condition. This spread experiences sizeable changes when shocks affect the relative supplies (of bank loans) or demands (for bank deposits) of the two currencies. Under such shocks, monetary effects dominate traditional UIP effects in the determination of exchange rates and allocations, and this becomes stronger as domestic and foreign currencies become more imperfect substitutes. With these shocks, the model successfully addresses the UIP puzzle, and it is also consistent with the Meese-Rogoff and PPP puzzles.

Research published in economics and finance journals

'The Impact of Covid-19 on Productivity', Review of Economics and Statistics (forthcoming), with Nick Bloom, Philip Bunn, Paul Mizen and Pawel Smietanka (NBER version revised July 2022) (Vox EU)

Abstract: We analyze the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted senior management time spent on dealing with the pandemic.

'Will Brexit Age Well? Cohorts, Seasoning and the Age-Leave Gradient, Past, Present and Future' Economica, August 2021 (with Barry Eichengreen and Rebecca Mari), (previously NBER WP 25219) (VoxEU post) (FT article)

Abstract: In the UK’s 2016 referendum on EU membership, young voters were more likely than their elders to vote Remain. Applying new methods to a half century of data, we show that this pattern reflects both ageing and cohort effects. Although voters become more Eurosceptic as they age, recent cohorts are also more pro-European than their predecessors. Much of the pro-Europeanism of these recent cohorts is accounted for by their greater years of education. Going forward, the ageing of the electorate will thus be offset at least in part by the replacement of older cohorts with younger, better-educated and more pro-European ones. But we also document large nationwide swings in sentiment that have little to do with either seasoning or cohort effects. Hence these demographic trends are unlikely to be the decisive determinants of future changes in European sentiment. Rather, nationwide changes in sentiment, reflecting macroeconomic or other conditions, and the age-turnout gradient will be key.

'Economic Uncertainty Before and During the COVID-19 Pandemic' Journal of Public Economics, August 2020, with David Altig, Scott R. Baker, Jose Maria Barrero, Nicholas Bloom, Philip Bunn, Scarlet Chen, Steven J. Davis, Julia Leather, Brent H. Meyer, Emil Mihaylov, Paul Mizen, Nicholas B. Parker, Thomas Renault and Pawel Smietanka) (NBER WP27418 version)

Abstract: We consider several economic uncertainty indicators for the US and UK before and during the COVID-19 pandemic: implied stock market volatility, newspaper-based economic policy uncertainty, twitter chatter about economic uncertainty, subjective uncertainty about future business growth, and disagreement among professional forecasters about future GDP growth. Three results emerge. First, all indicators show huge uncertainty jumps in reaction to the pandemic and its economic fallout. Indeed, most indicators reach their highest values on record. Second, peak amplitudes differ greatly – from a rise of around 100% (relative to January 2020) in two-year implied volatility on the S&P 500 and subjective uncertainty around year-ahead sales for UK firms to a 20-fold rise in forecaster disagreement about UK growth. Third, time paths also differ: Implied volatility rose rapidly from late February, peaked in mid-March, and fell back by late March as stock prices began to recover. In contrast, broader measures of uncertainty peaked later and then plateaued, as job losses mounted, highlighting the difference in uncertainty measures between Wall Street and Main Street.

Monetary Policy Transmission in an Open Economy: New Data and Evidence from the United KingdomEuropean Economic Review Volume 123, April 2020, (with Ambrogio Cesa-Bianchi and Alejandro Vicondoa) (Bank of England Staff Working Paper version)

Abstract: This paper constructs a new series of monetary policy surprises for the United Kingdom and estimates their effects on macroeconomic and financial variables, employing a high-frequency identification procedure. First, using local projections methods, we find that monetary policy has persistent effects on real interest rates and breakeven inflation. Second, employing our series of surprises as an instrument in a SVAR, we show that monetary policy affects economic activity, prices, the exchange rate, exports and imports. Finally, we implement a test of overidentifying restrictions, which exploits the availability of the narrative series of monetary policy shocks computed by Cloyne and Huertgen (2014), and find no evidence that either set of shocks contains any endogenous response to macroeconomic variables.

Foreign booms, domestic busts: the global dimension of banking crises’, Journal of Financial Intermediation (2019) (with Ambrogio Cesa-Bianchi and Fernando Eguren Martin) (BU post)

Abstract: This paper provides novel empirical evidence showing that foreign financial developments are a powerful predictor of domestic banking crises. Using a new data set for 38 advanced and emerging economies over 1970–2011, we show that credit growth in the rest of the world has a large positive effect on the probability of banking crises taking place at home, even when controlling for domestic credit growth. Our results suggest that this effect is larger for financially open economies, and is consistent with transmission via cross-border capital flows and market sentiment. Direct contagion from foreign crises plays an important role, but does not account for the whole effect. (earlier version available as Bank of England Staff Working Paper no. 644, January 2017)

The banks that said no: banking relationships, credit supply and productivity in the United KingdomJournal of Financial Services Research (2019) (with Jeremy Franklin and May Rostom), (BU post)

Abstract: This paper uses a large firm-level data set of UK companies and information on their pre-crisis lending relationships to identify the causal links from changes in credit supply to the real economy following the 2008 financial crisis. Controlling for demand in the product market, we find that the contraction in credit supply reduced labour productivity, wages and the capital intensity of production at the firm level. Firms experiencing adverse credit shocks were also more likely to fail, other things equal. We find that these effects are robust, statistically significant and economically large, but only when instruments based on pre-crisis banking relationships are used. We show that banking relationships were conditionally randomly assigned and were strong predictors of credit supply, such that any bias in our estimates is likely to be small. (Earlier version available as Bank of England staff paper no. 557, October 2015)

Step away from the zero lower bound: small open economies in a world of secular stagnationJournal of International Economics (2018) (with Giancarlo Corsetti, Eleonora Mavroeidi and Martin Wolf)

Abstract: We study how small open economies can escape from deflation and unemployment in a situation where the world economy is permanently depressed. Building on the framework of Eggertsson et al. (2016), we show that the transition to full employment and at-target inflation requires real and nominal depreciation of the exchange rate. However, because of adverse income and valuation effects from real depreciation, the escape has a beggar-thy-self effect, that may end up lowering welfare while eliminating underemployment. We show that as long as the economy remains financially open, domestic asset supply policies or reducing the effective lower bound on policy rates may be ineffective or even counterproductive. However, closing domestic capital markets does not necessarily enhance the monetary authorities' ability to rescue the economy from stagnation. (Previously published as Bank of England Staff Working Paper no. 666, July 2017)

Pushing on a String: US Monetary Policy is Less Powerful in Recessions, American Economic Journal: Macroeconomics Vol. 8 No. 4, October 2016 (with Silvana Tenreyro) (Vox EU post) (Data Set)

Abstract: We investigate how the response of the US economy to monetary policy shocks depends on the state of the business cycle. The effects of monetary policy are less powerful in recessions, especially for durables expenditure and business investment. The asymmetry relates to how fast the economy is growing, rather than to the level of resource utilization. There is some evidence that fiscal policy has counteracted monetary policy in recessions but reinforced it in booms. We also find evidence that contractionary policy shocks are more powerful than expansionary shocks, but contractionary shocks have not been more common in booms. So this asymmetry cannot explain our main finding.

Research published in policy journals

Demographic trends and the real interest rateInternational Journal of Central Banking, June 2021, (with Noemie Lisack and Rana Sajedi) (BU post, Banque de France bulletin (in French), Economist magazine)

Abstract: We quantify the impact of past and future global demographic change on real interest rates, house prices and household debt in an overlapping generations model. Falling birth and death rates can explain a large part of the fall in world real interest rates and the rise in house prices and household debt since the 1980s. These trends will persist as the share of the population in the high-wealth 50+ age bracket continues to rise. As the United States ages relatively slowly, its net foreign liability position will grow. The availability of housing and debt as alternative stores of value attenuates these trends. The increasing monopolisation of the economy has ambiguous effects.

'Brexit and Uncertainty: Insights from the Decision Maker Panel' Fiscal Studies (2018) Vol. 39, Issue 4, p555-580 (with Nick Bloom, Phil Bunn, Scarlet Chen, Paul Mizen, Pawel Smietanka and Garry Young) (Bank of England Staff Working Paper 780) (Economist article) (Harvard Business Review article)

Abstract: The UK's decision to leave the EU in the 2016 referendum created substantial uncertainty for UK businesses. The nature of this uncertainty is different from that of a typical uncertainty shock because of its length, breadth and political complexity. Consequently, a new firm‐level survey, the Decision Maker Panel (DMP), was created to investigate this, finding three key results. First, Brexit was reported to be one of the top three sources of uncertainty for around 40 per cent of UK businesses in the two years after the vote in the June 2016 referendum, and this proportion increased further in Autumn 2018. Hence, Brexit provided both a major and persistent uncertainty shock. Second, uncertainty has been higher in industries that are more dependent on trade with the EU and on EU migrant labour. Third, the uncertainties around Brexit are primarily about the impact on businesses over the longer term rather than shorter term, including uncertainty about the timing of any transition arrangements and around the nature of Brexit.

Why Are Real Interest Rates So Low? The Role of the Relative Price of Investment Goods, IMF Economic Review (2016) (with Rana Sajedi) (Larry Summers' blog)

Abstract: Across the industrialised world, real interest rates and nominal investment rates have fallen, while house prices and household debt ratios have risen. We present a calibrated OLG model which quantifies how much of these four trends can be explained with a fifth—the widespread fall in the relative price of investment goods. Relative to other explanations for low real interest rates, this trend is important because it can also account for the fall in nominal investment rates. The model can reproduce a small but economically significant part of the observed fall in interest rates and rises in house prices and household debt, and a larger part of the fall in the investment rate. (Working paper version)

Work in progress

‘Old dogs and new tricks: workforce aging and the global slowdown in TFP’ with Gee Hee Hong

'Willing and Able: Inequalities and the growth of remote work' with Gianni De Fraja, Jesse Matheson, Paul Mizen, James Rockey and Shivani Taneja

Projects on hold

‘The public channel of monetary policy’ with Andrea Alati and Silvana Tenreyro

Older working papers and published policy work (not an exhaustive list)

'Influences on investment by UK businesses: evidence from the Decision Maker Panel' (2021), Bank of England Quarterly Bulletin 2021Q2 (with Lena Anayi, Nick Bloom, Philip Bunn, Paul Mizen and Myrto Oikonomou)

'Tracking the views of British businesses: evidence from the Decision Maker Panel' (2017), Bank of England Quarterly Bulletin 2017Q2 (with Nick Bloom, Philip Bunn, Paul Mizen, Pawel Smietanka and Garry Young)

Independent Commission on Banking: Final Report

Independent Commission on Banking: Interim Report

‘The future of international capital flows’ (2011), (with Will Speller and Michelle Wright), Bank of England FS paper no. 12, featured in VoxEU and Gillian Tett’s FT column

‘Efficient frameworks for sovereign borrowing’ (2008), (with Gregor Irwin), Bank of England working paper no. 343

‘Optimal emerging-market fiscal policy when trend output growth is unobserved’ (2006), Bank of England working paper no. 308

‘Fiscal rules for debt sustainability in emerging markets – the impact of volatility and default risk’ (2006), (with Adrian Penalver), Bank of England working paper no. 307

‘Real world mortgages, consumption volatility and the low inflation environment’ (2005), (with Sebastian Barnes), Bank of England working paper no. 273

‘The Measurement of House Prices’ (2003) (with Rob Wood) Bank of England QB, Spring 2003

'The Effect of Automatic Stabilisers on UK Business Cycles' (with Marco Graziano and James Smith)

Other Bank Underground

Does domestic uncertainty really matter for the economy?

Voting with their wallets? Consumer expectations after the EU referendum

Teaching and technical assistance

  • In 2020-1 and 2021-2 I taught Monetary Theory and Practice to Nottingham MSc students. Due to my research funding commitments, Dr Garry Young will teach this course in 2022-3.

  • Throughout 2020 I worked on a capacity-building project in applied macroeconomics and public finance with the Kosovo Ministry of Finance, funded by USAID. This project was renewed for 2021-2 and 2022-3.

  • In late 2020 I conducted some technical assistance on monetary policy analysis for the National Bank of Ukraine.

  • In May and June 2020 I co-led a series of workshops on the economics of Covid-19 for central bankers in low- and middle-income countries, working in partnership with the Bank of England’s Centre for Central Banking Studies and DfID. The programme is here. The CCBS will share the materials with other central banks. Please email them at this address if you are interested.

  • In 2018 I delivered technical assistance to the Kosovo Ministry of Finance, in partnership with LuxDev .

  • In 2017 and 2018 I taught part of the PhD field course in International Finance at LSE, focusing on the international phenomenon of very low interest rates.


M.A. Economics, 2000, King’s College, Cambridge

M.Sc Economics, 2001, University College London

PhD Economics, 2015, London School of Economics