Over AUD1 million awarded to economics and accounting research

Congratulations to our 2020 ARC grant winners

We are pleased to announce that 7 researchers from the Faculty of Business and Economics have secured over $1million in Australian Research Council funding, 7 research projects in economics and 1 in accounting in the recent awards rounds for 2020. These are major outcomes for the University, signalling a strong need for leading research in these fields.

The following five ARC Discovery Projects will be led by researchers from the University of Melbourne

Associate Professor Mei Dong
Chief Investigator for Banking System Competition and the Macro-economy DP210101688

Australia has one of the most concentrated banking sectors in the world, generating concerns regarding its efficiency. Associate Professor Dong and her co-authors, Dr Stella Huangfu (The University of Sydney), Associate Professor Timothy Kam (The Australian National University), Professor Allen Head and Associate Professor Hongfei Sun (both Queen’s University, Kingston) aim to develop unified frameworks to understand and evaluate quantitatively how the structure of the banking industry affects the macro-economy and provide policy recommendations for establishing a healthy and efficient banking industry.

In 2017, the top five banks possessed nearly 94 per cent of total bank assets. The lack of competition in the banking sector has raised serious concerns that the inefficiency in the financial system may reduce Australia’s economic growth and long-term living standards. The project will provide long- and short-run perspectives on how the structure of and frictions within the banking industry affect the Australian economy to derive policy implications, including how monetary and macro prudential policies could enhance aggregate welfare by establishing a stable and efficient banking sector in Australia. With their findings, the team aim to strengthen the international competitiveness of Australia’s financial system and the broader economy.

Professor Chris Edmond
Chief Investigator for Skills, productivity, and wages: Theory and evidence DP210102782

In recent years, Australia has experienced a pronounced slowdown in both the growth of real wages and in productivity itself. Not only has productivity growth fallen, but real wage growth has fallen even further, resulting in an ‘excess slowdown’ in real wage growth. This project will help address the slowdown in real wage growth by addressing the productivity slowdown, as well asthe extent to which changes in productivity pass through to real wages. Professor Chris Edmond and his co-author, Assistant Professor  Simon Mongey from the University of Chicago, USA, will create a better understanding of the links between skills, wages earned, and productivity both at the level of individual firms and at the level of the Australian economy overall, by building a macroeconomic model to help understand the implications of heterogeneity in workers’ skills for wages and productivity.

Professor Nisvan Erkal
Chief Investigator for Economics of Biased Beliefs: Implications for Diversity Gaps in Workplaces DP210102183

In this project, Professor Nisvan Erkal, with co-Chief Investigator Professor Lata Gangadharan from Monash University and partner investigator and FBE alum Dr Boon Han Koh aim to improve our understanding of the factors contributing to diversity gaps in labour market outcomes in Australia, focusing on women and Asian-Australians. While there is growing recognition that greater diversity in key decision-making roles can better position organisations to respond and prosper in a competitive global market, differences in labour market outcomes, such as financial compensation and leadership, continue to exist along gender and ethnic lines in Australia. They will also evaluate possible interventions that reduce the biases in performance evaluation to inform policies targeted at increasing female and minority representation in decision-making roles across all levels of society within Australia. The insights gained will enhance Australia’s economic performance by improving workplace diversity and dynamics.

Professor Bruce Preston
Chief Investigator for Economic policy when interest rates are zero DP210101204

Dr Christopher Gibbs (Co-Chief Investigator, The University of Sydney) and Professor Stefano Eusepi (Partner Investigator, The University of Texas at Austin) join Professor Preston on this project to study economic policy when interest rates are zero. The co-authors will provide concrete policy recommendations to tackle real-world policy problems that confront Australia now. Since the 1980s, Australian interest rates have moved progressively lower. Market and Reserve Bank economists predict rates will stay low for years to come. Because central banks cannot further lower interest rates to stimulate the economy, questions arise about how to achieve inflation targets and raise aggregate demand in the case of recession. This work builds new knowledge about how to conduct economic policy in this environment, including the use of unconventional monetary policy and fiscal policy. They will analyse the different experiences with new policies in the US, EU, and Japan to learn what initiatives have worked. Their deep connections with domestic policy institutions uniquely place them to recommend policy to promote the welfare of Australians in an era of zero interest rates.

Chief Investigator for Distorted beliefs and asset price disconnect puzzles DP210103427

For this project, Professor Preston is again joined by Professor Stefano Eusepi, where they aim to delivery significant economic research and policy benefits. Booms and busts in asset markets generate large wealth effects and can have broad ranging implications for households. Yet standard models used by academics and Australian policymakers struggle to explain asset price movements and their macroeconomic effects, substantially limiting the usefulness for policy. We provide theory and evidence for a new framework that remedies the defects of standard models. While the project gives emphasis to theoretical developments and empirical implications, the ability to model asset markets properly, including house prices and exchange rates, will offer immediate benefits to policy makers. The project will develop a computer code toolbox in Matlab, a programming language extensively used by academics and policy makers, to solve, estimate, simulate and conduct policy experiments using the class of model we propose. The provision of a publicly available Matlab Toolbox will permit policy analysis of scenarios that currently confront Australia, and promote research and research training.

The following  ARC Discovery and Linkage Projects consist of investigators from the Faculty of Business and Economics, led by partner institutions

ARC Discovery Project: Price Transparency, Search, and Collusion in Markets DP210102321
By Associate Professor Nicolas de Roos; Associate Professor David Byrne; Associate Professor Matthew Lewis
Led by the University of Sydney

ARC Linkage Project: Climate Risk Disclosure: Developing Measures for Best Practice LP200100311
Professor Baljit Sidhu; Professor Stewart Jones; Professor Martina Linnenluecke; Professor Matthew Pinnuck; Dr Arunima Malik; Professor Tom Smith
Led by the University of Sydney

ARC Linkage Project: Ambitious and Fair: Strategies for a sustainable visual arts sector LP200100054
Dr Grace McQuilten; Dr Marnie Badham; Associate Professor Catherine MacNeill; Associate Professor Jeanette Lye, Ms Esther Anatolitis
Led by RMIT University

Congratulations to all our grant winners!