Our Economics colleagues are undertaking research across a broad range of research themes, spanning most of the principal fields within economics.

Publications

Political Rhetoric and Racial Discrimination on Arrests for Drugs

Economic Journal, July 2025
Dr Diego Zambiasi (with Francesco Barilari)

What this research shows: Strong US “War on Drugs” rhetoric increased racial disparities in drug arrests, particularly in politically competitive areas.

Dr Diego Zambiasi, Lecturer in Economics, and his co-author Francesco Barilari, recently published the paper ‘Political Rhetoric and Racial Discrimination on Arrests for Drugs’ in the Economic Journal in July.

This paper examines whether presidential “War on Drugs” rhetoric under Ronald Reagan and George H. W. Bush changed police behaviour and worsened racial disparities in drug arrests from 1981–1992. The authors build a monthly index of anti-drug rhetoric from more than 11,000 presidential documents and link it to arrest data from 1,420 police agencies.

They argue that counties with closer elections — measured by the 1984 presidential vote margin — were more exposed to national rhetoric because local media pay more attention to political messages in competitive areas. Consistent with this, they show that when national anti-drug rhetoric increased, newspapers in politically competitive counties mentioned War-on-Drugs themes more often, and survey data indicate that racial attitudes worsened in these counties by 1990.

The main finding is that stronger presidential anti-drug rhetoric led to larger increases in Black arrests for heroin and cocaine possession in politically competitive counties, with no comparable rise for White arrests. A one–standard deviation increase in rhetoric widened the Black–White arrest gap by about 5.5% in a typical competitive county. The effect is concentrated in states with close 1988 presidential races.

The authors find no evidence that police staffing or other crime categories explain the pattern. Instead, the results suggest that amplified presidential rhetoric in competitive areas hardened local racial attitudes and contributed to lasting racial disparities in drug possession arrests.

Narrow Framing in Risk Aversion Experiments: Further Evidence From a Wide Replication

Journal of Applied Econometrics
Dr Matt Walker et al.

What this research shows: People tend to treat experimental financial decisions as separate from their real-world wealth, even when making choices involving real money.

Dr Matt Walker and co-authors published ‘Narrow Framing in Risk Aversion Experiments: Further Evidence From a Wide Replication’ in the Journal of Applied Econometrics.

Dr Walker summarised the research: “We set out to replicate a previous published study (Andersen et al., 2018) which evaluates whether individuals integrate (i.e., consider) their background finances (i.e., bank account) when making decisions in lottery choice experiments. Lottery choice experiments are a standard tool economists use to measure people’s risk preferences, in which participants are asked to choose between different gambles (or "lotteries") of different risk levels, involving real money. The earlier study used a representative sample from Denmark, and found that participants treat the experimental lottery choices as psychologically separate from their background wealth or income. We replicated this finding in a representative sample of the Dutch population, and established its robustness across different research designs, stakes and measures of wealth/income. This finding has implications for how economists model risky decision-making, which is relevant for an array of societal issues (e.g., optimal level of insurance provision).”

The ineffective origin of Australian protectionism? Victoria's McCulloch Tariff of 1866

Economic Record
Dr Brian Varian

What this research shows: Australia’s first protectionist tariff had little direct economic impact, but it played an important role in shaping long-term political attitudes towards protectionism.

Dr Brian Varian recently published the paper 'The ineffective origin of Australian protectionism? Victoria's McCulloch Tariff of 1866' in the Economic Record.

Before Australia became a single country in 1901, it was a group of six colonies. Amongst the colonies, Victoria was the first to adopt a protectionist tariff policy. Thus, the origins of Australia's protectionist tariff regime, which was to last for more than a century, can be traced to Victoria's McCulloch Tariff of 1866. In the paper, Dr Varian asks the question: did this seminal piece of protectionist legislation have any effect? Data is scarce for this period, but the government did collect annual data on the number of manufactories per industry. Analysing this data, Dr Varian finds no evidence that Australia's first piece of protectionist legislation was economically consequential. Rather, the McCulloch Tariff was significant for establishing a protectionist political momentum within Australia.

Putting your CV together? Complete honesty might not be the best policy

The Conversation
Dr Tom Lane

What this research shows: Being completely honest on a CV is not always the most effective strategy for job applicants, depending on how information is interpreted by employers.

Dr Tom Lane recently published the article ‘Putting your CV together? Complete honesty might not be the best policy’ in The Conversation.

Convexity under Ambiguity

Dr Xueqi Dong

What this research shows: When investors face uncertainty about market odds, diversification can still make sense, but only for certain types of decision-makers.

Dr Xueqi Dong recently published the paper ‘Convexity under Ambiguity’. Dr Dong  outlined her research: “When we don’t know the odds of market events, is diversification sensible, and what kind of investor diversifies? We propose a principle, “convexity under ambiguity”: when market odds are unknown, if you prefer asset A to asset B, then a portfolio mixing A with B should beat holding only B; we use this to answer these questions.”

Collaboration

Oil price fluctuations, US banks, and macroprudential policy

Journal of Monetary Economics
Dr Marco Lorusso (with Federal Reserve co-author)

What this research shows: Rising oil prices weaken banks’ financial health and amplify economic downturns, but targeted financial regulation can reduce this instability.

Dr Marco Lorusso recently published an article called “Oil price fluctuations, US banks, and macroprudential policy” in the Journal of Monetary Economics with a co-author from a Federal Bank in the US.

This paper studies how changes in oil prices affect U.S. banks and the broader economy, and whether financial regulation can reduce the resulting instability. While oil price fluctuations are known to influence inflation and economic activity, their impact on banks has received far less attention. This is important because banks play a central role in financing businesses and households, and weaknesses in the banking sector can amplify economic downturns.

Using disaggregated data on U.S. banks from the early 1990s to 2019, the authors find that higher oil prices have a clear negative effect on banks’ financial health. When oil prices rise, banks’ net worth tends to decline. This effect is especially strong for banks with high leverage, meaning banks that rely more heavily on borrowed funds. Banks with lower leverage are much less affected. These results are confirmed using both bank-level data and broader macroeconomic analysis, showing a consistent inverse relationship between oil prices and banks’ balance sheets.

The paper explains this relationship through a financial amplification mechanism. Higher oil prices raise production costs, leading firms to reduce output and investment. Lower investment reduces the value of capital in the economy, such as machinery and equipment. Since banks’ assets are tied to the value of firms and their capital, falling capital values weaken banks’ balance sheets. Weaker banks then reduce lending or raise borrowing costs, which further depresses investment and economic activity. This feedback loop amplifies the initial oil price shock and makes its overall economic impact much larger.

To formalise this mechanism, the authors develop and estimate an economic model that includes banks, financial frictions, and an oil sector. The model shows that oil price shocks explain a much larger share of economic fluctuations when the banking sector is taken into account than when it is ignored. Finally, the paper evaluates a regulatory tool known as the countercyclical capital buffer. The results show that adjusting bank capital requirements in response to oil-driven credit conditions can significantly reduce financial and economic volatility. Overall, the paper concludes that oil price fluctuations are an important source of financial instability and that macroprudential regulation can help protect the economy from their effects.

Conferences

UK ASEAN Business Council Roundtable on Cambodia’s CPTPP Accession

London, September 2025
Dr Sara Maioli

What this activity shows: Small businesses and farmers may struggle to benefit from new trade agreements without greater investment in skills and human capital.

Dr Sara Maioli, Reader in Economics, on 10 September attended the UK ASEAN Business Council’s roundtable with Cambodia’s CPTPP Ministerial Taskforce. The meeting, hosted by KPMG in London, served to assess the possible impact of Cambodia’s accession to the Comprehensive and Progressive Trans Pacific Partnership (CPTPP). In attendance were also the Cambodian ambassador in London, representatives of businesses, the Department of Business and Trade, and the UK Trade Policy Observatory. Sara led a discussion on the preparedness of SMEs and farmers to join the trade agreement and the need to invest in human capital.

Newcastle Experimental Economics Workshop

Newcastle University Business School, November 2025

What this event shows: Experimental economics continues to grow as a collaborative field, bringing together international researchers to test how people make economic decisions.

The fourth edition of the Newcastle Experimental Economics Workshop was held on 6 and 7 November at the Business School. The workshop featured keynote lectures by Martin Dufwenberg (Purdue University and University of Gothenburg) and Brit Grosskopf (University of Exeter). The conference organisers were Dr Melanie Parravano Baro, Lecturer in Economics, Dr Smriti Sharma, Senior Lecturer in Economics, Dr Matt Walker, Lecturer in Economics, and Dr Till Weber, Lecturer in Economics.

Funding

The heterogenous value of health gains (PRESIDE)

Independent Research Fund Denmark
Professor Jytte Seested Nielsen

What this research shows: People value health improvements differently depending on factors such as illness severity, age, and uncertainty, which has major implications for healthcare decision-making.

Together with colleagues from the University of Denmark and supported by the Danish Medicines Council, Professor Jytte Seested Nielsen, Professor of Economics, have received funding from the Independent Research Fund Denmark.

The project ‘The heterogenous value of health gains. A preference study to inform decision making (PRESIDE)’ will run from 1 July 2026 to 31 December 2029.

Understanding how citizens prioritise healthcare resources is crucial for developing equitable and efficient healthcare policies, particularly in universal tax-funded systems. Demographic changes combined with the development of new, better and often more costly health care services renders the issue of priority setting even more pressing. When prioritising among health care services, decision makers must balance distributional objectives of efficiency versus various notions of fairness. The objectives of the proposed research project are to apply appropriately designed stated preference experiments to measure the societal value of health improvements. We will focus on the type of health gain and how factors such as severity of disease, patients' age and uncertainty of health effects impacts on citizens' valuation of health gains. A key purpose of this research is to generate evidence on the public’s priority preferences to inform and support social decision-making.

Presentations

Creative Europe Programme Network Analysis

ACEI 23rd International Conference on Cultural Economics
Professor Giorgio Fazio

What this research shows: Cultural funding programmes create valuable international networks, but their economic impact is much stronger when financial systems are taken into account.

Professor Giorgio Fazio presented a paper assessing the networks generated by the Creative Europe Programme at the ACEI 23rd International Conference on Cultural Economics, Erasmus University Rotterdam, 24-27 June 2025.