HSG professor Martin Wolf receives one of Switzerland's most important research grants

‘The indebtedness of industrial nations has grown strongly over the past 30 years, while their economic growth has slowed. I am interested in the connection between these two trends,’ says HSG Assistant Professor Martin Wolf. He recently received an SNSF Starting Grant for his research project “Debt, Growth, and the Macroeconomy: A Unified Perspective”. This is one of the most important funding instruments in Switzerland. Wolf will receive almost CHF 1.1 million in research funds through this grant.

The grant will enable Wolf to conduct intensive research at the HSG into the relationship between debt and growth over the next four years. He plans to build a team consisting of a doctoral student, a post-doc and research assistants.

Debt and growth are mutually dependent 

‘I definitely want to fill a gap in macroeconomics with my work. Previous models hardly depict the relationship between debt and growth.’ In scientific and political debates about debt, growth is often seen as a largely independent, given variable. 

However, the core insight of his SNSF-funded project is that both developments are mutually dependent. ‘Private and public debt overhang can prevent investment, which in turn slows growth. Conversely, lower growth leads to even more debt relative to aggregate national income. The first goal of my analysis is to examine and better understand this self-reinforcing mechanism.’

Developing policy recommendations

The second aim of the research project is to use this new model framework to evaluate existing policy recommendations. ‘Using this model, we can simulate the effect of various policy measures that aim to combat high debt and low growth, such as austerity policies or debt-financed investment incentives,’ says Wolf. 

In addition to evaluating existing policy proposals, the aim is also to develop new policy recommendations: ‘The third goal of the project is to use the model framework to reflect on optimal monetary, fiscal and regulatory policy,’ says the researcher.

It is important to Wolf, 36, that his work also has an impact on society. ‘I choose my research topics based on current social and political issues,’ he says. In addition to his research, Wolf is involved in teaching at the HSG: in 2023, he received the Excellence in Teaching Award from the HSG School of Economics and Political Science (SEPS). This is awarded by students each year.