Economic uncertainty and the robust design of sustainable financial systems, Mathematics – PhD (Funded) Ref: 3063

About the award

The University of Exeter’s College of Engineering, Mathematics and Physical Sciences is inviting applications for a fully-funded PhD studentship to commence in September 2018 or as soon as possible thereafter.  For eligible students the studentship will cover UK/EU tuition fees plus an annual tax-free stipend of at least £14,553 for 3.5 years full-time, or pro rata for part-time study.  The student would be based in Mathematics in the College of Engineering, Mathematics and Physical Sciences at the Penryn Campus in Cornwall.


Mathematics, Penryn Campus, Cornwall

Academic Supervisors:
Dr Tim Hughes, University of Exeter
Professor Stuart Townley, University of Exeter

Project Description:
Recent years have seen sustained growth in aggregate debt levels (private + public debt) and rising inequality. Indeed, excessive rises in debt levels are attributed as one of the main causes of the 2008 financial crisis. Attempts to explain this instability have led to several competing economic models, which exhibit differing dynamics and result in differing conclusions on important issues such as austerity and banking regulations. This project will use and develop techniques from mathematical systems and control to (1) investigate the sensitivity of economic dynamics to these differing modelling assumptions; and (2) design mechanisms for controlling aggregate debt levels and other key economic indicators, which are robust to the inherent modelling uncertainties. The objective is to inform the understanding of contemporary economic dynamics and the design of more sustainable, equitable and efficient financial systems.

One proposed research direction is to examine the sensitivity of economic dynamics to different models of money creation. In many models, banks are treated as financial intermediaries, with loans supported by pre-existing deposits [1]. Alternatively, the fractional reserve model of banking asserts that banks cannot create money in isolation, but the banking sector collectively creates money through systemic interactions [2]. In contrast, the “credit creation hypothesis of banking” asserts that banks create money out of nothing when issuing a loan, with the main constraints on bank lending being banks’ profitability and solvency. Empirical support for this third hypothesis appeared in [2]. When incorporated into models, the credit creation hypothesis was shown to be more consistent with recent economic phenomena, such as the sudden contraction in money supply following the 2008 financial crisis [1].

Potential topics for investigation include: (1) Developing a metric to capture the difference between economic systems based on differing money creation models, and determine the feasibility (or otherwise) of designing policies that are robust to this modelling uncertainty; (2) Examining controllability of key economic indicators (e.g., money supply, inflation, sustainable development goals) under different money creation models; 3. Investigating systemic properties of economic models based on the credit creation hypothesis, e.g., 3a. Will banks tend to encourage rising levels of debt? 3b. Is this mechanism of money creation a driver for income inequality?

The project will link to the activities of the International Federation of Control (IFAC) Technical Committee 9.5 on Technology, culture and international stability (TECIS). An introductory paper, presented in a session organised by TECIS at the 2017 IFAC World Congress, is available here.

This project requires a strong mathematical background, and a willingness to engage with interdisciplinary research.
This award provides annual funding to cover UK/EU tuition fees and a tax-free stipend.  For students who pay UK/EU tuition fees the award will cover the tuition fees in full, plus at least £14,777 per year tax-free stipend.  Students who pay international tuition fees are eligible to apply, but should note that the award will only provide payment for part of the international tuition fee and no stipend. 

The studentship will be awarded on the basis of merit for 3.5 years of full-time study to commence in September 2018.

[1] M. Kumhof and Z. Jakab, The truth about banks.
[2] R.A. Werner, Can banks individually create money out of nothing? – The theories and the empirical evidence, International Review of Financial Analysis 36 (2014) 1-19

Entry requirements:
Applicants for this studentship must have obtained, or be about to obtain, a First or Upper Second Class UK Honours degree, or the equivalent qualifications gained outside the UK, in mathematics, engineering or the physical or economic sciences. In addition, the successful candidate will likely have, or be about to obtain, a Master’s degree (or equivalent qualification) in one of these disciplines.

If English is not your first language you will need to have achieved at least 6.0 IELTS and no less than 6.0 in any section by the start of the project.  Alternative tests may be acceptable (see


Application deadline:6th April 2018
Value:£14,777 for 3.5 years
Duration of award:per year
Contact: Postgraduate Research

How to apply

How to apply
In the application process you will be asked to upload several documents.
• CV
• Letter of application (outlining your academic interests, prior research experience and reasons for wishing to undertake the project).
• Research proposal (up to 1 side of A4 paper)
• Transcript(s) giving full details of subjects studied and grades/marks obtained (this should be an interim transcript if you are still studying)
• Names of two referees familiar with your academic work. You are not required to obtain references yourself. We will request references directly from your referees if you are shortlisted.
• If you are not a national of a majority English-speaking country you will need to submit evidence of your proficiency in English

The closing date for applications is midnight on 06/04/2018.  Interviews will be held on the University of Exeter Penryn Campus, or by Skype, the week commencing 30/04/2018.
If you have any general enquiries about the application process please email or phone +44 (0)1392 722730.  If you have any project specific queries, then you are strongly encouraged to contact the main supervisor, Dr Tim Hughes.