Professor Bill Russell


University of Dundee School of Business, School of Business

Associate Dean International and Student Admissions

School of Business

Economic Studies, School of Business

Portrait photo of Bill Russell
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Dr Bill Russell is Professor of International Business. He graduated from the University of Western Australia in 1985 with a Bachelor’s degree in Economics (Honours) before undertaking an M.Phil. and D.Phil. in Economics at the University of Oxford which were conferred in 1996. Prior to arriving at the University of Dundee in August 1996, he had worked for ten years in the Research Department of the Reserve Bank of Australia.

Professor Russell’s primary teaching and research interest is macroeconomics and finance. He has published in the following five broad areas: (i) the theoretical basis of the negative long-run relationship between inflation and the markup, (ii) estimating the relationship between inflation and the markup, (iii) general empirical macroeconomics, (iv) modelling coffee prices, and (v) the methodology of macroeconomics.

Areas of expertise

  • Programme development
  • Partnership development
  • Admissions activity


My research has had some impact on how macroeconomists think about the statistical process of variables in general and inflation in particular. This impact has in part been through seminars and presenting papers at conferences. Since joining the University of Dundee I have given papers at conferences and a range of central banks (Bundesbank, European Central Bank, Bank of England, and the Reserve Bank of Australia) and at universities in the United Kingdom and overseas including the Australian National University, European University Institute, University of Cambridge, University of Oslo, and the University of Oxford. I have presented refereed papers at high level conferences including the Royal Economics Society Conferences, the World Congress of the Econometrics Society, European Meeting of the Econometrics Society and Money, Macroeconomics and Finance Annual Conferences.

Summary of research expertise

  • Macroeconomics
  • Modelling breaks in time series data
  • Empirical macroeconomics
  • Macroeconomic policy
  • Applied finance

My research considers five broad issues:

The theoretical basis of the negative long-run relationship between inflation and the markup

The theoretical basis of the negative relationship between inflation and the profitability of firms (i.e. the markup) focuses on the difficulties that firms face when trying to coordinate changes in prices in an inflationary environment. This leads firms to adjust prices cautiously and with a lag to avoid the costs of coordination failure and results in firms accepting lower profits while adjusting prices. I propose that the uncertainty surrounding the changing of prices is not of the sort that disappears when inflation is stable and that permanently higher inflation will permanently lower the profitability of firms.

The theoretical research also considers the policy implications of the inflation-markup relationship.

Estimating the Relationship between Inflation and the Markup

1. Assuming Inflation is an Integrated Process of Order 1

The early empirical work identifies the negative relationship between inflation and the markup of price on unit costs (a proxy for profitability) assuming inflation is an integrated I(1) process and the price level is I(2). The research focuses on data for a wide range countries, frequencies, and levels of aggregation. This work demonstrates that it is easy to identify the negative relationship and that the relationship can be characterized as ‘long-run’ in the sense of Engle and Granger as the long-run relationship between two integrated variables of order 1 (i.e. inflation and the markup). Neither variable can be ‘truly’ integrated and only appear to be integrated due to structural breaks in the means of both variables. Consequently, while the ‘true’ statistical process of the variables is most likely stationary around a shifting mean the early empirical analysis proceeds on the assumption that the data can be approximated by an integrated process of order 1.

2. Assuming Inflation is Stationary Process around a Shifting Mean

While inflation is unlikely to be an integrated process as argued in 1 above it is likely to have been non-stationary over the past fifty years in the developed world. In a series of papers using around fifty years of quarterly United States inflation data we demonstrate that if the shifts in mean inflation are not accounted for in the estimation then the standard results of the ‘modern’ Phillips curve literature can be retrieved. However, once the shifts in mean inflation are allowed for then there is no significant empirical evidence in favour of any of the ‘modern’ theories of the Phillips curve. Importantly, there is also no significant evidence supporting the role of the model defining expected rate of inflation in the NK and hybrid theories of the inflation.

General empirical macroeconomics

The third area of interest is empirical macroeconomics and looks at price and wage inflation, employment, the impact of share prices on business cycles and the role of exports in transmitting foreign business cycles between countries.

Modelling coffee prices

The modelling of coffee prices recognises that changes in government policies over the years leads to changes in the ratio of the producer price of coffee over the terminal price of coffee. Consequently, to model coffee prices successfully using a cointegration analysis or an error correction model requires these changes in the coffee price ratio to be accounted for. If not then the estimated models will be biased and lead to incorrect inference. This modelling approach allows the identification of the long-run producers share of the terminal price of coffee and thereby allows the identification of the losses experienced by producers over the years as a result of different government policies.

Methodology: Is Macroeconomics a Science?

Whether or not macroeconomics is a science depends on the scientific nature of macroeconomic theories and how the discipline responds when the empirical evidence fails to match the underlying assumptions and predictions of the theories. By way of example, I set out four conditions for macroeconomics to be a science. These conditions identify the types of theories that are relevant for a science and how a discipline uses empirical evidence to examine the theories. The conditions are then applied to the Friedman/Phelps expectations augmented and New Keynesian theories of the Phillips curve as two examples of dominant macroeconomic theories of the past five decades. It is found that while the ‘modern’ theories of the Phillips curve are scientific in the sense of Popper it appears that the empirical validity of the assumptions underlying the model and their associated predictions are somewhat compromised.

Consequently, it is argued that while the discipline in general maintains one condition it routinely violates the other three. This suggests the macroeconomics discipline has some way to go before it can call itself a ‘pure science’.

Research themes

Health, Welfare and Education

Markets and Governance

View full research profile and publications


I have taught macroeconomics, finance, introductory statistics and macroeconomic policy.

Media availability

I am available for media commentary on my research.

Contact Corporate Communications for media enquiries.

Areas of expertise

  • Banking and finance
  • Economy