What initially sparked your interest in economics? What key milestones would you highlight as fundamental to shaping your academic and scientific path?
My interest in economics began in secondary school. I was very keen on understanding social phenomena and even considered studying sociology. But then I thought about employability – which didn’t seem very promising in sociology and was clearly better in economics. On the other hand, I had very good grades in nearly every subject, including mathematics. Economics offered strong employability, made better use of my broad skill set, and still allowed me to explore social phenomena. The decision was also made easier because the D. Manuel II secondary school – where I had always studied and wanted to stay, with a group of good friends – offered classes in the “C area” (economics). After completing my economics degree at the School of Economics and Management of the University of Porto (FEP) in 1987, I applied for a junior teaching assistant position and was fortunate to be accepted. I spent eleven years without exclusivity, working in parallel as a freelance professional economist, but I was also completing my master’s degree and increasingly enjoying both learning and teaching – discovering a vocation for becoming a professor. In 1997, I was widowed and had a two-year-old daughter to raise, which meant I had to stop working seven days a week. This combined with a clear realisation that life shouldn’t be postponed, and a vocation shouldn’t be wasted. In 1998, I made the decision to work exclusively at FEP and pursue a PhD. Since then, I’ve remained in full-time academia at FEP, beginning and advancing along a truly academic and scientific career.

The current social and economic context is extraordinarily fertile when it comes to pressing issues worth investigating and documenting for future learning. Which lines of research do you see as holding the greatest potential for significant changes in the macroeconomic landscape?
One very pressing issue is population ageing in the Western world, which has major implications for the economy and business management. In economics, the most obvious concerns are the sustainability of Social Security and the National Health Service. On the other hand, ageing transforms many markets – for example, because consumer profiles are changing, creating markets such as assisted living for the elderly. Ageing also changes the conditions for economic growth, limiting available resources and requiring higher savings rates, for which productive allocations must be found. A second issue is income and wealth inequality. In recent decades, we’ve witnessed a decrease in inequality between countries but an increase within them, particularly in developed nations. Even if this increase may be overestimated (as measuring inequality is tricky), extreme inequality between the top and bottom of society is becoming less and less acceptable in our current civilisational stage. In emerging countries, the chronic inequality between political elites and the general population is increasingly visible. In developed countries, the disparity between the richest of the rich and the poorest of the poor – seemingly as a result of globalisation and technological changes – is becoming less tolerable. A third major concern relates to climate change. The impacts on economic and financial activity are numerous and perhaps not yet fully understood, which calls for more knowledge to guide appropriate interventions. For example, in financial markets, there is genuinely a new kind of risk that needs coverage. Another example concerns monetary policy, which, according to some, should adopt procedures that promote environmental sustainability.

Specifically regarding inflation, rising interest rates continue to challenge central banks worldwide and significantly affect our everyday lives. What does economic science tell us about strategies for controlling inflation while maintaining economic growth?
First and foremost, economic science tells us that a low and stable inflation rate is essential for providing agents with a favourable macroeconomic environment – one that encourages efficient decisions about work, saving, and investment, and therefore supports robust economic growth, high employment, and low unemployment. Today (after the last five decades of major progress in understanding macroeconomics and macroeconomic policy), the science tells us that to ensure inflation control, the first requirement is to maintain independent central banks. That means central banks that are autonomous from governments, statutorily committed to a low inflation rate (the current consensus is a 2% annual target), operating transparently and being held accountable to the public and political authorities. Central banks must manage inflation expectations in order to keep the actual inflation rate at the target. Essentially, they raise (or lower) official interest rates to slow (or stimulate) demand for goods and services, thereby countering periods of economic expansion and inflationary pressure (or recession and deflationary trends). A second condition currently emphasised is the control of public debt relative to gross domestic product. In essence, fiscal policy must not hinder the mission and effectiveness of monetary policy, and must ensure the sustainability of public finances. Governments can assist in cyclical stabilisation – meaning deficits during recessions – as long as they secure surpluses during expansions, and thus avoid chronic deficits and systematic increases in their debt. Otherwise, the financial resources available for productive investment become even scarcer, and a debt crisis could erupt at any time, causing financial instability and further complications for monetary policy.

With rapid advances in technologies like fintech, more efficient supply chain management, and green energy – among other examples – how do you foresee these innovations and macroeconomic challenges influencing the reshaping of financial markets and economic policy in the coming years?
Fintech is bound to revolutionise the banking sector, financial markets, and financial instruments more broadly. This will have implications for how those markets operate and how they are regulated and supervised. It will affect saving decisions and how savings are channelled into productive capital investment, and therefore the medium- and long-term growth potential of economies. It will impact how financial and even non-financial firms are organised and managed. It may also influence the transmission of monetary policy, changing how some of its transmission channels – like the credit channel – work. It will alter the scope and structure of monetary and financial policies, including the interplay between monetary policy and macroprudential and supervisory policies. Society could become more efficient in terms of savings, investment, and growth – but new risks will emerge, which must be understood and managed. Digital currency – a major and novel step in the ongoing dematerialisation of money – could profoundly change how the payment system works and how monetary, supervisory, and macroprudential policies are designed. For example, there’s much debate right now about whether central banks should issue digital currency. This could revolutionise monetary policy. It could also transform the relationship between central banks and the banking system, and reshape the banking system itself. In general, progress in digital technologies and their application to the monetary and financial system undoubtedly requires a major research effort. Although I’ve focused more on economics and finance, it’s clear that business management – especially financial management – could also undergo profound transformation.

In your opinion, which areas of economics research most urgently need to adapt swiftly to the digital transformation that, in truth, is inevitable across all spheres and contexts?
I believe there are many areas of economics, finance, and management research that need to rapidly adapt to the new digital realities. There’s already quite a bit of research that takes digitalisation into account. For example, digital marketing research is now widespread, and there are many papers on central bank digital currencies and fintech developments like crowdfunding and microcredit. However, I think we are still in the early stages of understanding how digitalisation impacts how the economy functions, how markets operate, what regulation is needed, and how economic policies might need to be redesigned. We began, it seems to me, by analysing digital reality through a technical and operational lens, looking at tools and methods. Even in that space, there is much to explore – for instance, how fintech is changing corporate financial management, how monetary policy might evolve in a world with digital currencies, and so on. The big challenge, in my view, is to go deeper – to revisit the core of our theories and models in economic analysis – micro, macro, financial, and management – and assess whether they remain valid or need revising to fit the new digital reality. I’m thinking of consumer theory, the production and cost functions we typically use, the specification of dynamic general equilibrium models, among many others. The field of study is vast, in my view. I can’t even see its full horizon.

You are currently the Director of cef.up (Centre for Economics and Finance at the University of Porto). Could you share with U.Porto’s scientific community the goals and impacts of its main initiatives?
The core goals of cef.up are: first, to push the boundaries of knowledge through high-quality scientific research, recognised nationally and internationally for its innovation; second, to significantly influence academia and society through the dissemination of research findings to the academic world, policymakers, and other audiences in the public and private sectors; and finally, to train and equip a new generation of researchers – as well as senior researchers – with advanced skills throughout their careers. Our activities and initiatives are numerous, so I can only highlight a few examples here. For the first goal, we maintain a favourable research environment by offering resources and suitable incentives. We promote seminars, advanced courses, and workshops led by internationally renowned academics, ensure financial support for research missions, and provide access to computing and data resources. We have an incentive programme that rewards authors of high-quality publications with additional resources. For the second goal, we’re refining and strengthening our knowledge dissemination strategies, encouraging researchers to be active in academic and community outreach. The centre invests in both internal and external communication and regularly hosts international events. Many of our researchers engage in consultancy, leveraging their expertise to serve society. As for the third goal, cef.up hosts FEP’s two PhD programmes – in economics and in management – organising advanced courses with internationally prestigious researchers, supporting students with research scholarships, and funding the dissemination of their research. These advanced courses are also opportunities for senior researchers to update and enhance their knowledge.

How does cef.up invest in multidisciplinarity and engagement with industry, and what major benefits arise from this investment to support the R&D unit’s mission in contributing to public policy debate?
Since its inception in 2009 – from the merger of FEP’s two economics research centres, CEMPRE (macroeconomics) and CETE (microeconomics and finance) – cef.up had primarily housed researchers in economics and finance. In 2021, we amended our statutes and expanded the centre to include all areas of management, making it the research centre for all core areas at FEP – economics, finance, and management. We’re currently focusing on strengthening synergies between research in economics and finance, on the one hand, and research in management. This is where we are directing most of our attention and resources in terms of multidisciplinarity and interdisciplinarity. For example, we will hire a FCT-Tenure researcher specialising in ageing, to enhance research on this multifaceted issue. We’ll also hire another FCT-Tenure researcher specialising in microdata, suited for studying problems at the intersection of economics and management. And we’ll bring on another FCT-Tenure researcher with expertise in quantitative methods for management, aiming to deepen the use of econometrics in management research and align it more closely with economics and finance. cef.up doesn’t have a specific strategy for industry engagement. Our researchers with recognised expertise are often invited for applied work. The demand is more directed at individual researchers than the centre as a whole. We believe in freedom of initiative. That said, we do welcome such consultancy and applied analysis activities, from which we gain substantial prestige and visibility. Still, we’re not a consultancy hub. Nevertheless, we take great pride in having several researchers who are highly respected voices in public policy analysis, in fields such as health, energy, innovation, entrepreneurship, public finance, and many more.

We'd like to end with some advice. What would you like to share with young researchers starting their careers in economics? What skills and perspectives do you believe are essential for facing future global challenges?
Starting out, I advise young researchers to pursue a PhD at an institution that offers a robust doctoral programme – with at least two to three semesters of coursework covering the core areas of economics: mathematical economics, microeconomics, macroeconomics, and econometrics. Choose a programme with a competent teaching staff, combining experienced researchers and younger, up-to-date, dynamic scholars. Preferably, one that includes exposure to researchers/professors from other universities and research units, and provides opportunities to complete at least one dissertation essay at a different department. After the initial stage, I recommend maintaining a ‘broadband’ perspective. One of today’s major challenges, in my view, is hyper-specialisation. Having broad general knowledge – of economics and other fields – is essential to becoming a truly excellent researcher (and teacher), capable of seeing things critically and updating approaches in a fast-changing world. An excellent researcher/teacher will never be just a great technician. A scientist must be curious and imaginative – and for that, they need to know the world, explore ideas from other fields, stay informed about developments in different areas of economics/finance/management, and stay in tune with the world, history, culture, and the arts.

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