Paul Armstrong-Taylor

Paul Armstrong-Taylor

Resident Professor of International Economics

Hopkins-Nanjing Center
Nanjing University
Nanjing, Jiangsu 210093


  • China
  • East Asia
  • Great Britain
  • Nanjing, China
  • United Kingdom
  • Western Europe
  • Corporate Finance
  • Developing Nations
  • Economics
  • Global Financial Crises
  • Game Theory
  • International Financial Markets
  • Economic Development
  • Corporate Governance and Financial Markets
  • American Economic Policy
  • Privitization and Private-sector Development
  • Emerging Markets
  • Governance
  • International Debt
  • International Economics
  • International Finance
  • International Monetary Economics
  • International Monetary Theory
  • International Trade Theory and Policy
  • Newly Industrialized Countries
  • Political Economy & Development
  • Chinese

Background and Education

Before coming to Nanjing in September 2010, Dr. Armstrong-Taylor was a Visiting Professor of Economics and Finance at the Antai School of Economics and Management, Shanghai Jiaotong University.
Previously, he worked as an investment banker at Morgan Stanley in London, as an economic consultant for London Economics in London and as a management consultant for Monitor Group in Cambridge, MA.  
Professor Armstrong-Taylor received his BA and MPhil in Economics from Cambridge University, and his PhD in Economics from Harvard University. 
Research and Publications:
Dr. Armstrong-Taylor’s research and teaching interests include applied game theory, business strategy and finance. His PhD thesis Strategic Credibility investigated how the propensity of politicians to falsely deny involvement in a scandal varies with their popularity.

Download Curriculum Vitae (PDF)

When do politic...

When do politicians lie? A politician who admits to wrongdoing will likely suffer some loss of popularity, but probably not as great as if he denied wrong doing and was subsequently discovered to have lied. This simple observation has a number of implications. For example, a politician in a marginal seat may have little choice but to risk lying as admitting will lose him too much popularity to survive. On the other hand, a politician in a relatively safe seat might survive the loss from admitting, but not from lying and being caught. Therefore we might predict the likelihood that a politician admits to a scandal to be positively related (over some range at least) to the security of his seat. This paper tests this prediction, and some others, with data from House bank scandal of 1991-92.

Published in Berkeley Electronic Journal of Economic Analysis and Policy (December, 2012)

I examine the e...

I examine the effects of trade and financial links on the transmission of GDP growth. I find that countries with high level of imports and exports transmit growth less, while countries with high levels of foreign bank assets and liabilities transmit growth more. Financial links are particularly important during global recessions.

Presented at the China Economists Conference (Chengdu, June 8th, 2013)
Submitted to Frontiers of Economics in China (July 10th, 2013)

Conventional an...

Conventional analysis of incentives suggests that severe punishments discourage criminal activity. However, in China, increases in the severity of punishment for corruption has led to an apparent rise in such crimes. This research project investigates a new explanation for this finding.

We show how increased severity of punishment might encourage collusion between corrupt officials (by increasing the costs of informing against each other) and so make it harder for corruption to be uncovered. We also present experimental evidence in support of the theoretical conclusions.

Ongoing research with Yongjie Wang.

We show how Sim...

We show how Sims' concept of rational inattention could lead to financial crises. If certain information is rarely important to the price of a security, it maybe rational for investors to ignore it. Therefore, when the information is important, there may be a sharp shock to financial markets that could trigger a crises.

An example would be credit quality of mortgage-backed securities (MBS) prior to the subprime crisis. Because house prices had been rising since the Great Depression, default rates were extremely low even for poor credit quality (as long as the house price is greater than the outstanding mortgage, it rarely makes sense for a homeowner to default). Therefore credit quality may have been rationally ignored by MBS investors. When house prices fell and default rates increased, this gave the financial system a large shock.

Ongoing research with Hesheng Xing

Spring 2014 
This course wil...
This course will analyze the economies of China and the United States and consider the current and future challenges they will face. The course will address topical issues in demographics, industrialization, growth, inequality, labor relations, trade and finance. No background in economics is required.
Fall 2013 
Economics, part...
Economics, particularly game theory, provides a powerful and flexible way to address a wide range of questions. In this class, I want to introduce students to some fascinating ways of thinking about topics that are not obviously related to economics – as well as a few that are. “Strategy” will be a common theme, but one that is interpreted quite broadly.
Spring 2014 
The purpose of ...
The purpose of this course is to introduce students to the theory and practice of corporate finance. The method of teaching will include lectures and case studies. The lectures will introduce some theories and give examples of applications. The case studies will give students a chance to apply these ideas themselves to real companies and discuss the advantages and disadvantages of different approaches.
Spring 2014 
The recent cred...
The recent credit crisis arising from the collapse of the subprime mortgage market had a large impact on the world economy. At the time of writing, some worry that the debt crisis in the Euro zone could have a similar impact. The causes of both these crises had been building up for years, if not decades, yet few recognized the warning signs. This course will attempt to answer the following questions: 1. Were the recent crises predictable? If so, what were the warning signs? 2. Why did so few predict them? Was this a failure of economists, bankers, politicians, or all of the above? 3. What could have been done to prevent them? What should we be doing to prevent future crises?
Fall 2011 
The purpose of ...
The purpose of this course is to introduce students to the theory and practice of business strategy. We will use microeconomics as framework for considering these issues. We will focus on four issues: what a firm should do, how it should do it, and how it should evaluate its market and competitors. As we move through the course we will look to apply these ideas to real world cases. The cases, prepared by Harvard Business School and other leading business schools, have been carefully chosen to offer students challenging, real-life decisions to analyze.
Spring 2011 
In the first pa...
In the first part of the course, we will look at some of the ways game theory has been applied. I have deliberately tried to find example from different fields to demonstrate the cross-disciplinary power of game theory. The second part of the course will focus on students applying game theory to analyze problems. Some of the problems will be provided, but students will also be required to come up with some of their own subjects for analysis.