Dr Surico received the funding from the European Research Council (ERC) after impressing among more than 2,500 other applications. Fewer than 10% of the proposals, from the physical, social and life sciences, received ERC backing.
He joins Irem Tuna, Associate Professor of Accounting, and Anna Pavlova, Associate Professor of Finance, who also secured ERC funding, totalling €2,735,835.
The grant will allow Dr Surico to conduct his research on Macroeconomic Dynamics with Heterogeneous Agents. He will lead a team of economists including the School's faculty member Dr Kanishka Misra.
Dr Surico was recognised in the competition as an "early career starter" who had completed his PhD just five years earlier. His research was highly praised by the panel and identified as "influential, original and important".
They also said that his project was "original, analysing an issue that has received little attention in macroeconomics and with potentially very important implications for macroeconomic theory and policy".
Paolo said: "I am very honoured to have won this award and I am very much looking forward to working with my colleagues across the School. Quantifying the diverse effects of fiscal and monetary policies on the aggregate economy is a first order challenge for both academics and policy makers alike.
"I intend to use this grant to work towards an assessment of the varied and diverse effects of the kind of policy actions which prevailed during the recent financial crisis."
Paolo joined the School in 2009. He was formerly a research advisor of the external members of the Bank of England's Monetary Policy Committee.