• Researchers from Warwick Economics and Warwick Business School are among the speakers taking part in a major policy conference organized in partnership with the Bank of England and Rebuilding Macroeconomics
• New Approaches for Modelling Expectations in Economics is the third conference in a successful series organized by Professor Roger Farmer of Warwick Economics and the Bank of England.
• This year the conference is also supported by the Economic and Social Research Council (ESRC) funded research network, Rebuilding Macroeconomics.
• The conference aims to foster the exchange of ideas between academics and the policy community on the themes of uncertainty and the financial markets.

Warwick researchers will play a key role in a major two-day conference - New Approaches for Modelling Expectations in Economics - which will take place on 2 and 3 December 2019 at the Bank of England. The conference is organized by Roger Farmer, Professor of Economics at Warwick University, in partnership with the Bank of England and the ESRC funded network, Rebuilding Macroeconomics.

The conference will bring together international researchers from around the globe to discuss whether, and how, economists and policymakers can replace the notion of ‘rational economic man’ with theoretical and empirical models that recognize its limitations.

Sydney Ludvigson, Julius Silver, Roslyn S. Silver, and Enid Silver Winslow Professor of Economics at New York University, and Laura Veldkamp, Professor of Finance at Columbia University's Graduate School of Business, will deliver the keynote speeches.

The contributions from Warwick researchers include:-

• Nick Chater, Professor of Behavioural Science at Warwick Business School, will be discussing his recent work on the patterns which can be observed in financial markets. The Macroeconomics of the Sampling Brain project uses thinking from experimental psychology and the natural sciences to explore possible links between ‘noisy brains’ and ‘noisy markets.’ Professor Chater’s work is funded by Rebuilding Macroeconomics.
• Dr Christopher Roth, Assistant Professor of Economics, will be presenting a paper on Subjective Models of the Macroeconomy: Evidence from experts and a Representative Sample.” In this project Dr Roth is investigating how people think about the macroeconomy and comparing their beliefs about the functioning of the economy to models that experts have in mind, as well as to actual predictions of economic models.
• Dr Christine Braun, Assistant Professor of Economics, will be leading one of the discussion sessions.
• Two papers co-authored by Professor Farmer will also be presented. Some international Evidence for Keynesian Economics without the Phillips Curve, presented by coauthor Giovanni Nicolò of the U.S. Federal Reserve Board, offers an alternative conceptual apparatus to understand the connection between inflation and unemployment. We Can’t Always Agree, co-authored with Jean-Philippe Bouchaud of Rebuilding Macroeconomics presents progress on modelling radical uncertainty, in a simple model of the financial markets.

Professor Farmer said: “The aftermath of the financial crisis lingers a decade after the Great Recession was declared over, and Brexit - according to many commentators - is causing low investment and slow productivity growth in the UK.

“These twin events have cast a shadow over mainstream models of the macroeconomy in which rational forward-looking agents make calculations to maximize utility in an uncertain, but predictable, environment.”

“This conference addresses the problems with mainstream models head on. Our two keynote speakers are thought leaders in the area of uncertainty and financial markets. Both are engaged in cutting edge research that addresses ways of incorporating more sophisticated models of expectations into macroeconomics.”

“The partnership between Warwick and Rebuilding Macroeconomics has allowed us to showcase the frontier research carried out by Warwick faculty and to provide a platform to disseminate the pathbreaking research emerging from the Rebuilding Macroeconomics Network”.

“By holding this conference at the Bank of England, we hope to foster the exchange of ideas between academics and the policy community at a time when policy makers are seeking ways to design policies to prevent the next financial crisis and researchers are seeking feedback from policy makers about the usefulness of their ideas.”

NOTES

Keynote speakers:

Sydney Ludvigson https://www.sydneyludvigson.com is the is Julius Silver, Roslyn S. Silver, and Enid Silver Winslow Professor of Economics at New York University, Chair of the NYU economics department, and a Co-Director of the National Bureau of Economic Research Asset Pricing Program. Her research centers on the interplay between asset markets and macroeconomic activity, with recent applications to the pricing and risk premia of stock, bond, and housing markets, the role of heterogeneity and wealth inequality in housing and stock market valuations, and the dynamic causal effects of uncertainty for business cycle fluctuations.

Laura Veldkamp https://www0.gsb.columbia.edu/faculty/lveldkamp/ is a Professor of Finance at Columbia University's Graduate School of Business and a co-editor of the Journal of Economic Theory. She is a faculty research fellow for the National Bureau of Economic Research and the Centre for Economic and Policy Research, and the author of the textbook, Information Choice in Macroeconomics and Finance (Princeton University Press). Professor Veldkamp’s research focuses on how individuals, investors and firms get their information, how that information affects the decisions they make, and how those decisions affect the macroeconomy and asset prices. Her recent work examines how people form beliefs about tail risk and how learning about tails, or disasters, can explain persistent low interest rates, volatile equity prices and secular stagnation.

About Rebuilding Macroeconomics:

Rebuilding Macroeconomics (RM) is a research initiative funded by the Economic and Social Research Council (grant reference ES/R00787X/1). It is run out of the National Institute of Economic and Social Research (NIESR) at its offices in Westminster.

RM aims to transform macroeconomics back into a useful and policy-relevant social science, asking fundamental questions about macroeconomics in the ‘real world’ and encouraging rigorous, innovative and interdisciplinary research. Its research is centred around six Research Hubs, each addressing a particular macroeconomic question.

https://www.rebuildingmacroeconomics.ac.uk/

 

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