Developing New Analytical Frameworks—CEU Hosts INET Conference
Between 6-8 September CEU co-organized and hosted the conference, “Toward an Alternative Macroeconomic Analysis of Microfoundations, Finance-Real Economy Dynamics and Crises,” which has brought together many of Europe’s leading economists and academic experts as well as selected participants from the United States and Asia. The conference was part of an ongoing series of important events discussing and debating recent economic failures and ways in which the economic profession should move forward. Organized by CEU and LEM (Laboratory of Economics and Management) at the Sant’Anna School of Advanced Studies, Pisa, Italy, and sponsored by INET (Institute for New Economic Thinking) and by DIME (Dynamics of Institutions and Markets in Europe) Network of Excellence, the four conference sessions dealt with both the fundamentals of economic theory and practical issues of model building under the following headings: Incumbent Theories Facing the Current Crisis, Toward a Fully Fledged Microfunded Macroeconomics, The Statistical and Econometric Evidence and Complex Dynamics “in action.”
“Bringing together the brightest minds to solve difficult problems is central to the mission of Central European University. Helping overcome the challenges that have been wrought by the global economic crisis is a critical undertaking of INET and CEU that we are proud to be a part of,” commented John Shattuck, President and Rector of Central European University and INET Advisory Board member.
INET, an organization created to promote changes in economic theory and practice through conferences, grants and education initiatives, was launched in October 2009, with a $50 million pledge from George Soros. It encourages professional responsibility to think beyond the inadequate methods and models of the world’s financial infrastructures and supports the creation of new paradigms in the understanding of economic processes. The ambitious task of the present conference is to identify strategies for developing new analytical frameworks for the future. Rather than review the long list of shortcomings of the incumbent theory, those convened will identify promising alternative approaches that incorporate the possibility of crises and suggest ways of diminishing their impact.
INET Advisory Board members Joseph Stiglitz and Axel Leijonhufvud led the introductory session on Monday. Speakers of the opening session expressed critical views on the toolkit of the incumbent economic theory. Among the gravest problems, the failure to predict the present global financial crisis was most frequently mentioned. During the second session, the presentations and the debates addressed both the shortcomings of the DSG (Dynamic Stochastic General Equilibrium) models, as well as the upcoming new trend in model building, the family of agent-based models.
On Tuesday and Wednesday distinguished scientists as A. Kirman, G. Dosi, J. Kornai, M. Lippi K. Juselius, D. Hendry, H. Follmer, S. Winter, S. Johansen, and others, discussed issues concerning agent based modeling, coordination failures, heterogeneity among agents, bounded rationality, and econometric approach and evidence. The last session included discussion about future research agenda and practical steps.
John Shattuck interview with Joseph Stiglitz after Day 1:
The full conference program is available on: http://ineteconomics.org/initiatives/conferences/budapest/agenda
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