Rebuilding Macroeconomics: Instability Hub Research Call

Application Details

Research Hub Question:Why are Economies Unstable?

Research Hub Leader:Prof Roger E. A Farmer & Jean-Philippe Bouchaud

Application Deadline: July 18, 2018

Submit Application to: Richard Arnold (r.arnold@niesr.ac.uk)


Background

The self-correcting mechanism present in core macroeconomic models appears to be questionable today. A decade after the Great Recession and we face unexpectedly weak productivity and the lingering spectre of ‘secular stagnation.’ Such persistent economic underperformance has corrosive effects on standards of living over time.

A key theme which emerged from our workshop is the extent to which economic agents can learn about the future from the past as assumed in these core macroeconomic models. This foundational assumption enables the use of probability methods to be deployed over time and for the system to converge to a unique long-run equilibrium independent of its initial conditions.

Questioning this foundational assumption (ergodicity) opens-up a number of potentially fruitful directions for future research.

visit our instability hub

18 June 2018

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