The 2007-9 financial crisis was precipitated by a unique combination of events to which many commentators have suggested the response of mainstream macroeconomic thinking was inadequate.
Stimulating macroeconomic thinking into previously unexplored avenues, the ESRC-Oxford Martin School International Scientific Symposium on Macroeconomics takes place in Oxford this week. It was organised by Oxford Martin School Fellows Professor John Muellbauer and Sir David Hendry.
Attracting distinguished economists from the US, the European Central Bank, the Bank of England and European and UK universities, the symposium takes its cue from the events of 2007-9 which have cast a critical light on the capabilities and limitations of economic models.
The symposium brings together a range of perspectives to identify future directions for macroeconomic research. Output from the symposium will feed into the Economic and Social Research Council’s research development plans.
Keynote speakers and discussants at the Symposium have been invited to address a variety of issues, including the rise in the ratio of private sector debt to GDP in economies such as the US and UK; earnings inequality; falling household savings ratios; shifting correlations between credit growth and economic growth; asset pricing puzzles; and policies that might be appropriate in the aftermath of the global financial crisis.
The future focus of world-leading macroeconomic research is likely to encompass some of the following possibilities:
- deepen the range of analytical and mathematical frameworks within the DSGE (dynamic stochastic general equilibrium)approach, incorporating financial market frictions and the roles of policy and regulation in financial markets;
- approaches not previously considered mainstream to the discipline, including agent-based models, other complexity-science based approaches, and non-equilibrium modelling;
- import systems-based approaches from modern physics and biology, including network analysis;
- engage with other dimensions of micro-economics such as behavioural approaches and recent insights as to their biological underpinning;
- place much greater emphasis on the role of empirical evidence.
A report on the proceedings of the Symposium is due to be published within the coming months.