Grant

Financial Fragility and Systemic Risk

The project strives to provide new ideas and policy proposals to contain the spread of systemic risk in the financial system through appropriate regulation of financial markets and intermediaries, as well as the design of monetary policy. The ultimate goal of the project is to help devise ways to protect and prevent society from the risk of a new Global Financial Crisis.

Systemic risk can be viewed as the spread of financial fragility in the economy on a scale that leads to a financial crisis. The subprime crisis of 2007, the Global Financial Crisis (GFC) of 2008, and the extraordinarily long and painful recession that ensued, have dramatically unveiled the recent build-up of systemic risk.

The project will follow the agent-based approach to analyze credit networks, and will develop models and datasets that incorporate financial factors, economic policy, heterogeneity, non-linearity and networks.

 
Professor of Economics
Catholic University in Milan