Program

Toward an alternative macroeconomic analysis of microfoundations, finance-real economy dynamics and crises

Budapest, 6-7-8 September 2010

Central European University, Budapest, Hungary

Popper Room

Institute for New Economic Thinking Institute (INET)
Central European University, Budapest
DIME - Dynamics of Markets and Institutions in Europe (Network of Excellence, European Union, 6th Framework Program)
Laboratory of Economics and Management (LEM) Sant'Anna School of Advanced Studies, Pisa

Program

Monday 6 September

Registration and light lunch 1:00-2:30

Session 1 - 2:30 – 6 pm
Coffee break 4:00 - 4:20

Incumbent theories facing the current crisis
i. The fundamental limitations of the toolkit of incumbent economic theory: the failure to interpret the current crisis as a litmus test. What have been and are the worse theoretical errors of omission and commission? Discussion introduced by J. Stiglitz and A. Leijonhufvud

ii. How far can we go in the interpretation of the crisis and the continuing slump on the grounds of what we have called in the outline of the conference as “progressive new Keynesianism”? and, conversely, what are the interpretative domains for which we need more urgently a new macroeconomic theory? Discussion introduced by D. Colander with structured interventions by A. Bhaduri and J. Kregel

iii. Open discussion on the contribution of the theory to macroeconomic policy management. This involves its contribution to conditional forecasting, i.e. correctly anticipating the consequences of policy moves.

Tuesday 7 September

Session 2 – 9:30 am – 1 pm
Coffee break 11:00 - 11:20

Toward a full fledged microfounded macroeconomics
The session will address among other themes:

Coordination and coordination failures;
Explicit representation of out-of-equilibrium dynamics;
Agent based modelling;
The nature of heterogeneity among agents;
The characterization of “boundedly rational” behavior

Introduction by A. Kirman, and G. Dosi. Structured comment by J. Kornai

Some reflections on the following questions:

a. Is simulation an effective tool for going from microfoundations with heterogeneous
actors, to macro conclusions?

b. In models of that kind, how do we handle the problem of actors’ expectations?

c. How do we handle price determination and market clearing (or not)?
put forward by S. Winter and a structured intervention by C. Hommes

Templates of agent based models addressing the foregoing themes by G. Dosi / B. Verspagen and D. Delli Gatti / M. Gallegati

Structured contributions to the discussion by practitioners in the field (including H. Dawid)

Lunch break 1:00 – 2:30

Session 3 – 2:30- 6:30 pm
Coffee break 4:00 – 4:20

The statistical and econometric evidence
Introduction by M. Lippi, presentations by

1. K.Juselius“Testing Exchange Rate Models Based on Rational Expectations vs Imperfect Knowledge Economics: A Scenario Analysis”
2. D.Hendry“On the Mathematical Basis of Inter-temporal Optimization”
3. S. Johansen “An econometric analysis of the Blanchard-Watson bubble model”
4. M.Lippi “Aggregation, fundamentalness and factor models”
5. A.Roventini“The econometrics of agent based macromodels”

Open discussion

Wednesday 8 September

Session 4 – 09:30 am
Coffee break 11:00 - 11:20

Complex dynamics ‘in action’