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Integrated Macro-Financial Modelling for Robust Policy Design

Integrated Macro-Financial Modelling for Robust Policy Design

Objective

During the global financial crisis and ensuing Great Recession, economists at policy-making institutions had little choice but to augment macroeconomic models with ad-hoc assumptions and adjustments in order to provide analysis and advice for policy makers. Our consortium’s proposal aims to move policy-focused macroeconomic modelling beyond this approach to the endogenous modelling of the dynamics resulting from financial risks and related decision making in banks, households, firms and public institutions. We bring together four broad lines of research to systematically develop new behavioural and institutional building blocks, integrating them in policy-focused macroeconomic models and using these models in a new framework for policy evaluation. In terms of building blocks, one line of research moves beyond the assumption of representative and homo-oeconomicus-type agents to incorporate micro-behavioural realism in decision making, while a second line of research advances the modelling of financial institutions, their fragility and the dynamics of systemic risk. The third line of research integrates these new building blocks (including a selection of those developed by researchers outside the consortium) in a new generation of policy-focused macroeconomic models. In parallel, in the fourth line of research new policy evaluation tools are developed, with a focus on robust tools aimed at containing financial contagion and boom-bust cycles, maintaining fiscal sustainability and coordinating monetary, fiscal and regulatory policies in normal and crisis regimes. The consortium comprises researchers with a strong track record in advancing the frontier on behavioural and institutional modelling, highly influential macroeconomic modellers as well as seasoned veterans of model-based monetary, fiscal, and regulatory policy evaluation and design. Consortium members have strong academic backgrounds as well as substantive practical experience at policy-making institutions.

Coordinator

UNIVERSITEIT VAN AMSTERDAM

Address

Spui 21
1012wx Amsterdam

Netherlands

Activity type

Higher or Secondary Education Establishments

EU Contribution

€ 527 000

Administrative Contact

Teresa Klerkx (Ms.)

Participants (11)

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Centre Pour La Recherche Economique Et Ses Applications

France

EU Contribution

€ 277 000

JRC -JOINT RESEARCH CENTRE- EUROPEAN COMMISSION

Belgium

EU Contribution

€ 144 000

UNIVERSITA DEGLI STUDI DI PAVIA

Italy

EU Contribution

€ 134 000

UNIVERSITY OF SURREY

United Kingdom

EU Contribution

€ 139 000

KATHOLIEKE UNIVERSITEIT LEUVEN

Belgium

EU Contribution

€ 226 000

UNIVERZITA KARLOVA

Czechia

EU Contribution

€ 115 000

JOHANN WOLFGANG GOETHE-UNIVERSITATFRANKFURT AM MAIN

Germany

EU Contribution

€ 290 000

UNIVERSITA CATTOLICA DEL SACRO CUORE

Italy

EU Contribution

€ 244 000

AGENCIA ESTATAL CONSEJO SUPERIOR DEINVESTIGACIONES CIENTIFICAS

Spain

EU Contribution

€ 211 000

CITY UNIVERSITY OF LONDON

United Kingdom

EU Contribution

€ 139 000

UNIVERSITE LIBRE DE BRUXELLES

Belgium

EU Contribution

€ 54 000

Project information

Grant agreement ID: 612796

Status

Closed project

  • Start date

    1 May 2014

  • End date

    30 April 2017

Funded under:

FP7-SSH

  • Overall budget:

    € 3 337 592,40

  • EU contribution

    € 2 500 000

Coordinated by:

UNIVERSITEIT VAN AMSTERDAM

Netherlands