The Institute for New Economic Thinking‘s Taskforce on Macroeconomic Efficiency and Stability, chaired by Professor Joseph E. Stiglitz, was created in 2012 in order to deepen the studies on macroeconomic inefficiency and instability, especially the inefficiencies and instabilities arising from the interaction of agents and institutions operating in networks and from pervasive macroeconomic externalities. The 2008 North-Atlantic financial crisis highlighted the importance of these phenomena and motivated the creation of the Taskforce.
The Taskforce consists of different working groups that focus on the causes and consequences of the instabilities that arise in adaptive economic systems; the study of the resolution of the crises that eventually result from those instabilities; the macroeconomic externalities and their implications for macroeconomic (including both monetary and macro-prudential regulatory) and labor market policies; the endogenous emergence of systemic risk in the financial system due to market participants’ incentives to get interconnected in specific ways in network structures, as well as how to integrate climate policy risk in the valuation of interconnected financial contracts—a central question in the ongoing policy debate on the role that the financial sector can play to foster a transition to a low-carbon economy; and the macroeconomic externalities of artificial intelligence, analyzing how artificial intelligence affects labor market outcomes and policies to deal with those effects. Professors Joseph Stiglitz, Stefano Battiston, Martin Guzman, and Anton Korinek lead the different activities of the Taskforce, that is supported by a team of postdocs and research assistants and associates.
The work of the different groups is complementary towards a common goal of understanding how market economies can perform better, developing models and empirical analysis that create new ideas for policies that aim at improving market stability, efficiency, and fairness. Key to understanding the functions (and dysfunction) of financial networks is an understanding of the externalities to which they give rise, in particular in the event of bankruptcy and even more so when crises occur.
The Taskforce held its 2018 Annual Meeting on Wednesday, August 29, 2018, at Columbia University Business School in the City of New York. The meeting program, as well as the papers and presentations, are available below.
9:30am Introduction by Taskforce Chair, Professor Joseph Stiglitz
Stefano Battiston (University of Zurich);
Agostino Caponi (Columbia University GSB); “Bail-ins and bailouts: incentives, connectivity, and systemic stability”
Cynthia Mei Balloch (Columbia University and LSE); “Inflows and Spillovers: Tracing the Impact of Bond Market Liberalization”
12:30-1:45pm Lunch – Discussion: “Structural Transformations and Deep Macroeconomic Downturns”
Bruce Greenwald (Columbia University)
Christopher Boone (Cornell University)
Joseph E. Stiglitz (Columbia University)
Levent Altinoglu (The Federal Reserve Board of Governors); “Sovereign Debt Distress and Aggregate Demand Externalities”
Jonathan Kreamer (Florida State University);
Tomohiro Hirano (University of Tokyo); “The Wobbly Economy”
Michael Poyker (Columbia University); “Do Private Prisons Raise Incarceration Rates?”
5:30pm Final remarks by Joseph E. Stiglitz