The Institute will fund Professor Ussher’s project to simulate how distress and
growth propagate through the real economy
New York, NY, November 02, 2010 – The Institute for New Economic Thinking (INET), launched with a $50 million pledge from George Soros to promote changes in economic theory and practice through research grants, Task Force groups, academic partnerships, and conferences, announced that it has selected Leanne Ussher of Queens College, City University of New York, Sorin Solomon of Hebrew University Jerusalem, Israel and Marco Lamieri of Intesa Sanpaolo, Milan, Italy to be awarded a project grant through the Institute’s Inaugural Grant Program to develop a simulation of how distress and growth propagate through the real economy via a network of inter-firm trade credit. The grant program, along with other INET initiatives, was created in direct response to arguably the worst economic crisis in world history, and has been designed to encourage and support new economic thinking. Starting in 2011, INET will conduct two grant cycles annually.
Stress testing financial networks has become an essential part of macro-prudential activities. But the spillover onto the real side of economy remains difficult to assess. Using INET’s funding, the project will map, model and simulate an extensive trade credit network using visualization software, a stock-flow consistent micro-macro model underpinned by an agent-based model (ABM) based on local and dynamic firm balance sheet rules (behavior), and statistical mechanics to measure and forecast emergent macro regularities.
“In our response to the worst economic crisis since the Great Depression, there is a greater need now more than ever for reliable measurements for further warnings,” commented Dr. Rob Johnson, executive director of INET. “The tools developed from this project’s research directly address this challenge, and will aid bank monitoring as well as stress testing initiatives.”
Leanne Ussher is Assistant Professor of Economics at Queens College, CUNY. She holds a PhD in Economics from the New School for Social Research (2005) and her research is broadly focused on money, banking, and the macro-microstructure of financial markets. She is co-founder of the NYC Computational Economics and Complexity Workshop. In 2008 she was a visiting Research Scientist, in the Multi-Agent System Division of the Institute for Scientific Interchange, Italy. She has publications that simulate market price behavior from agent-based models that ‘grow economies’ from the bottom up, and emphasize the importance of benchmarking models with zero intelligent agents.
“We will use agent-based modeling techniques to create a computerized simulation of an institutionally rich network, replicating empirical emergent macroeconomic and systemic outcomes,” said Leanne Ussher, Assistant Professor in Economics at Queens College, City University of New York. “This methodology will contribute towards a new economic paradigm of micro foundations for macroeconomics, that treats the economy as a large interactive network. It offers a new way to model the economy as a complex system. In the United States, INET is one of the few institutions willing to fund this new approach.”
INET’s Inaugural Grant Program has been designed to harness the new economic thinking we recognize as crucial to effecting change. The program was launched this summer and received more than 500 applications from around the world and has selected 31 initiatives to be awarded grants totaling $7 million. INET’s Grant Program will continue with two similar grant cycles annually, the next one commencing in the spring of 2011.
For further details regarding INET’s Grant Program or additional projects and people to be awarded grants please visit the Institute’s website.
About the Institute for New Economic Thinking:Launched in October 2009 with a $50 million commitment from George Soros and driven by the global financial crisis, the Institute for New Economic Thinking (INET) is dedicated to empowering and supporting the next generation of economists and scholars in related fields through research grants, Task Force groups, academic partnerships, and conferences. INET embraces the professional responsibility to think beyond current paradigms. Ultimately, INET is committed to broadening and accelerating the development of innovative thinking that can lead to insights into and solutions for the great challenges of the 21st century and return economics to its core mission of guiding and protecting society. For more information please visit http://www.ineteconomics.org/
For more about Queens College visit http://www.qc.cuny.edu/Pages/default.aspx
Contact: Phyllis Cohen Stevens
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