The current financial crisis suggests that economic theory has not provided a comprehensive response to understand what is happening in the financial system and market. For this reason a group of experts, consisting of leading worldwide economist s, will attempt to explain the crisis and create new foundations for macroeconomic models, which will involve significant change in the monetary policies of each country.
The Workshop “Theoretical Questions Around the Economic Crisis”, organized by the Banco Central and the Centre for Mathematical Modeling, FCFM-U. Chile, is attending by the economists Michael Woodford (Columbia Univ), George Evans (Univ. Oregon), Stephen Morris (Princeton Univ), Jess Benhabib (Univ. New York), Roger Guesnerie (College de France) and Christophe Chamley (PSE Boston Univ.) Some of these experts have been recognized teachers of well known national economists and have been highlighted for their significant contributions in the micro and macro economy through scientific articles, book publishing and as advisers to their governments.
These foreign economists are part of the International Network on “Coordination of Expectations,” which will be officially launched during this Workshop. This network, composed of 64 experts grouped in thirteen nodes, has among its objectives the dissemination of knowledge and to generate discussions on the fundamentals of macro and micro models and the problem of coordinating expectations. Of these proposals are new mathematical challenges, both in its analysis and its use.
Alejandro Jofre, deputy director of the Centre for Mathematical Modeling and one of the organizers of this meeting, the current economic model is based on the assumption of “rational expectations”, which states that agents behave as if they had a vision not unbiased and statistically accurate. “Many models and analyses are done assuming this hypothesis, however with the current crisis it has begun to be questioned and alternatives have been proposed to explain the best way what is happening with the financial crisis,” he says.
For the mathematical economist and leader of Santiago Node of the International Network on “Coordination of Expectations” in this workshop will discuss the impact on macro and micro models if today they stop working with the assumption of rational expectations. “The impact will be not only in the structuring of new models but also in the proposed new economic policies. These enable new business models to understand, cope better and avoid a crisis like the present, “said Jofre.
