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Conference on Behavioural Macroeconomics, 22 - 23 June 2009

Conference Description
Conference Program
Speakers & Papers
Venue
Sponsors
Coordinator

Conference Description

The unfolding global financial crisis dramatically illustrates the deficiencies of the current state of macroeconomic theory. The Great Moderation, the recent era of high growth and subdued volatility, has ended abruptly with unprecedented gyrations in stock markets, severe disruptions in global credit markets, volatile inflation and—most likely—deep recessions across the industrialised world.

Such wholesale shifts in economic fortunes are difficult to reconcile with dominant standard economic theory, which emphasises rationality and linearity. Behavioural economics seeks to refine our understanding of the discipline by accounting for relevant features of human behaviour that are absent in the standard economics framework. The basis for analysis is empirically well-documented psychological and sociological factors such as cognitive bias, reciprocity, fairness, herding, and bounded rationality. Finance theorists have long acknowledged that individuals are bounded in many dimensions, in particular in their rationality, self-control and self-interest. However, insights from behavioural economics have only recently found their way into macroeconomics. While behavioural macroeconomics is still in its infancy, it is rapidly making inroads into the mainstream. Prof. George Akerlof in his 2001 Nobel Prize acceptance speech said,

“I have argued in this lecture that reciprocity, fairness, identity, money illusion, loss aversion, herding, and procrastination help explain the significant departures of real-world economies from the competitive, general equilibrium model. The implication, to my mind, is that macroeconomics must be based on such behavioral considerations.”
[G. Akerlof, 2002, “Behavioral Macroeconomics and Macroeconomic Behavior,” American Economic Review 92(3), p.428]

This two-day conference run by the Centre for Applied Macroeconomic Analysis at the Australian National University brings together leading researchers from the US, Europe and Oceania to present recent advances in behavioural macroeconomics. The themes and papers have a strong theoretical footing, but the workshop’s purpose is to showcase the range of applications of behavioural methods and to display their policy relevance. The workshop will therefore be of interest to academics and research students, to policy makers from central banks and government departments as well as to financial market economists.

Full Conference Program now available.

Speakers & Papers

Sumit Agarwal (Federal Reserve Bank of Chicago)
Consumer Behavior in Consumer Credit Markets

Morris Altman (Victoria University of Wellington)
Involuntary Unemployment, Macroeconomic Policy, and a Behavioral Model of the Firm

Masanao Aoki (University of California, Los Angeles)
Non-self Averaging Economic Growth: A Criticism of Endogenous Growth Theory

Christopher Crowe (International Monetary Fund)
Irrational Exuberance in the U.S. Housing Market: Were Evangelicals Left Behind?

Paul de Grauwe (Catholic University Leuven, Belgium)
Animal Spirits and Monetary Policy

Lorenz Goette (University of Geneva)
Fairness and Effort: Evidence from a Field Experiment

Ian McDonald (University of Melbourne)
Macroeconomics and the behavioural foundations of the fix-flex price mix: Developing some early insights into macroeconomics

Gordon Menzies (University of Technology Sydney)
Pricing Under Inferential Expectations

Bruce Preston (Columbia University)
Expectations, Learning and Business Cycle Fluctuations

Julio Rotemberg (Harvard University)
Altruistic Dynamic Pricing with Customer Regret

Willi Semmler (New School University, New York)
Asset Pricing and Loss Aversion: Theory and Empirics

Jean-Robert Tyran (University of Copenhagen)
Money Illusion

Venue

H.C. Coombs Centre for Financial Studies
122A Kirribilli Avenue
Kirribilli NSW 2061

Sponsors

Australian Treasury
Australian National University
Department of Education, Employment & Workplace Relations
New Zealand Treasury
Rabobank
Reserve Bank of Australia
Reserve Bank of New Zealand
University of Southern Queansland
University of Technology Sydney

Coordinator

Dr Timo Henckel
Director of the CAMA Behavioural Macroeconomics Program
timo.henckel (at) anu.edu.au