icon for Economic Modelling (EMoD)

Economic Modelling (EMoD)

Overview

The Economic Modelling Programme (EMoD) has highlighted major flaws in extant macroeconomic models, revealing that many of their equations do not adequately characterize the evidence, and even their mathematical derivations are invalid when shifts occur. Moreover, `conventional’ assumptions about how economic actors form their expectations about the future (so called `rational expectations’) are in fact irrational in shifting processes. Given these critiques, improved methods and models are urgently needed. Consequently, researchers in EMoD are developing and applying new mathematical, statistical and computational tools to improve empirical econometric analyses, economic policy, and forecasting facing rapidly changing economic outcomes. The research develops novel econometric time-series methods embedded in automatic modelling software that allow empirical modellers to combine insights from subject-matter theory with empirical evidence to discover new results. By retaining theory models, far larger information sets—including when there are more potential explanatory variables than available observations—can be investigated without risking spurious findings, thereby allowing new features to be discovered when the theory-model is incomplete or incorrect. EMoD is led by Professor Sir David Hendry (Director) and Professor Bent Nielsen (Co-Director) and is conducted in collaboration with the University's Department of Economics and Nuffield College. Sadly, Sir Tony Atkinson passed away at New Year, 2017. His intellectual contribution was immense, his commitment outstanding, and his productivity remarkable. Tony will be greatly missed, but his lifetime struggle to bring inequality to the forefront of economics is at last being realized.
 

About the Programme

The 21st century began with the largest global economic and financial crisis since the Great Depression almost 80 years earlier. Many factors have been blamed for this disastrous outcome, but inadequate economic models and a failure to forecast the crash are partly at fault, exacerbated by poor policy responses, precipitating the need for a paradigm shift. In fact, economic analyses, policy, empirical modelling and forecasting all confront major difficulties when sudden, or very rapid, unanticipated changes occur in economies. EMoD researchers engage with academics and policymakers to disseminate their work and show how their approach differs substantively from conventional methods. Since its inception, policymaker interactions include the central banks of Argentina, Australia, Austria, Brazil, Canada, Cyprus, Greece, South Africa, Sweden, Switzerland and UK; US Federal Reserve Board, European Central Bank, World Bank, IMF, Bank for International Settlements, Statistics Norway and Statistics South Africa. EMoD researchers actively participate in, and present at, International Economic and Econometric Conferences, as well as delivering seminar presentations. The program also addresses climate change as that too has major implications for economies worldwide. There have been more than 3,000 citations of our researchers work since the programme’s inception. 

Who's Involved?

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Janine Aron

Senior Research Fellow

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Vanessa Berenguer-Rico

Senior Research Fellow

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Sophia Carodenuto

Visiting Fellow

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Jennifer Castle

Senior Research Fellow

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Jurgen Doornik

Senior Research Fellow

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James Duffy

Research Fellow

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David F. Hendry

Co-Director of Economic Modelling

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Ryoko Ito

Research Fellow

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Luke Jackson

Research Fellow

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Andrew Martinez

Doctoral Student

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Sophocles Mavroeidis

Senior Research Fellow

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John Muellbauer

Senior Research Fellow

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Bent Nielsen

Co-Director of Economic Modelling

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Felix Pretis

Research Fellow

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James Reade

Associate

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Moritz Schwarz

Associate

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Kevin Tang

Research Assistant

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Angela Wenham

Programme Administrator for Economic Modelling