Third Research Conference of the Macroeconomic Modelling and Model Comparison Network (MMCN)

The latest developments in macroeconomic modelling were in the focus of the Third Research Conference of the Macroeconomic Modelling and Model Comparison Network (MMCN) on June 13 and 14 at Campus Westend. More than 100 researchers discussed their findings regarding macroeconomic models in monetary and fiscal policy. A special focus was put on assessing the effects of macroprudential policies and forecasting with macroeconomic models.

The MMCN is a research network under the auspices of the Centre for Economic Policy Research (CEPR) and forms part of the Macroeconomic Model Comparison Initiative (MMCI), a joint project led by the Hoover Institution at Stanford University and the IMFS. Quantitative macroeconomic models play an important role in informing policy makers about the consequences of monetary, fiscal and regulatory policies.

In his keynote lecture, John B. Taylor of the Hoover Institution emphasized the recent revival of policy rules research, citing the new section of the Fed’s Monetary Policy Reports as an example. In his view, this is partly due to the need to improve monetary policy with concern about the effective lower bound (ELB) and the disappointments with monetary policy leading to the great recession. To sum up, Taylor asked for an international monetary reform where each central bank follows its own rules-based monetary policy within a global rules-based monetary system. “With the Fed normalizing its monetary policy, this reform could follow and each central bank would describe and commit to a strategy”, Taylor said.According to Taylor, this would be attractive as each country could choose its own strategy and contribute to global stability. However, as Taylor pointed out there are large differences between policy models and hence a need for robustness studies.

In the second keynote speech, Lars Peter Hansen of the University of Chicago elaborated on the question of pricing uncertainty induced by climate change. In a situation with various components to uncertainty and measurement challenges as the impacts are regionally different as well as the long-run and short-run effects, Hansen and his co-authors Brock and Barnett come to the conclusion that asset pricing and decision theory tools help in navigating through the multiple layers of uncertainty.

The MMCI project is financially supported by the Sloan Foundation. The MMCI is led by John Taylor, Hoover Institution at Stanford University, as well as Volker Wieland and Michael Binder, IMFS and Goethe University. As a part of this project, Wieland and his team have expanded their open platform for macroeconomic models, the macroeconomic model data base (MMB), which now offers 128 models. On the website, researchers can share formulas and codes of their models and also reproduce the calculations of other researchers. In 2018, the Second Research Conference took place at the Hoover Institution at Stanford University.

Program and slides