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Next Generation Analytical Approaches to Policy - events

NAEC and its partners are developing new approaches and injecting them into the networks and structures of policymaking. The aim is to develop innovative approaches applying insights and methods from agent-based modelling, behavioural neuroscience, contagion dynamics, network science, econophysics, and mathematics to policy questions spanning public health, inequality, conflict and economics. Discussions with world experts on state-of-the-art policy applications emerging from new analytical tools and techniques show how methodological innovations and interdisciplinary approaches could contribute to a better understanding of the complexity and interaction of our economic, financial, social and environmental systems. 

16-18 June 2021 - Forecasting the Future for Sustainable Development

 

CEST, in collaboration with OECD-NAEC and the Young Scholars Initiative @ INET, organises a 3-day workshop to discuss new approaches to modelling and forecasting towards more sustainable goals. The event brings together young scholars and policymakers to discuss a broad range of topics including impact investing, SDGs and ESG impact evaluation, patent analytics, bibliometrics, and foresight methods.

Agenda

Registration

Full details on event website



New Approaches to Modelling and the Science of Prediction

The method of policy and decision making in both the public and the private domain should rely mainly on three key constituents: (i) assumptions, (ii) modelling and (iii) empirical validation. All of the three are tightly interconnected as one can make the other collapse and as such they all have to be thoroughly researched and validated.

Models should make sound and useful predictions: they should be able to forecast the future in a sense and their validation comes from empirical data. At the same time, the increasing quest for quantification and quantitative forecasting has led to arguable models, to say the least, if not to blatant malpractice. In some domains, there has been a dangerous shift from evidence-based policymaking to policy-based evidence, with extremely high social and economic costs.

Which analytical tools can be adopted in order to guide policy-makers to achieve the desired societal impacts? How can reliability of modeling and prediction be improved? This event will then focus on new approaches to modelling and forecasting towards more sustainable goals, bringing together young scholars and policymakers to discuss a broad range of topics including impact investing, SDGs and ESG impact evaluation, patent analytics, foresight methods.

26-27 April 2021 - Symposium on Systemic Recovery

NAEC-Fields logos

 

Fields/OECD-NAEC Symposium at the Fields Institute, Toronto 

This 2-day symposium consists of four sessions of invited talks on the themes below. In each session, a moderator introduces the theme and the key modelling and policy questions and asks the three to four speakers to present their remarks, followed by a discussion and further questions from the audience. In addition, each day includes a session where the main findings of the Extended Problem-Solving Workshop are presented and discussed.

Full agenda (pdf)

Theme 1 - Not out of the woods yet: The Covid-19 pandemic is still raging around the globe. This panel reviews the current state of the crisis, from both a health and economics points of view, and discusses the main lessons learned in the past year. 

Theme 2 - Exit strategies: In the next several months, as vaccines roll out and the number of new cases and deaths consequently decreases, many countries will begin implementing measures for safe reopening of their economies. This panel discusses the short term implications of resumption of economic activities and expected phase out of government policies put in place during the pandemic, including the effects of defaults and bankruptcies on global financial stability. 

Theme 3 - Which normality?: This panel addresses the medium term economic effects of the pandemic, including possibly permanent changes in productivity and the nature of work, the role of expanded private and public debt, and the interactions between inequality and health. 

Theme 4 - The long haul: The Covid-19 crisis exposed fragilities in the health care system, social safety nets, supply chains, and transportation networks, while at the same time redefined the limits of what is possible in terms of adaptability and policy responses. This panel explores implications for long term economic and environmental sustainability, including the appropriate level of preparedness for crises, the trade off between efficiency and resilience, and how these lessons can be help fight the looming climate change crisis.

> Full details and registration available at Fields/OECD-NAEC Symposium on Systemic Recovery 

Extended Problem Solving Workshop

Deadline for graduate student and Postdoctoral Fellow applications extended until March 12, 2021. Apply now! 

The Extended Problem Solving Workshop (EPSW) will run for three weeks with up to five groups of graduate students and postdocs working under the supervision of a faculty mentor on a number of problems proposed by partner institutions. Each problem will be presented at the Fields/OECD-NAEC Symposium on Systemic Recovery (26-27 April, Toronto)

(1)   OECD problem: Effectiveness of policy interventions in different countries and lessons for the future

(2)   Bank of Canada problem: Business closures in the time of COVID

(3)   Canadian Securities Transition Office problem: Fallen angels 

Full details available at Extended Problem Solving Workshop

4 June 2020 - Faster economic indicators with data from aircraft and online photos

Tobias Preis, Professor of Behavioural Science & Finance, University of Warwick Business School

The crisis we are currently fighting has underlined how critical fast indicators are for good decision making. This talk outlines some recent highlights of research which demonstrates how alternative data sources can be used to produce more timely economic and social indicators. First, it illustrates how billions of real-time aircraft location broadcasts can provide a leading indicator for aviation’s direct contribution to GDP in both the UK and the US [1]. This analysis draws on an adaptive nowcasting framework originally developed to generate quicker estimates of current flu cases using Google search volume [2]. Second, it describes how metadata from millions of photographs shared online can be used to produce a real-time indicator for global travel flows [3]. These studies contribute to the broader research programme of the Data Science Lab at Warwick Business School, which investigates whether alternative data from the Internet and beyond can be used to measure and even predict human behaviour.

Faster economic indicators with data from aircraft and online photos


[1] Miller, S., Moat, H. S. & Preis, T. Using aircraft location data to estimate current economic activity. Scientific Reports 10, 7576 (2020) https://www.nature.com/articles/s41598-020-63734-w.pdf

[2] Preis, T. & Moat, H. S. Adaptive nowcasting of influenza outbreaks using Google searches. Royal Society Open Science 1, 140095 (2014) https://royalsocietypublishing.org/doi/pdf/10.1098/rsos.140095

[3] Preis, T., Botta, F. & Moat, H. S. Sensing global tourism numbers with millions of publicly shared online photographs. Environment and Planning A 52, 471-477 (2020) https://journals.sagepub.com/doi/pdf/10.1177/0308518X19872772

6 March 2020 - Masterclasses in New Approaches to Economic Challenges

On 6 March 2020, NAEC and its partners held masterclasses with some of the world’s leading practitioners on complexity, network analysis and agent-based modelling - See agenda

-> Watch the webcast

-> Introduction

Alan Kirman, Chief Advisor for NAEC, CAMS-EHESS, Paris

-> Understanding Agent Zero (pdf)

Led by Joshua M. Epstein, Professor of Epidemiology, New York University School of Global Public Health and External Professor, Santa Fe Institute

-> Agent-Based Modelling and the Financial System

Led by Richard Bookstaber, Author of The End of Theory

-> Econophysics

Led by Michael Benzaquen, Chair of Econophysics & Complex Systems, LadHyX - CNRS - Ecole Polytechnique, and José Morán, Ecole Polytechnique

-> Stock-flow consistent models and Climate-Economy Modelling (pdf)

Led by Matheus Grasselli, Professor of Mathematics, McMaster University and the Fields Institute, Toronto

The masterclasses were preceded by a one and a half-day conference under the auspices of the NAEC initiative calledIntegrative Economicson 5-6 March 2020

6 March 2020 - Forecasting Financial Crises

Sebastian Poledna & Elena Rovenskaya from the OECD’s Strategic Partnership with the International Institute for Applied Systems Analysis (IIASA) present work on forecasting financial crises using a large-scale ABM model.

The financial crisis of 2007-2008 and the subsequent Great Recession sparked widespread discussion among economists on the requirements for future macroeconomic models. The benchmark model in 2008 of Smets and Wouters, which shares many features with models currently used by central banks and large international institutions, did not give any warning of the emergence of a crisis in 2008 and has difficulty explaining both the depth and the slow recovery of the Great Recession. To address these and other shortcomings, we develop an agent-based model for the euro area that fulfills widely recommended requirements for future macroeconomic models by i) incorporating financial frictions, ii) relaxing the requirement of rational expectations, iii) including heterogeneous agents, and iv) building on appropriate micro-foundations.

Using macroeconomic and sectoral data, the model includes all sectors (financial, non-financial, household, and a general government) and integrates the real side and financial flows as well as balance sheets with stock-flow consistency. Moreover, the model incorporates many features considered important for future policy models, such as a financial accelerator with debt-financed investment, a complete GDP identity, and allows for non-linear responses.

Importantly, we show that the agent-based model can compete with dynamic stochastic general equilibrium and vector autoregression models in out-of-sample prediction. We demonstrate the model during the Financial crisis of 2007-2008 and the subsequent Great Recession as well as the European sovereign debt crisis—two crises that dynamic stochastic general equilibrium models struggled to predict and have difficulties explaining. Making use of out-of-sample forecasting exercises we show that the model predicts an endogenous crisis around the most intense phase of the Great Recession in the euro area, albeit with lower severity without a global downturn (which is exogenous to the model). With conditional forecasts, which include an exogenous shock on exports from the global downturn, we demonstrate that the model explains both the severity and slow recovery of the Great Recession.

This will work was presented during the NAEC Integrative Economics Conference on 5-6 March, but the LAB Discussion focused on the details of the modelling approach.

 

21 January 2020 - NAEC-Ecole Polytechnique Workshop on Econophysics and Policy

Researchers from Ecole Polytechnique presenting on Econophysics

Econophysics is an interdisciplinary research field, applying theories and methods originally developed by physicists in order to solve problems in economics, usually those including uncertainty or stochastic processes and nonlinear dynamics.

Econophysics has tended to concentrate on financial markets, and these represent an ideal laboratory for testing economics concepts using the terabytes of data generated every day by financial markets to compare theories with observations. The dynamics of financial markets, and more generally of economic systems, may reflect the same underlying mechanisms that are familiar to physicists.

As models become more realistic, analytics often have to give way to numerical simulations and this is well-accepted in physics.

Econophysics - Introduction by Alan Kirman (pdf)

A presentation from researchers from Ecole Polytechnique on the following themes with discussants from OECD directorates:

Presentations by OECD discussants: Boris Cournede ¦ Maria Chiara Cavalleri ¦ Eleonora Mavroedi

> Watch the webcast

17 April 2019 - NAEC masterclasses

NAEC and its partners held master classes with some of the world’s leading practitioners on complexity, network analysis and agent-based modelling

>> Agenda (pdf) >> Watch the webcast - am / pm

 

Complexity Economics

Led by Alan Kirman, Chief Advisor for NAEC, CAMS-EHESS, Paris

=> Complexity and Economics (pdf)

Elena Rovenskaya, Programme Director, Advanced Systems Analysis, IIASA

=> Towards a Systems Perspective on National Well-being (pdf)

Agent-Based Modelling

Led by Robert Axtell, Chair of the Department of Computational Social Science at George Mason University, and Santa Fe Institute

Networks and Systemic Risk

Led by Thomas Hurd, Professor of Mathematics, McMaster University, Toronto

=> Introduction to Financial Networks and Systemic Risk (pdf)

Macroeconomics

Led by Matheus Grasselli, Professor of Mathematics, McMaster University and the Fields Institute, Toronto

=> An Introduction to Stock-flow Consistent Models in Macroeconomics (pdf)

12 February 2019 - Why Big Data Needs Small Data

Professor Roberto Rigobon, Professor of Applied Economics at the MIT Sloan School of Management

A discussion on how to combine big and small data to construct better national statistics in the context of MIT and Harvard’s Billion Prices project. Professor Rigobon will talk about the advantages and the limitations of using big data technique for economic measurement and the possible extension to our area of expertise, measuring competition with prices in services sectors and the links with policy regulations. He will illustrate with concrete examples the IT architecture put in place to collect unstructured data from the web and online retail platforms, such as Walmart and Amazon, the process designed to transform these data into a structured dataset suitable for the daily measurement of CPI inflation in a set of countries. From his experience, we will consider the feasibility of replicating such an approach in the context of the NAEC Innovation LAB and discuss future collaboration.

>> Watch the webcast

14-16 January 2019 - 10 Years After the Crisis - Modelling Meets Policy Making

The 2008 financial crisis posed unprecedented challenges to practitioners and policy makers around the world. Researchers responded in tandem by re-examining the approaches to model financial markets and their interactions with the real economy. Agent-based models, networks, dynamical systems, and mean-field games became part of the emerging research area of systemic risk alongside more traditional economic models.

In a joint OECD NAEC-Fields Institute workshop in Toronto, leading academic experts and policy makers reflected on the lessons learned over the past 10 years and discussed recent advances in modelling of the financial system with the aim of a sustainable, inclusive and stable economy.

=> Summary of conference (pdf)

The first day of the workshop featured mini-courses targeted towards graduate students, postdoctoral fellows and other young researchers

Complexity Economics
Alan Kirman, NAEC Initiative

Agent-Based Models in Economics

Blake LeBaron, Brandeis International Business School
Alissa Kleinnijenhuis, University of Oxford

Asset Price Bubbles: Economics, Mathematics, and Statistics

Matheus Grasselli, McMaster University

Networks and Systemic Risk
Thomas Hurd, McMaster University

Blockchains and Distributed Ledgers in Retrospective and Perspective

Alex Lipton, Co-Founder and CTO, Silamoney and MIT

23 October 2018 - Policy Experiments

Andy Haldane, Chief Economist and Executive Director of Monetary Analysis and Statistics at the Bank of England

His seminar on "Policy Experiments (pdf)" endorsed the work of the NAEC Innovation LAB.


As a scientific method, economists have gone from telling stories, to using empirics to developing models. All still have an important role in the policy domain – indeed, the role of each is being reshaped and improved by new data and new technologies. The missing ingredient, at least for macro-economic policy purpose so far, has been experimental methods. These hold great promise for the future, as recent examples in the monetary policy and regulatory policy domain illustrate.

>> Watch the webcast

27 June 2018 - Modelling housing using Agant Based Modelling (ABM)

Marc Hinterschweiger and Arzu Uluc (Bank of England) and Adrián Carro of the Institute for New Economic Thinking (INET)

The Bank of England/Oxford team led an in-depth discussion of their work using ABM to model the housing market at the Bank of England which went into depth on the design, calibration and simulation of their model.

>> Watch the webcast

20 October 2017 - Financial markets, network analysis and ABMs

A technical workshop on methodologies and tools for understanding financial markets with Rick Bookstaber, one of the world’s leading risk managers, and Jean-Philippe Bouchaud, Capital Fund Management and École Polytechnique.
>>  Watch the webcast

ABM background paper (pdf)
Presentation - JP Bouchaud (pdf)
Presentation - R Bookstaber (pdf)

29 September 2017 - New perspectives on the labour market: Policy applications using agent-based modelling (ABM)

In a session on macro-economic insights on labour markets using ABM Jean-Philippe Bouchaud (Capital Fund Management and École Polytechnique) discussed a methodology, inspired by statistical physics, that helps in understanding large macro-economic fluctuations. A session on Micro insights on the Labour Markets Using ABM, with Gérard Ballot, Université Paris 2 Panthéon-Assas, and Jean-Daniel Kant, Université Pierre et Marie Curie (UMPC), reviewed French Labour Laws using a model of the recent French labour market (An agent-based approach to evaluate the impact of economic dismissals facilitation on the French labor market).

>> Watch the webcast (OECD only)

ABM background paper (pdf)
Annotated agenda (pdf)
Presentation ABM - J-P Bouchaud / Presentation ABM - A Mourougane / Presentation ABM - G Ballot et JD Kant / Presentation ABM - P Fialho