• There is a high degree of acceptance now of the
make mistakes, learn, and adapt, and how such
need to think about the economy and the financial
evolution determines market dynamics. Negative
system as a complex adaptive system and the
feedback is essential and Andrew Lo suggested a
tools of complexity are increasingly being used in
financial NTSB be established for analyzing market
policy-making institutions, regulatory agencies,
crashes.
and central banks.
The Central Bank of Canada and Finance Ministry
• Network analysis is essential to understand
were reasonably confident about the ability of
systemic risks. Stresses in one or more institutions the authorities to handle another crisis and that
could trigger default or stresses on other
buffers, safeguards, and resilience were adequate.
institutions leading to scale cascades of system
However, economist Bill White suggested another
failure.
crisis is inevitable and its magnitude could be
• The Institute for New Economic Thinking (INET)
provided details of state-of-the-art ABM modelling
which offers a more realistic way of thinking
about markets. They will continue to be a key
partner of NAEC, as the Organisation for European
Cooperation and Development gets up to speed in
this area. Joint work will be supported financially
by a three-year funding package by Baillie Gifford.
even greater than that of the crash ten years ago.
The conference highlighted the benefits and the
necessity of collaboration, experimentation and
inter-disciplinarily planning in promoting new
economic thinking and action. It highlighted
the important role NAEC is playing in focusing
the energies of different clusters of researchers
to develop a systemic perspective on some
of our most pressing challenges and the
tools, techniques and narratives needed to
understand them. Findings of the discussion
are intended to be shared with the Committee
for Financial Markets in April 2019.
• Cyber-security has emerged as one of the most
important systemic risks to financial stability and
should be considered like other risks – credit
risks, operational risks, etc. It is now a major
and impending concern of financial institutions.
Beyond technical solutions which should be
enhanced, it should be remembered that there is
The Fields Institute is an ideal collaborator for
always a weak human link and that employees and NAEC and there were several opportunities
customers should be made aware of these threats. discussed for strengthening co-operation,
involving parts of the Canadian government
• Proportionally, the wealthy spend less of their
income and the poor and middle class increasingly (this was discussed at a meeting with a Senior
Director from the Bank of Canada) and INET.
have to borrow to maintain living standards,
leading to financialization. Neo-classical models
There may also be interest in funding such a joint
are poorly equipped to model these relationships. effort with the Natural Science and Engineering
Unbalanced growth will increase financial fragility, Research Council pledging resources.
generate periodic crises, and lead to real economy
Alan Kirman (Aix-Marseille University) made
instability.
• Inequality has probably increased financialization
rather than vice-versa as is commonly assumed
according to Lars Osberg (Dalhousie University)
and Steve Pressman (Monmouth University).
• Using stock-flow consistent models, Gaël Giraud
and his co-authors suggested that climate change,
unchecked, could lead to financial and economic
collapse. A price signal (carbon tax) provides
the right incentive to avoid most of the climate
damage but would not preclude financial risks.
• New paradigms and narratives are needed
to understand financial markets. This would
include better understanding of how individuals
an excellent contribution to the conference,
continually questioning the approaches presented
and pushing for policymakers to go further in
implementing some of the key insights of NAEC.
Overall, the event was extremely well received.
I cannot think that, if I had to spend my birthday away from
home, I could have found a better environment. To spend
it with such a interesting and friendly group with such
different backgrounds was a real pleasure. This sort of thing
should be easy to do but is, in fact, extremely rare. Thanks
everybody it was a memorable occasion for me.
- Alan Kirman (Aix-Marseille University)
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