Winston Wei Dou is finishing his PhD in financial economics at the Massachusetts Institute of Technology, where his research interests include assets pricing, uncertainty, market efficiency, international finance, and monetary policy. Before studying at MIT, he earned a PhD in statistics from Yale University and holds bachelor’s degrees in mathematics and in economics from Peking University, China. He has received multiple academic awards, including an MFM fellowship.
You are just finishing your second PhD. How did you become interested in economics, and in particular, macro financial modeling (MFM)?
Growing up and attending school in China, I was always fascinated by mathematics, though not necessarily interested in the economy. So it was an easy decision to pursue my undergraduate degree in math. At that time, however, I was both struck and puzzled by how much poverty was in the news and how financial markets fluctuate so much, and yet they play a vital role in creating growth. I decided to add a second major in economics to investigate these questions. That’s really how it started. Later, I earned a PhD in statistics from Yale in 2010, and I’m just finishing another PhD in financial economics at MIT. My background in mathematics and statistics has provided me with helpful training in modeling methodologies that, today, help me pursue fascinating questions about how economic policy affects behavior.
It seems as though you’ve prepared yourself well to understand the mathematical as well as the theoretical parts of MFM. For those who are not economists, could you describe what macro financial models are and why they are important?
Macroeconomic and financial issues are often the types of stories you see in the newspapers and feel in your wallet. One prominent example: the recent financial crisis and recession. Fluxes in the economy change people’s everyday behavior and decisions. “Will I buy this new car? Will I buy or rent a home? Can I afford to go to college?” Those individual behaviors and decisions, in turn, work together and define the aggregate economic condition. How individual behaviors aggregate and feedback to the economy is a very complex process. In order to understand these dynamics and their potential outcomes under different scenarios, researchers use simplified versions of reality, or models, to look at sets of economic factors and how they combine to affect economic activity. The MFM community is actively searching for and developing more ambitious macroeconomic models that are designed to better account for important financial sector influences on the economy.
You have attended a number of other MFM events in the past. Describe your experiences. How have they shaped your expectations for this summer’s four-day camp?
I have been attending MFM meetings and workshops since they began in 2012. My experiences in past years have helped to shape my own research ambitions by broadening my vision and inspiring me to explore new, challenging research topics with the potential to influence real world policy design. My interactions with the MFM community have pushed me to pursue knowledge beyond books and classrooms as well as helped sharpen my skills as a modeler. I am even working on a paper co-authored by Andrew W. Lo, one of my advisers at MIT, and Harald Uhlig, one of the most esteemed economists in this field and whom I met at an MFM event.
In this year’s summer camp, I am expecting the same innovative presentations, workshops, and discussions that have become characteristic of MFM events, but I’m hoping to dig deeper into various topics through the four-day format. The most unique feature of the summer program is that young researchers get to interact with the top minds in two fields: macro and finance. To have Nobel Prize-winning economists really listen to my research ideas and provide feedback is just an incredible opportunity. The interaction and collaboration across areas – from macroeconomics to finance, from practitioners to academics, and from young students to established researchers – are unique traits of the MFM group that speak to our common interest to advance macro financial modeling. This very broad participation brings with it a valuable range of expertise and perspective. And despite participation by many high-level individuals in the field, the program is really designed to ensure that young researchers are not overwhelmed by the big names. There are many opportunities for collaboration, discussion, and research advancement.
This summer, you will be joining the finance faculty at the Wharton School. How do you anticipate that the MFM summer camp will benefit you in your new career?
The insights, knowledge, and skills I have learned at previous MFM events actually helped me win the opportunity to join the finance department at Wharton, one of the best schools in which to conduct macro finance research. The summer camp and other MFM meetings are extra rewarding to young scholars like me, who are experiencing a transition from student to teacher, a period requiring greater independence and the ability to seek out new collaborations. The skills I learn and the connections I make will help me interact with my own graduate students as well as engage with senior faculty members. The MFM group lays the foundation for an open network that connects people from all over the world with similar interests. This network embraces both great depth in knowledge and focus, as well as extraordinary broadness in participation. For me, it offers rich opportunities to connect with researchers, from students to Nobel prize winners, and from academic minds to monetary talents.
The Macro-Financial Modeling Summer Session, offered under the auspices of the Becker Friedman Institute for Research in Economics, is one of a host of summer research activities highlighted in this series. To learn more, please visit our summer research hub.