The financial crisis of 2007–2009 revealed serious gaps in our ability to define, measure, and manage financial sector activities that pose risks to the macroeconomy as a whole. Current macroeconomic models typically used for quantitative and empirical investigations are not well designed to account for important financial sector influences on the aggregate economy.
To address these deficiencies, the Becker Friedman Institute launched the Macro Financial Modeling (MFM) initiative to develop and assess more ambitious macroeconomic models.
Under the leadership of Becker Friedman Institute director Lars Peter Hansen and Andrew W. Lo, director of the Massachusetts Institute of Technology Laboratory for Financial Engineering, the project established a network of prominent researchers working together to develop the next generation of policy tools.
The project works to generate:
- papers and an online compendium of research related to better measurement of systemic risk
- new and improved software for macroeconomic models
- new knowledge in the form of dissertations and journal articles that explore linkages between economic sectors
The group focuses on assessing the current landscape of risk measurement, exploring questions like:
- What are the virtues and potential pitfalls of existing measures? What new measures will be revealing?
- What data is available to effectively measure risk? What data is lacking?
- How do we address data confidentiality issues?
This effort is supported with generous grants from the Alfred P. Sloan Foundation and the CME Group Foundation.
Working Group Meeting 1 April 6, 2012, NY
Working Group Meeting 2 Sept 13-14, 2012, NY
Working Group Meeting 3 May 2-3, 2013, Chicago
Working Group Meeting 4 October 10-11, 2013, Boston
Working Group Meeting 5 May 30-31, 2014, NY
Working Group Meeting 6 March 13-14, 2015 NY
Working Group Meeting 7 January 28-29, 2016 NY
Working Group Meeting 8 June 11-15, 2016 Summer Session Cape Cod
Working Group Meeting 9 March 9-10, 2017 NY
Working Group Meeting 10 June 18-22, 2017 Summer Session Bretton Woods