There has been much discussion and debate among economists and policy-makers in the aftermath of the financial crisis of 2008. Macroeconomists in particular have expressed their viewpoints with a fair amount of vigour. Two recent opinion pieces characterize perhaps the two ends of the spectrum: the September 2nd article in The New York Times Magazine by Nobel laureate and Princeton professor Paul Krugman titled “How Did Economists Get It So Wrong?” and the response by Professor John Cochrane of the University of Chicago titled “How Did Paul Krugman Get It So Wrong?”
Clearly, this is an exciting time to organize thoughts about post–financial-crisis macro-finance and to think about future research directions in this broad area. Mindful of this fact, Professor Hashmat Khan organized a lunchtime mini-workshop on 23 September 2009. Several colleagues from the Department—including CMFE Co-Director Charles Freedman—Professor Lilia Karnizova from the University of Ottawa, Ali Dib and Wei Dong from the International department of the Bank of Canada, and a number of graduate students participated in an engaging discussion over pizza and pop.
Professor Huntley Schaller gave a short presentation summarizing his reflections on various meetings he had while on sabbatical last year primarily at Princeton University. In the ensuing discussion, three broad areas were identified as promising for future research in macro-finance: (i)incorporating inter-bank markets explicitly in macroeconomic models; (ii)exploring the optimal framework for fiscal and regulatory policies to avoid financial crises; and (iii)better understanding unconventional monetary policy in the face of very low or near-zero nominal interest rates.