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CERGE-EI Interviews Professor Philippe Aghion

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Let’s start from the beginning. Who influenced your decision to become an economist?

I wanted to go into economics because I was politically engaged; I was a left wing militant in my youth. And I realized then that understanding the economy was important because I could see that it plays a big role in political events. I thought it was good to be able to go into academics to understand these things better. I knew there are ways to transform the world and to make it a better place, so that’s what motivated me.

So tell us, where did you get your education?

In France I started mathematics first. I went to do my PhD in Harvard, and then I spent two years at MIT. Eventually I was a bit homesick, so I went back to Europe, and spent ten years here.

In Europe I spent most of my time in London because the EBRD was being created and I was part of the team that started it. Then in 2000 I went back to Harvard and I’ve been a professor there since then.

As for your current state research, what is your interest? And as a professor who has published many books and articles, where do you see the research gap?

My area of research is growth economics. What differentiates my approach from other approaches to growth is that firms play a big role. It’s an ‘industrial organization’ approach to growth. Particularly I examine competition and growth, industrial policy and growth, and how monetary and fiscal policy influence growth by affecting firms’ investment decisions, like R&D and other types of investment. So it’s very much firm level growth analysis, and that’s really what I’ve been pushing.

My training is in theoretical industrial organization and contract theory. I try to understand how market structures and the organization of firms and government matters for growth. Recently I’ve also been working on climate and growth.

I’m very interested in how to rethink growth policy in Europe. Everyone talks about growth policy. So how should it be designed? I think the research I do has something to say about how to design a growth policy package for Europe.

It always leads to using a Schumpetrian approach to get into new reconsiderations of growth policy; this could be competition, it could be more general structural reforms, it could be industrial policy, investment policy, or microeconomic policy of growth. It’s on those grounds that things can be done to spur growth in the Eurozone.

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general, Interviews, Visiting Lecturers

What’s Really Hidden in the Hidden Economy? CERGE-EI Interviews Professor Dilip Bhattacharyya

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Could we have predicted the crisis? Were there hidden clues and we just didn’t know where to look? Professor Bhattacharyya (University of Essex) is on a mission to measure the hidden economy and understand what it can tell us about macroeconomic instability.

Dr. Bhattacharyya’s guest lecture at CERGE-EI, titled “Predicting the 2008 Financial Crises from the Hidden Economy Estimates,” outlined how hidden economy estimates and the methodology used in the estimation procedure allow us to produce an indirect measure of ‘excessive money.’ Previous scholars, notably Raghuram Rajan, have noted that ‘excessive money’ in the economy was a primary cause of the 2008 financial crisis. Dr. Bhattacharyya paper notes that even as early as 1995 there were hidden signals suggesting a possible impending crisis for the UK economy.

Could we have predicted the 2008 financial crisis13 years earlier if the authorities had cared to consider this research?

 

Check out CERGE-EI’s brief interview with Dr. Bhattacharyya:

What is the most important insight from your research?

The most important insight, which is often missed, is that there are signals in this world which are mostly ignored by mainstream economists, and which can predict a lot of things which mainstream economics cannot. More importantly, it highlights the changing economic structure—the informal economy is taking a more important role, so learning about it and how it is interrelated with the normal ‘recorded’ economy is an important part for the future of the world. We hear now that there is 10% unemployment. But how these people can be absorbed into the system is not always necessarily through the process of formal employment—there might be informal employment structures growing. These are very fundamental questions in economic analysis. I don’t know when and how long it will take for this type of research to be taken up in a very deep way—but I won’t be surprised if one day someone working in this area becomes a Noble Prize winner Continue reading What’s Really Hidden in the Hidden Economy? CERGE-EI Interviews Professor Dilip Bhattacharyya →

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Interviews, Visiting Lecturers

CERGE-EI Interviews Professor Dirk Engelmann

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During Professor Engelmann’s visit to CERGE-EI, he sat down to speak with two PhD students for a brief interview. They discussed the direction of experimental economics, tips for getting a paper published, and the inspiration for research. Have a look at their interesting discussion:

On your CV we saw that you originally did a Masters in mathematics. Why did you decide to switch to economics?

I wanted to do something with somewhat more direct meaning towards life. Math was nice, but quite empty in some ways. Originally I planned to do my PhD in psychology. But I realized that the economists were a bit more open to introducing psychological ideas into experiments than psychologists were open to, for example, game theoretical modeling. If you do research with both psychology and economics, it seems easier to do it within economics, at least if you want to do it a bit more formally.

How do you get inspiration for your research?

There are three ways. One, I see some kind of theoretical or empirical paper, and I think ‘that’s worth testing’. Two, I see other experiments where I don’t quite trust results, and I want to do robustness checks. As for the third thing: I like to talk to people who don’t do experiments, because they often have questions that they’d like to test experimentally. If you talk to people who don’t do experiments, you are usually exposed to unusual questions, and you have to think about relatively innovative experiment designs.

Can you tell us what you think are the economic topics today which provide for ‘low hanging fruits’?

I think it’s hard to find ‘low hanging fruits’, because there are so many people doing experiments now. It is very attractive to start doing experiments, because it is a bit more entertaining than theoretical or empirical stuff. You can avoid some of the problems there. And you can be sure to get some kind of results. So I think that everything that looks like low hanging fruit is being constantly picked by these armies of experimentalists. Of course there are always some obvious questions that are not explored.

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Interviews, Visiting Lecturers

Understanding Development in Africa: An Interview with Dr. Nathan Fiala

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Earlier this month, Dr. Nathan Fiala came to CERGE-EI to lecture about his research in Africa. The lecture was titled “Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda.” Dr. Fiala sat down with CERGE-EI for a brief interview where he discussed his current research, the morals of sustainable development, and the expedience of experimental methods. Have a look!:

 

What research are you currently working on?

Right now I am doing randomized control trials. This is a big, new, exciting field.  In the last ten years it has become a special interest to a lot of developmental economists. I am conducting experiments in Africa, mostly in Uganda, but also India, and hopefully a few coming up in Kenya.

One that I’m working on right now is a ‘Cash Grant’ program, geared toward young men and women who are unemployed or underemployed in Uganda. The government has transferred money to them in order to help them set up businesses and gain some kind of employment and income generation.

There is a lot of unemployment and underemployment in Uganda, and very little formal sector employment. So for a lot of young people there, setting up their own business is basically the only option that they have. But there is doubt whether these types of ‘Cash Grant’ programs have any real impact, whether they provide any kind of meaningful help for individuals.

In order to explore this, we randomized who received the cash grant and who did not receive the cash grant. We did that because we wanted to try to compare those that received the cash grant with some kind of comparison group. It has to be a very well thought out comparison group, and randomization gives you the opportunity to basically ensure that with a large enough sample size. The people who receive the program versus those who do not receive it still have the same characteristics.  They’re about the same age on average, the same ratio of gender, the same education levels, etc. But most importantly they have the same level of excitement and interest in starting their own businesses.

Is there anything unique about doing research in Uganda?

Well one of the unique things about this is that it’s a program being conducted in a post-conflict area. It’s in Northern Uganda, which just finished a 20-year civil war. The government is interested in how to decrease the likelihood of civil unrest, violence, and proclivity to anti-social behavior. They hope these cash grant programs will cause citizens to become more productive citizens and less likely to engage in negative social behavior.

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