CERGE-EI Gala: May 31st, 2014. Save the Date!

Dear friends of CERGE-EI,

Don’t wait, save the date! The 2nd Annual Graduation Gala will take place on Saturday, May 31st, 2014 at 6:30pm. Join us for a fabulous evening of drinks, dinner and dancing as we celebrate our graduates and reunite our ever-growing CERGE-EI community.

Last year’s Gala was the event of the year (pictures here), and you won’t want to miss it this year! Further information about the event, tickets and premium tables coming soon.

Sincerely,
CERGE-EI Development Team

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Wine, Big Macs, and Natural Experiments: CERGE-EI Interview with Professor Orley Ashenfelter

Orley Ashenfelter is the Joseph Douglas Green 1895 Professor of Economics at Princeton University. Professor Ashenfelter recently received a prestigious honorary degree from Charles University. While in Prague, Professor Ashenfelter sat down with CERGE-EI PhD Student Liyou G. Borga to discuss his research interests and his long experiences as a supporter of CERGE-EI. Watch the full interview here!:

httpv://www.youtube.com/watch?v=05Jf8V3Q7i4

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Prof. Orley Ashenfelter’s Honorary Degree Speech

In case you missed it, below is the full text of the speech Professor Ashenfelter gave upon receiving his Charles University Honorary Degree:

It is my very special privilege to be with you in Prague today for this marvelous ceremony and honor. I realize there are many people responsible for this gracious day, including the Rector of the Charles University, the faculty of the University, and those who have directly assisted in these arrangements. My thanks go to all of you.

One reason this honorary degree is special to me is that it comes from an institution with which I have had such a long and fruitful relationship. And, of course, it is being presented in a city that I and my wife have come to realize is one of the most beautiful and civilized in the world. And then there are the Czech people, who since my arrival for a first visit over 20 years ago have been so friendly to me and have progressed so far. As I came to know Czechs a little better over the years I gained some perspective on the country. My view at the outset was that there had been far too much outside interference and that, left alone, the Czech nation would prosper. But it did help me to learn a little about Czech humor, a droll style that for many—especially Germans—takes a little getting used to.

Upon my arrival, for example, I decided I needed to learn a few Czech words so I could get by in restaurants and other places where university professors are known to hang out. So, I asked a graduate student at the Charles University, “What is the most important word for me to know?” The answer, without a shade of a smile was, “Pivo.” Ah, I thought, this must be an important Czech word of greeting, so I asked, “What does Pivo mean?” Ah, the graduate student said, “it means beer.” As you can imagine I then learned the word “vino,” which is wine, and even more important it turned out, “archivni vino,” which means vintage wine.

This style of humor sometimes has to change when it is no longer possible to engage in the self-deprecation that is a key aspect of Czech (and often American) humor. Take, for example, the automobile known as the Skoda. When I first arrived in Prague in 1992 I was picked up in a proper Communist Skoda, which felt a little like a tank when you rode in it. I asked the graduate student escorting me, “What kind of car is this?” Ah, he said, “this is a Skoda.” So, I asked, “what are they like?’ His answer, “a Skoda is like a Jehovah’s Witness.” Falling for this completely, I ask, “How is a Skoda like a Jehovah’s Witness?” He answered with a straight face, “you cannot close the door on either one!” There are, of course, endless Czech jokes of this nature: A man pulls into a gas station and says, “I would like a tank of gas for my Skoda.” “Yes,” the attendant says, “that is about the right price.” Of course, only a few years later, the newly designed Skoda was named “car of the year” in Europe and the jokes had to move on.

I would, finally, like to take your time to make a few remarks that touch on the nature of the work I have done that is directly related to the other two aspects of my contributions to economics that the citation for this honor touches upon. I call these remarks.

Evidence Based Policy Evaluation and The Design of Natural Experiments

The title of these brief remarks is taken directly from one of the most famous and influential scientific books of the 20th century, RA Fisher’s Design of Experiments.1 Fisher struggled with, and analyzed, what is now considered the “gold standard” method for making causal inferences. This method, which had been hinted at in scientific work for centuries, finally reached its full development in the 20th century. Designed to produce highly credible evidence in complex situations, it is based on the idea that we determine the causal effect of a treatment or intervention by assigning randomly some fraction of the units we wish to influence and reserving the remainder as a control group. In medicine it is said that we test a drug or procedure by using randomized clinical trials, but Fisher studied primarily agricultural experiments and these are called randomized field trials.

The key point is that these are experiments that take place in the real world, not a laboratory – and they provide the final, conclusive test of the efficacy of a treatment or intervention. An interesting aspect of Fisher’s work is that it was always motivated by actual problems of experimental inference, and evolved as a fundamentally practical analysis. Fisher’s lasting contribution, now taken for granted by virtually all scientists, is a set of methods for determining when observed differences are unlikely to be due to chance alone.

Much of what I have tried to do in my own research in the last forty years is to find some way to implement highly credible methods for the study of important, and controversial problems of inference in economics. These methods, which tend to be opportunistic because they differ with the problem being studied, have come to be called “natural experiments.” Natural experiments are sometimes randomized trials (jokingly called “unnatural experiments” by a few of my colleagues), but often they must depend on some method that falls short of this gold standard. The key point is that these are analyses of what happens in practice, not just in theory, and the emphasis is on the credibility of the results.

Continue reading Prof. Orley Ashenfelter’s Honorary Degree Speech

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Honorary Degree Ceremony for Professor Orley Ashenfelter

Orley Ashenfelter received an honorary degree from Charles University on January 15th, 2014 in Prague. Professor Ashenfelter (Princeton University), who is a former member of the CERGE-EI Executive and Supervisory Committee and a current member of the CERGE-EI Foundation Board of Directors, has been a long-time supporter of CERGE-EI. He is also one of the leading economists of our time.

JUSTIFICATION OF THE AWARD

Professor Ashenfelter is widely regarded as the originator of the use of so-called natural experiments to infer causality about economic relationships. Many important social science questions seemed impossible to answer due to absence of both necessary data and convincing econometric techniques. Professor Ashenfelter pioneered innovative formulations and empirical testing of economic hypotheses and creative data collection. The methods he introduced are used in all social sciences today. He has also helped to transform our views of the labor market as he has made major advances in the study of wage structure, trade unions, labor supply, discrimination, and education and retraining.
Professor Ashenfelter’s numerous honors and awards include the Karel Englis Honorary Medal of the Academy of Science of the Czech Republic, the Jacob Mincer Award of the Society of Labor Economists, the IZA Prize in Labor Economics, and the Ragnar Frisch Prize of the Econometric Society. In 2005, he was named a Corresponding Fellow of the Royal Society of Edinburgh, and in 1977 he was named a Fellow of the Econometric Society. He received the degree of Doctor Honoris Causa from the University of Brussels in 2002.

Selected publications:

  • Bargaining Theory, Trade Unions, and Industrial Strike Activity. American Economic Review, 1969
  • American Trade Union Growth: 1900-1960. Quarterly Journal of Economics, 1969
  • Unionism, Relative Wages, and Labor Quality in US Manufacturing. International Economic Review, 1972
  • Estimation of Income and Substitution Effects in a Model of Family Labor Supply. Econometrica, 1974
  • Estimating the Effect of Training Programs on Earnings. Review of Economics and Statistics, 1978
  • Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs. Review of Economics and Statistics,1985
  • Estimates of the Economic Returns to Schooling from a New Sample of Twins. American Economic Review, 1994
  • Using Mandated Speed Limits to Measure the Value of a Statistical Life. Journal of Political Economy, 2004

Cooperation with Charles University:

Since the early 1990s, Professor Ashenfelter has actively participated in the process of restoration of doctoral education and research in economics in the Czech Republic and more broadly in Central and Eastern Europe. Since 1999 he has served on the Board of Directors of the CERGE-EI Foundation, which aims to foster economics education in the region and which supports the doctoral program in economics at CERGE-EI, the joint workplace of the Center for Economic Research and Graduate Education (CERGE) of Charles University, Prague, and of the Economics Institute (EI) of the Academy of Sciences of the Czech Republic. Between 2001 and 2007 he has also been a member of the Executive and Supervisory Committee of CERGE-EI, an academic supervisory body charged with supporting the quality of research and education at the joint workplace. During his regular visits to Prague, he has provided long-term support and valuable advice to students and faculty alike, and he has also helped the development efforts at the CERGE-EI library, which serves not only the CERGE-EI community, but also an equally large group of researchers from the Faculty of Social Sciences of Charles University. He has also played an active and successful role in the CERGE-EI Foundation’s efforts to raise funds from sponsors to support economics education including student mobility or stipends as well as economics research in the region.

Justification:
Professor Ashenfelter has had a major influence on economics research, particularly in the area of impact measurement of social programs, but also in the general study of labor markets. He has pioneered the method of “natural experiments” widely used today to uncover causal relationships in social sciences. It was his indisputable scientific contribution together with his long-standing support of research on transition economics and of economics education at Charles University, where he has helped to grow a new generation of economists, that has led the Scientific Council of the Faculty of Social Sciences to submit a proposal to award him an Honorary Doctorate of Charles University in Prague.

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MAE Students – BCG Strategy Cup 2013 Winners!

Boston Consulting Group (BCG) recently organized the 7th edition of its BCG Strategy Cup, one of the top business competitions in the Czech Republic.

Teams from Czech and Slovak universities participated in the competition. Their task: provide strategic advice on potential acquisitions for a global mining company. Finding an inventive and feasible solution demanded intensive brainstorming well into the night. Jiri Sykora and Jakub Cermak—both MAE students at CERGE-EI—and their teammate Andrea Sandorova (CVUT) had only five days at their disposal, and it was the first time they participated in such a challenging event.

Jiri provided us with insight into the team’s strategy: “We started by analyzing the individual commodities to determine which one would best fit into our company’s current portfolio. Based on this analysis, we formed a hypothesis about our potential recommendation and subsequently tried to validate it by company-level analysis. This was the most demanding part of the competition as we had to create detailed financial models with cash flows predictions for all three acquisition targets. Next, we identified the key value drivers of the acquisition, quantified synergies and performed a pro-forma analysis for the combined group. Based on this evidence, we supported our original hypothesis of acquiring the Colombian coal mine and recommended this to the company.”

Finally, the team had to present their recommendations to the BCG consultants and answer a series of demanding questions. Jiri and Jakub were extremely excited to find out they had won the competition, knowing that it will be a glowing achievement on their road to professional success.

The CERGE-EI community is very proud of them and their impressive results – CONGRATULATIONS!

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2013 CERGE-EI Achievements: A Letter from Director Stepan Jurajda

Dear friends, colleagues and supporters,

This is again the time of the year to thank you all for your support of CERGE-EI’s education mission, which now stretches into its third decade. We continue our service to the post-soviet region by providing top- notch economics education and research. Allow me to briefly highlight some of our achievements of 2013:

  • This year CERGE-EI faculty and researchers published 30 articles in ISI impact-ranked journals including Journal of Economic Theory, Economic Journal, Psychological Science, or Review of Economics and Statistics. As a result, we have maintained our top position in global research rankings generated by the Social Science Research Network and Research Papers in Economics, in which CERGE-EI currently stands in the 3rd and 6th percentile, respectively.
  • Students from 35 countries studied at CERGE-EI in 2013. These included 26 new students enrolled in our PhD program and 20 students in the third cohort of the Masters in Applied Economics (MAE) program coming from 11 countries as diverse as Germany, India, Nigeria, Russia and the US.
  • The Teaching Fellows program, designed to boost undergraduate economics education, supported 76 fellows serving over 10,000 students at 41 different universities in 18 post-soviet countries.
  • We welcomed Marek Kapička and Nikolas Mittag to the full-time faculty. Prior to joining us, Marek became an Associate Professor at the University of California, Santa Barbara, while Nikolas joined us after finishing his Ph.D. at the University of Chicago.
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Third Place Research Prize Awarded to CERGE-EI Graduate Peter Ondko

The Governor of the National Bank of Slovakia (NBS) Jozef Makúch, has granted third prize to our Ph.D. graduate Peter Ondko for his dissertation titled “Essays on Access to External Finance, Acquisitions and Productivity”.

RESEARCH FOCUS

Peter’s thesis consists of three chapters that are empirical investigations of classical questions in the financial and industrial economics literature on the influence of institutions and industry conditions on firm’s access to finance, the propensity to merge, and productivity.

In the first chapter Peter examines whether financial markets development facilitates the efficient allocation of resources. He shows that firms in industries with high growth opportunities use more external financing in financially more developed countries.

In the second chapter, he investigates the role of productivity in the selection of firms into acquisitions and whether acquisitions lead to productivity gains. He concludes that there is positive assortative matching in revenue productivity for firms engaging in vertical acquisitions and economically and statistically significant productivity gains exist only for targets acquired in horizontal acquisitions.

In the last section of his work he demonstrates that liberalization of network industries in the EU leads to substantial productivity growth.

THE IMPACT OF THE PRIZE

The NBS Governor says about the prize:”…the aim of the granting the prize is to support the best economics students in Slovakia and help them to become an inspiration for next generations of students”.

ABOUT THE COMPETITION

The NBS organized the competition in 2013 to honor its 20th. Anniversary. Students  were invited to apply with their theses or dissertations which investigate the fields of monetary economics, macroeconomics, financial economics and financial stability. All works submitted had to fulfill strict requirements, particularly exceptional quality and unique contribution to scientific knowledge.

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CERGE-EI Panel Discussion & Alumni Reunion in London!

We did it! After several months of careful planning, numerous meetings and Skype calls between London and Prague, we finally did it. On November 28th, we kicked off CERGE-EI’s first ever UK Alumni Event!

But make no mistake, this was no ordinary alumni gathering. We wanted an event that would play to the main strength of so many talented CERGE-EI economists: spirited intellectual discussion. With that in mind, we organized a special Panel Discussion and invited experts and special guests to join the debate.

Thanks to Alan Brown (Board member of the CERGE-EI US Foundation) and his enthusiastic support to host the event at Schroders, we could meet in the heart of London, a few steps from St. Pauls Cathedral. Susan Walton, also a Foundation Board member, worked tirelessly to make it all happen. And of course, we all wanted to see each other. Many of us have not seen each other for years and some of us have never met before. Our senior alumni Anita Taçi thus held opening remarks to welcome all the guests in the name of the Alumni Community.

And what have we discussed? The title of the debate was “Is German Discipline Enough?” The Euro is off the front pages – for now.  The balance of payments crisis in the periphery is easing, the sense of crisis has abated, and the Eurozone has bought some time. However, we know that the true crisis is not yet over. Before the next shock strikes, what are the prospects that the Eurozone will use the time to establish a Banking Union, and to move towards a proper fiscal Transfer Union? All these issues are truly important for the future of Europe and stability of the old continent. Therefore, our second opening remark was held by Czech Ambassador to the UK, His Excellency, Michael Žantovský, who recalled the ideas of the Czech president, Václav Havel, and related the topic to the problem of leadership and the ideas a leader represents.

With so many esteemed speakers, the panel discussion proved highly provocative. Alan Brown moderated the discussion and introduced all four speakers, who provided different views on the same problem. The first speaker was Petr Zemčík, Director of Economic Research at Moody’s Analytics in London but whom many of us remember from his time as a professor at CERGE-EI. He discussed the role of Germany and suggested that rebalancing the export imparity between Germany and the periphery would not solve the Eurozone’s biggest problems. The missing transmission mechanism and incomplete banking integration means that deposits in different states of the Eurozone have different values, and so the entire system remains fragile.

The second speaker was Prof. Jan Švejnar, one of the founders of CERGE-EI and currently the Director of the Center on Global Economic Governance at Columbia University. Prof. Švejnar provided a parallel between the US and the Eurozone. He stressed that recent incomplete integration in the Eurozone is certainly an unstable equilibrium and either deeper integration is needed or the Eurozone must go the opposite direction. Then, John Nugée took the podium. He opened his speech by pointing out that the Eurozone monetary policy is causing a positive feedback for all its countries. The widely discussed internal devaluation of the periphery is not a solution for the Eurozone. He concluded with a logical chain of unions which Europe has to undertake, starting with the currency union and leading through the monetary, banking and fiscal union, on an inexorable march towards full political union. According to Nugée, full political union is the inevitable endpoint on the Eurozone’s path to a stable solution.

Andrew Lilico, Director and Principal of Europe Economics, discussed the lack of ideas behind current European integration. He stressed that two generations ago, the leaders were breaking down walls and restoring democracy throughout Europe. One generation ago, the leaders were unifying Europe and creating the big ideas of the European Union, and, consequently, the Eurozone. The current generation, by contrast, has no more big ideas left and is mired in small problems and technocratic issues. In the end he also cited full political union as the only viable solution.

Long and spirited discussion between speakers and the audience emerged. Audience members put difficult questions to the panel about the future of Europe and democracy. After the formal discussion ended, the debate continued informally at a lovely wine reception. Many of us then ended up in a nearby watering hole, which is, however, an issue for a different blog post…

All agreed that the first UK Alumni Event was a huge success and has set the bar high for future Alumni gatherings, whether in the UK, in Prague, or in the many other places where CERGE-EI alumni are working to change the world. See you there next time!

View more pictures from the event here!

 

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CERGE-EI Will Welcome A New Director, Prof. Michal Kejak, at the Start of 2014!

CERGE-EI is delighted to welcome Professor Michal Kejak as our new director effective on January 1, 2014. Professor Kejak joined the CERGE-EI faculty in 1997 and was promoted to Associate Professor with tenure in 2007. He has served on CERGE-EI’s Executive and Supervisory Committee and twice been Deputy Director of Research. He was a Fulbright Scholar at New York University in 2010 and has also visited at the Hoover Institute at Stanford University and the Institute for Advanced Studies in Vienna.

Professor Kejak’s work has been published in journals such as the Journal of Money, Credit, and Banking, the Economic Journal, the Journal of Economic Dynamics and Control and The Economics of Transition.  His research has been supported through numerous competitive grants including from the European Union, the Global Development Network, and the Grant Agency of the Czech Republic.

In welcoming Prof. Kejak CERGE-EI is also expressing its gratitude to Prof. Stepan Jurajda, who is stepping down from the role of Director after his four years of visionary leadership.

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