Category Archives: Special Events

The light and dark sides of the shadow economy


It’s not often you get the chance to sit in a room with a collection of today’s most influential minds and hear their thoughts and opinions on current global issues. But that’s what I was able to do this week at a panel discussion in London organized by CERGE-EI Alumni with the Legatum Institute and the European Bank for Reconstruction and Development. “The Shadow Economy – Impact on Innovation, East and West” was moderated by Edward Lucas, senior editor at The Economist, with contributions from Andrei Kirilenko (MIT), Peter Sanfey (EBRD), Tina Fordham (Citibank), Giles Andrews (Zopa) and CERGE-EI’s own Jan Švejnar. Continue reading The light and dark sides of the shadow economy


Corruption Fighters: A CERGE-EI Special Panel Discussion On Anticorruption Measures And Lessons Learned

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Corruption undermines democratic institutions, slows economic development and contributes to governmental instability. An endemic problem across the developed and developing world, corruption poses a major challenge to policy makers and governments worried about maintaining legitimacy.

So how do we fight corruption? The answer is far from clear. As David Ondracka notes, you close one hole only to discover that two new ones have opened.

That’s why on Thursday, November 21st,  leaders of government, civil society, and the private sector came together at CERGE-EI to discuss innovative anti-corruption solutions and lessons learned.

See the speakers and watch the full event (including lecture slides) in the link below!:

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Economic Elites, Crises, and Democracy: A Book Presentation by Andrés Solimano

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In his new book, ‘Economic Elites, Crises, and Democracy,’ Andrés Solimano thoughtfully examines the main challenges to global capitalism, including the rise of economic elites, the increased frequency of financial crises, and rising public discontent with the status-quo.

During his CERGE-EI visit on November 19th, Professor Solimano presented data showing the rise of rich economic elites and the fragmentation of the middle class. He warned that these trends, combined with the weakening of the traditional working class and marginalization of labor, are a common feature of capitalist societies all over the world and together constitute a major threat to the stability of the system.

He also noted that financial crises have increased markedly since the 1980s, and have recently reached the ‘core’ economies of the world system. All this has led to fractionalization and public disenchantment with democracy, which manifests in social protests and the rise of extreme politics.

Solimano forcefully  argued that these trends threaten to undermine the global capitalist system unless new approaches are adopted in order to solve the world’s acute social problems. He briefly discussed potential approaches, including redistributional tax policies, reclaiming and redefining public ownership, and giving labor and the middle class more voice in austerity programs.

Given the brief time available, Professor Salimano could not go into great detail about such an ambitious topic. Lucky for us, the detailed information can be found in his book, which is available for purchase here!

Solimano book cover


CERGE-EI Public Lecture: Sixty Years of Returns to Education with Prof. George Psacharopoulos

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Over the course of his long career, George Psacharopoulos has made a deep impact on the way education is viewed from the perspective of economics. During his CERGE-EI Public Lecture on November 4th, Prof Psacharopoulos gave an interesting overview of the evolution of this research. He walked the audience through years of evolving theories and empirical evidence on the importance of education as both a personal and public investment, sharing a number of revealing facts and thoughtful insights.

See the full lecture with accompanying slides here:


Oxford University and CERGE-EI Cooperate on Economic Conference

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The following article was written in Czech by Kateřina Surmanová for Hospodářské Noviny on September 29th. The original article can be found here.

CERGE-EI maintains that it ranks among the best economic institutes in the world.  Recently CERGE-EI cooperated with Oxford University in organizing an academic conference focused on the connection between psychology and economics. The prestigious English university specifically requested CERGE-EI’s cooperation in organizing and participating in the conference, and CERGE-EI researchers were given the job of choosing who to invite.

“It’s quite common for individuals to attend academic conferences abroad. But for one institution to invite an entire other institution is quite an honor,” said Filip Matejka of CERGE-EI, who has been specializing in the special topic of the conference (the theory known as ‘Rational Inattention’) since his time as a PhD student at Princeton University.

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CERGE-EI Economist Filip Matejka








CERGE-EI already earned a good name for itself two years ago when it organized the first annual ‘Rational Inattention’ conference in Prague. Twenty top economists took part in that conference, including Christopher Sims, who is the 2011 winner of the Nobel Prize in Economic Sciences and a long-time research collaborator with Matejka. “We have managed to convince our international colleagues that we know how to organize a top-level conference and that we have research expertise in the field,” mentioned Matejka.

Continue reading Oxford University and CERGE-EI Cooperate on Economic Conference


Does Home Ownership Drive Unemployment?: A Public Lecture with Andrew Oswald

Andrew Oswald at CERGE-EI


Unemployment is a major source of misery in modern society. It is also plainly a waste of resources. So it is perhaps no surprise that macro and labor economists are obsessed with explaining the phenomenon. But are they searching in the wrong place for answers? Professor Andrew Oswald (Warwick University) said at his public lecture at CERGE-EI that he thinks they are, and that he may have found a key.

According to Oswald, economists have typically looked for answers “too close to the source.” Standard explanations have focused on the impact of trade unions, over-generous unemployment benefits, and inflexible labor markets. Yet policies meant to address these issues have made only minor dents on unemployment levels.

Professor Oswald ventured to propose a radically different explanation for the persistent unemployment we observe across developed countries. According to his research, the level of homeownership within an economic area can largely explain the level of unemployment. Few economists have explored this rather unintuitive notion, but as Oswald noted, it is typical for experts to overlook deep structural forces in favor of more immediate explanations.

But how does homeownership negatively impact employment? Oswald considers three possibilities. The first is that higher homeownership lowers geographical mobility. By reducing the flexibility to move between locations, homeownership reduces workers ability to relocate to places where their knowledge and skills may be put to better use. The second possibility is that homeownership contributes to urban sprawl and lower-density housing. Long commuting times and congestion hamper economic activity and efficiency.

Finally, Oswald points out that homeownership directly relates to the ‘Not in My Back Yard’ problem (NIMBY). Homeowners often oppose new productive development projects because they perceive the projects as having negative external effects on their neighborhood. Residents can often team up in homeowners’ unions to block projects from being realized. Even though they often agree that those developments are needed in society, they do not want the development to take place in their ‘back yard.’ As such, NIMBY blocks productive economic activity and development from taking root.

Pondering how a lake becomes filled with water, primitive man would have concluded that it collects the rain falling from the sky. He could not have imagined that hidden streams of water deep underground are the true source. Andrew Oswald’s proposition—that homeownership is the underlying cause of long-term unemployment—is also hidden from sight, but that certainly doesn’t mean it’s not there.

The CERGE-EI Public Speaker Series invites leading international scholars to Prague to present their ideas and engage in public discussion. Learn about upcoming CERGE-EI events here.


What’s a Good Teacher Worth? A CERGE-EI Public Lecture by Eric Hanushek

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“Economic growth is a function of education, period.”  During his public lecture at CERGE-EI, Professor Eric Hanushek emphasized the enormous impact that human capital (i.e. education) has on long-term economic development.  A renowned scholar in educational research, Professor Hanushek (Stanford University) used this link between education and development to make a compelling argument for improving the quality of instructors.

Prof. Hanushek began his lecture from a distance and gradually brought the audience ‘closer to earth.’ From the furthest vantage point, he established the unambiguous link between economic growth and test scores (i.e. what students know). A graph plotting test scores and economic growth revealed a nearly perfect correlation for a wide sample of countries over the past five decades. To Prof. Hanushek, the data screams loud and clear that imparting knowledge and skills through the educational system is the most potent means by which countries successfully grow.

Growth and test scores

Unfortunately, raising test scores is not so simple. Students may be required to attend school, and governments spend a great deal to make this happen, but merely sitting in a classroom with a teacher is not enough to guarantee meaningful learning. The question, then, is how to ensure that students learn while they sit in those classrooms.

According to Prof. Hanushek, research on student achievement has identified that good teachers play the essential role. In economic terms, how much can a good teacher contribute to economic growth? He showed that a top teacher with a class of 30 students will boost the cumulative lifetime income of that classroom group by over $800,000. Of course the inverse of this relationship also exists: lousy instruction from the worst teachers will damage their students’ earnings by a similar magnitude.

Removing the worst teachers and replacing them with average ones could contribute to large gains in test scores—and as Hanushek already demonstrated, higher test scores should directly contribute to long-term economic growth. Analyzing the Czech Republic and making conservative assumptions about teacher quality, he showed that removing the bottom 5% of teachers and replacing them with average instructors could lift the country’s test scores to the level of Finland. This in turn would add 110 trillion euros to the Czech Republic’s GDP over the next 80 years (in present value worth).

Eric Hanushek Lecture

Considering the enormous impact that good teachers can have on student achievement and economic growth, the focus on improving teacher quality should be paramount. Unfortunately, solutions to improve teacher quality are often misguided and ineffective.

Rather than focus on a teacher’s educational credentials, experience, or training, Prof. Hanushek proposed solutions that work with incentives and focus on outcomes.  He suggested methodically measuring testing outcomes and rewarding teachers for achieving defined objectives. He was also dismissive of those who see technology as a silver bullet. Accountability and performance rewards can be far more effective than giving students iPads.

Check out the full lecture below:


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!



World Bank Present World Development Report 2014 at CERGE-EI: Watch the Full Presentation!

Last month, the World Bank visited CERGE-EI to give a special presentation and discussion about their World Development Report 2014. Titled Risk and Opportunity: Managing Risk for Development, the WDR 2014 examines how improving risk management can lead to large gains in development and poverty reduction.

CERGE-EI recorded the entire presentation, including the presentation slides. You can watch the whole event on the CERGE-EI blog here, or on the presentation website


The 1st Annual Graduation Gala: A Wonderful Night to Reunite the CERGE-EI Community

On any given day, CERGE-EI is filled with serious people conducting economic research and studying for exams. When it comes to complicated calculus and datasets, CERGE-EI is among the best. But when it comes to throwing a good party, we have a bit less experience. Nevertheless, the Graduation Gala proved that CERGE-EI knows how to do that too!  On the evening of June 1st, our beautiful palace rooms, usually the location of lectures and exams, were filled with fun and celebration previously unknown here!

All who attended will agree: the 1st Annual Graduation Gala at CERGE-EI was an unbridled success. We welcomed over 160 guests—students, alumni, faculty and staff, the members of our governing bodies, as well as our donors and other business guests. It was an amazing evening filled with speeches, live music, gourmet food, and dancing.

The Gala started with a champagne reception accompanied by a live jazz quartet. Dressed in their best suits and dresses, most guests were eager to have their ‘celebrity photo’ on the red carpet at the top of CERGE-EI’s regal marble stairwell. An audience gathered to hear welcome speeches by Susan Walton (CERGE-EI Foundation Board member) and Jan Švejnar (a ‘Founding Father’ of CERGE-EI and Chairman of the ESC). Before dinner, guests also heard remarks by CERGE-EI alum Martin Kálovec and recent PhD graduate  Peter Ondko.

After an elegant dinner, the Gala continued with remarks by J. Peter Neary (Professor of Economics at University of Oxford and a newly-elected ESC member at CERGE-EI), a touching speech by Dragana Stanišić (CERGE-EI Junior Researcher), and a ballroom dance performance by a professional dance pair. A ‘Surprise Student Raffle’ followed, awarding fun prizes to CERGE-EI students, including boat rides and tennis matches with CERGE-EI faculty members.

The mood shifted from elegance to revelry as the hours passed. With the live band bringing up the energy, everyone was eager to show off their dance moves under the chandeliers and frescoes in the main ballroom. The band eventually had to go home, but an energetic DJ jumped in without missing a beat and kept the music and dancing going until the late hours of the night.

The Graduation Gala establishes a new tradition at CERGE-EI. Once a year, the students, faculty, staff, alumni and affiliates who make CERGE-EI such a successful place deserve a night like this. With each passing year, our Graduation Galas will offer the best opportunity for the CERGE-EI community to reunite and celebrate. Looking forward to next year!

See more pictures from the First Annual Graduation Gala here!