New York, NY, November 05, 2010 --(PR.com
)-- The Institute for New Economic Thinking (INET), launched with a $50 million pledge from George Soros to promote changes in economic theory and practice through research grants, Task Force groups, academic partnerships, and conferences, announced that it has selected Edward J Kane of Boston College, Armen Hovakimian of CUNY Baruch College, and Luc Laeven of the International Monetary Fund to be awarded a project grant through the Institute’s Inaugural Grant Program to conduct macroeconomics research relating to systemic risk. The grant program, along with other INET initiatives, was created in direct response to arguably the worst economic crisis in world history, and has been designed to encourage and support new economic thinking. Starting in 2011, INET will conduct two grant cycles annually.
Since the onset of the financial crisis, it has become critical to search for ways to improve the existing structures for monitoring and resolving losses at large financial institutions, because it has become clear that former ways of looking at systemic risk are incomplete. The grantees plan to use INET’s funding to find a measure that can shed light on the interconnectedness of financial institutions, which allows problems at a distant institution to undermine otherwise apparently healthy institutions.
“The project addresses the idea of developing an operational measure of systemic risk, as an input into the policy process,” said Dr. Rob Johnson, executive director of INET. “We support this project because it encourages new thinking in the vital areas areas of network and systems theory.”
Edward J. Kane is Professor of Finance at Boston College. From 1972 to 1992 he held the Reese Chair of Banking and Monetary Economics at Ohio State University. A founding member of the Shadow Financial Regulatory Committee, Kane rejoined the organization in 2005. He served for twelve years as a trustee and member of the finance committee of Teachers Insurance. Currently, he consults for the World Bank and is a senior fellow in the FDIC’s Center for Financial Research. Previously, Kane has consulted for numerous agencies, including the IMF, components of the Federal Reserve System, and three foreign central banks. He is a past president and fellow of the American Finance Association and a former Guggenheim fellow. Kane is a longtime research associate of the National Bureau of Economic Research. Besides authoring three books, he has published widely in professional journals and currently serves on six editorial boards. He received a BS from Georgetown University and a PhD from the Massachusetts Institute of Technology.
”The value of safety-net subsidies represents a cogent way to measure what government officials ought to mean by ‘systemic risk.' Unfortunately, authorities are reluctant to admit --let alone to size accurately-- how their all-too-predictable willingness to put financial-institution losses to taxpayers in crisis times generates systemic risk during pre-crisis periods," said Edward J. Kane, Professor of Finance at Boston College. "This reluctance to highlight the pivotal role of the incentive structures government officials face makes the study we envision hard to fund through conventional sources and particularly appropriate for INET sponsorship."
INET’s Inaugural Grant Program has been designed to harness the new economic thinking we recognize as crucial to effecting change. The program was launched this summer and received more than 500 applications from around the world and has selected 31 initiatives to be awarded grants totaling $7 million. INET's Grant Program will continue with two similar grant cycles annually, the next one commencing in the spring of 2011.
For further details regarding INET’s Grant Program or additional projects and people to be awarded grants please visit the Institute’s website.
About the Institute for New Economic Thinking:
Launched in October 2009 with a $50 million commitment from George Soros and driven by the global financial crisis, the Institute for New Economic Thinking (INET) is dedicated to empowering and supporting the next generation of economists and scholars in related fields through research grants, Task Force groups, academic partnerships, and conferences. INET embraces the professional responsibility to think beyond current paradigms. Ultimately, INET is committed to broadening and accelerating the development of innovative thinking that can lead to insights into and solutions for the great challenges of the 21st century and return economics to its core mission of guiding and protecting society. For more information please visit http://www.ineteconomics.org/