New York, NY, November 08, 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 Cosma Shalizi, Mark Schervish, and Daniel McDonald of Carnegie Mellon University to be awarded a project grant through the Institute’s Inaugural Grant Program to extend proven techniques in statistical learning theory so that they cover the kind of models and data of most interest to macroeconomic forecasting. 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.
The dominant modeling traditions among academic economists, namely dynamic stochastic general equilibrium (DSGE) and vector auto regression (VAR) models, both spectacularly failed to forecast the financial collapse and recession which began in 2007, or even to make sense of its course after the fact. Through extending the proven techniques in statistical learning theory, the team at Carnegie Mellon plans to use INET’s funding to resolve macroeconomic disputes and determine the reliability of whatever models that emerge for macroeconomic time series.
“Over the last three decades statisticians and computer scientists have developed sophisticated methods of model selection and forecast evaluation, under the rubric of statistical learning theory,” commented Dr. Robert Johnson, Executive Director of INET. “Applying the methods that have revolutionized the modern industry of data mining is an approach that we believe holds great promise in improving the quality of economic forecasts and predictions.”
Cosma Shalizi is an Assistant Professor, Mark Schervish is the Department Head and Daniel McDonald is a PhD candidate in the Department of Statistics at Carnegie Mellon University in Pittsburgh. The research team has deep experience in the statistical analysis of complex systems, including time series prediction, self-organization, and network analysis.
“Economists have to use models for forecasting and policy-making, which means comparing competing models, which means needing to know how well they will generalize to new data,” said Cosma Shalizi, assistant professor at Carnegie Mellon University. “INET is giving us the opportunity to bring that model evaluation up to the same rational level everyone uses in data mining and statistical learning. In the end, we'll show economists how they can reliably select the best models, and control prediction error.”
INET’s Inaugural Grant Program has been designed to harness the new economic thinking they 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/