Antonio Guarino of UCL, Douglas Gale of NYU, and Marco Cipriani of GWU to be Awarded a Grant from the Institute for New Economic Thinking

An INET Grant will fund Professors Guarino, Gale and Cipriani’s project to study contagion among financial institutions and the role of financial market regulation

New York, NY, December 05, 2010 --( 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 Antonio Guarino of University College London, Douglas Gale of New York University, and Marco Cipriani of George Washington University to study the contagion among financial institutions and the influence of financial market regulation on the transmission of financial turmoil across institutions. 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 financial crisis of 2007/2008 demonstrates how the crisis of one financial institution may lead to the failure of other institutions in a domino effect. Professors Guarino, Gale and Cipriani plan to use INET’s funding to develop a new model of contagion, in which banks hold claims on other banks that are connected in a network. The model will analyze the test of theoretical models, and highlight biases that can exacerbate or dampen the theoretical mechanism of financial contagion. It will be the first experimental study of contagion among financial institutions and will be important to evaluate the results of empirical studies based on market-generated data.

“The project by Guarino, Gale and Cipriani, addresses one of the aspects of the financial crisis that made for lots of news headlines but is still not thoroughly understood,” said Dr. Robert Johnson, Executive Director of INET. “Through this and other projects we are seeking to provide the knowledge that will keep cascading failures throughout the financial system from appearing in the future.”

Marco Cipriani is an Associate Professor of Economics and Public Affairs at George Washington University. Douglas Gale is a Professor of Economics at New York University. Antonio Guarino is an Associate Professor of Economics, at University College London.

“The crisis of a single financial institution may lead to the collapse of the entire financial system. We need a deeper understanding of the conditions under which this occurs, and of what is at the root of financial fragility and systemic risk,” said Antonio Guarino, Associate Professor of Economics at University College London. “We aim to achieve this by linking together theoretical and experimental work and the INET grant will be crucial in developing this project.”

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 34 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

Institute for New Economic Thinking
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