Barcelona GSE Research Professor Albert Marcet (ICREA-IAE, MOVE, and Barcelona GSE) has been awarded an Advanced Grant from the European Research Council for his project, "Asset Prices and Macro Policy when Agents Learn and are Heterogeneous."
The ERC Advanced Grant is a competitive award for senior researchers conducting ground-breaking work at the highest level. The objective of the funding scheme is to give these researchers a chance to realize their most creative ideas and potentially produce results that will have a major impact on science, society and the economy. The grants are part of the EU's Research and Innovation program, Horizon 2020.
Project proposals are evaluated by selected international peer reviewers, and scientific excellence is the sole criterion. This year the program received 2,167 applications and awarded 269 grants to senior research leaders in 27 different European countries. Only 19 projects in the field of Economics were selected to receive Advanced Grants.
With this new award, Affiliated Professors at the Barcelona Graduate School of Economics have received a total of 23 ERC grants:
- 9 Starting Grants for researchers establishing their careers
- 7 Consolidator Grants for mid-career researchers
- 7 Advanced Grants for exceptional research leaders
Agent expectations and their implications for asset pricing and policy
The new ERC project is a continuation of Prof. Marcet's previous ERC-funded project (APMPAL), which also explored agent expectations and their implications for asset pricing, fiscal and monetary policy.
A conventional assumption in dynamic models is that agents form their expectations in a very sophisticated manner. In particular, that they have Rational Expectations (RE). Professor Marcet and his team have developed some tools to relax this assumption while retaining fully optimal behaviour by agents. They assume that agents are Internally Rational, that is, they have a slightly imperfect view of price behavior but they behave rationally given their system of beliefs. This is conceptually a small deviation from RE. The APMPAL developed some modelling tools to apply this idea and studied some empirical and policy implications for asset pricing, fiscal and monetary policy. It also developed tools for the analysis of policy under partial information.
The current project, APMPAL-HET intends to: i) develop further the theory of Internal Rationality and optimal policy under partial information, and to introduce investors and consumers that are heterogeneous in their expectations, ii) build models that are useful for policy analysis and iii) build different tools for prediction of macroeconomic and financial variables.
About Albert Marcet
Albert Marcet is ICREA Research Professor at the Institute for Economic Analysis (IAE-CSIC). He is AXA Research Chair on Macroeconomic Risk at the Barcelona Graduate School of Economics, where he is also Barcelona GSE Research Professor. He is associate researcher at the Center for Research on International Economics (CREI) and Director of MOVE (Markets, Organizations and Votes in Economics).
Previously, Prof. Marcet was Professor at the London School of Economics (LSE) and Universitat Pompeu Fabra (UPF). He is a Fellow of the Econometric Society and Research Fellow of CEPR. He has also served as President of the Spanish Economic Association (2007).
In 2016, he was awarded the Rei Jaume I Prize, which recognizes significant contributions by top Spanish scientists.