Xavier Gabaix

The plenary speaker on Friday November 3rd was Xavier Gabaix, the Pershing Square Professor of Economics and Finance at Harvard University's economics department. Gabaix has made significant contributions in finance, macroeconomics, and behavioral economics. He has been awarded numerous prizes and recognitions, among which the Fischer Black prize given to the best financial economist under 40, the Bernacer prize given to the best European economist under 40 working in macroeconomics and finance, and the Lagrange and Allais Prizes.

In his plenary lecture, "Behavioral Macroeconomics," Gabaix presented a new framework to model decision-making by economic agents. In traditional economic models agents are assumed to comprehend the full complexity of the world in which they operate. In Gabaix's framework, instead, agents pay attention to a few endogenously selected dimensions of their world. Gabaix first introduced the basic mathematical formalization of this idea, centered on the concept of "sparsity." He then devoted the rest of his lecture to discuss a number of its applications in a variety of areas such as consumption-saving choices, business cycle analysis, monetary economics, and taxation.

Find Gabaix's lecture video here:

Dirk Krueger

The plenary speaker on Saturday November 4th was Dirk Krueger, who is currently Professor of Economics at the University of Pennsylvania and editor of the Journal of the European Economic Association. Krueger's influence in the field of macroeconomics cannot be overstated. His research agenda on macroeconomics and household heterogeneity is at the very core of the "heterogeneity revolution in macroeconomics" of the last 20 years. His work skillfully combines rigorous modeling as well as careful empirical analysis. This allows him to provide important insights on many relevant topics such as risk sharing across households and generations; optimal taxation; social security; health insurance; housing and education subsidies.

Krueger's talk was titled "(Re)-distribution in the Great Recession" and focused on measuring the welfare losses of households of different ages during severe macroeconomic downturns. The recent Great Recession featured a sharp decline in labor earnings and a collapse in asset prices, particularly real estate. The main reason why these shocks have uneven effects across different generations is that young households typically have little wealth relative to their labor income, while old households are asset-rich but have a lower present discounted value of future labor income. The main finding is that younger cohorts fared better than older cohorts in the Great Recession because the decline in asset prices hurt the latter while benefitting the former who were able to purchase assets at depressed prices.

Find Krueger's lecture video here: