Freewheeling Econometrics. The Econometrics of Complex Evolving Economies
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The objective of this Workshop – organized by the Institute of Economics with the support of the Young Scholar Initiative (YSI-INET) - is to uncover the limits of standard econometrics and to single out alternative techniques able to deal with the complex-system nature of the economy.
The majority of econometric methods is grounded on the Frisch-Slutsky paradigm, which conceives the economy as working like a pendulum. In this type of framework, there is no room for endogenous forces potentially driving the dynamics out of equilibrium. The standard theory-driven toolbox, abstaining from the analysis of the economy as a complex evolving system, leads the empirical researcher to often neglect the theoretical assumptions upon which econometric models and estimation techniques build. Potential drawbacks of this approach could be, for example, the inability to conceive and model crises, tipping points and structural breaks.
What kind of econometrics is needed to measure and understand a world characterised by heterogeneity, self-organisation, and change? This will be the core question addressed during the Workshop. The discussion will focus on domains at the research frontier, like the use of machine learning techniques and big-data for economics, but also devoting attention to the core traditional topics of econometric analysis like endogeneity, identification, and aggregation.