New York University Skip to Content Skip to Search Skip to Navigation Skip to Sub Navigation

NYU Economist to Study Contagion Among Financial Institutions, Role of Regulation Under Institute for New Economic Thinking Grant

December 9, 2010
165

Douglas Gale, a professor in New York University’s Department of Economics, will study contagion among financial institutions and the influence of prudential regulation on the transmission of shocks under a grant from the Institute for New Economic Thinking (INET).

Gale will be part of a research team that includes Antonio Guarino of University College London and Marco Cipriani of George Washington University.

INET was 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. The grant program, along with other INET initiatives, was created in response to the recent global economic crisis and has been designed to encourage and support new economic thinking.

This crisis demonstrates how the failure of one financial institution may lead to the toppling of other institutions. Gale, Guarino, 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 and test theoretical models, and highlight biases that can exacerbate or dampen the theoretical mechanism of financial contagion. Their work will be the first experimental study of contagion among financial institutions and will be used 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 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.”

This Press Release is in the following Topics:
NYUToday-feature, Research, Arts and Science, Faculty

Type: Press Release

Press Contact: James Devitt | (212) 998-6808

NYU Economist to Study Contagion Among Financial Institutions, Role of Regulation Under Institute for New Economic Thinking Grant

Douglas Gale, a professor in New York University’s Department of Economics, will study contagion among financial institutions and the influence of prudential regulation on the transmission of shocks under a grant from the Institute for New Economic Thinking (INET).


Search News



NYU In the News

Paying It Backward: NYU Alum Funds Scholarships

The Wall Street Journal profiled Trustee Evan Chesler on why he decided to chair the Momentum fund-raising campaign.

A Nobel Prize Party: Cheese, Bubbles, and a Boson

The New Yorker talked to Professor Kyle Cranmer and graduate student Sven Kreiss about NYU’s role in the discovery of the Higgs boson, which resulted in a Nobel prize for the scientists who predicted its existence.

The World as They Knew It

The New York Times reviewed the exhibit at the Institute for the Study of the Ancient World on how ancient Greeks and Romans mapped the known and unknown areas of their world.

Elite Institutions: Far More Diverse Than They Were 20 Years Ago

NYU made stronger gains over the last 20 years in increasing diversity than any other major research university, according to the Chronicle of Higher Education.

Program Seeks to Nurture ‘Data Science Culture’
at Universities

The New York Times reported on the multi-million collaboration among NYU and two other universities to harness the potential of Big Data, including an interview with Professor Yann LeCun, director of NYU’s Center for Data Science.

NYU Footer