Grant for research Dirk Bezemer on financial growth versus crisis

The Institute for New Economic Thinking has allocated a grant to dr. Dirk Bezemer of the Faculty of Economics and Business. The grant will enable him to attract a post-doctoral researcher to work with him on understanding the financial causes of growth, productivity and financial instability. His grant is one of 23 grants issued worldwide, and chosen out of over 400 proposals.

INET has designed her Grant Program “to identify key areas in economics that require significant attention and support, since the current financial crisis has revealed the inadequacy of existing economic knowledge. “

Bezemer's projectis titled 'Understanding Finance's Potential for Growth and for Crisis'.The financial sector is vital to economic growth; but finance is also a cause of crises. This two-sided potential is missing in most of today’s theoretical models and empirical research – the key reason why the 2007-8 credit crisis came as a surprise to leading policy and research institutions.

The project will build on theory indicating that credit flows to the real sector have systematically different effects from financial flows to asset markets. A second innovation is to compile a dataset of credit flows in OECD countries over the last decades in order to test these effects. The results will improve our understanding of financial causes of growth, productivity and financial instability. It is hoped that this will support more effective policies to harness finance for sustainable growth.

INET
The Institute for New Economic Thinking (INET) was created to broaden and accelerate the development of new economic thinking that can lead to solutions for the great challenges of the 21st century. According to INET the financial crisis has vividly demonstrated the deficiencies in current economic theories, and shown the need for new economic thinking. The institute is supporting this shift in economic thinking through research funding, among other things.