INET Taskforce in Macroeconomic Efficiency and Stability: Networks and Externalities

The INET Taskforce in Macroeconomic Efficiency and Stability, chaired by Professor Joseph Stiglitz, focuses on the inefficiencies and instabilities that arise from the interaction of agents and institutions operating in networks and from pervasive macro-economic externalities, as well as on the macroeconomic inconsistencies that may result from those interactions.

INET Seminar Series at Columbia University

The financial crisis highlighted the importance of these phenomena and motivated the creation of the taskforce in 2012. The Task Force consists of different working groups that work in an interactive way toward the common goals of understanding the causes and consequences of the instabilities and inefficiencies that are repeatedly observed in market economies; the resolution of the crises that eventually result from those instabilities; and the implications of macroeconomic externalities for macroeconomic (including both monetary, macro-prudential regulatory, and fiscal) and labor market policies. In recent years, groups within the taskforce have also focused on the endogenous emergence of systemic risk in the financial system given market participants’ incentives to get interconnected in specific ways in network structures, and how to integrate climate policy risk in the valuation of interconnected financial contracts—a central question in the ongoing policy debate on the role that the financial sector can play to foster a transition to a low-carbon economy. An abiding interest of the Taskforce has been the interactions between macroeconomic externalities and instability and income distribution. Most recently, it has turned to the implications of the macroeconomic externalities of artificial intelligence (AI), with an emphasis on how AI is likely to affect inequality and on appropriate policies to deal with those effects.

To advance understanding of these issues and to disseminate the work of the Taskforce—much of which presents a strong counter to the DSGE frameworks that prevailed before the crisis—the Taskforce organizes high-profile workshops at some of the most influential international institutions, as well as panel discussions at major events around the world. It also organizes on a regular basis seminars at Columbia University. Its groups have developed a number of strands of work that create new ideas for policies that aim at improving market stability, efficiency, and fairness. This work is having influence in academia as well as in policy making, and is receiving wide dissemination, including through professional journal articles and influential media in the United States and elsewhere, contributing to the understanding of how market economies can perform better.