Prof. Jaume Ventura, Senior Researcher at CREI and Barcelona GSE affiliated professor, has received an Advanced Investigator Grant of one million euros from the European Research Council (ERC) for his project, “Asset Bubbles and Economic Policy.”
ERC "Advanced Grants" fund cutting-edge research by the very best established research leaders in Europe. According to the Council’s website, projects funded by these competitive and selective grants must be highly ambitious, pioneering, and creative in their approach. The grants support research that takes risks, employing unconventional methodologies and investigations “at the interface between established disciplines” and presenting the possibility of a major breakthrough with far-reaching impact.
This year's call drew nearly 1,600 project proposals from across the spectrum of research fields. A total of 236 will receive grants, with researchers coming from 18 different countries and 26 nationalities. Only nine projects in the field of Economics were chosen to receive Advanced Grants.
Seven GSE professors in the "Champion's League" of European scientific research
Prof. Ventura is the third member of the Barcelona GSE’s teaching faculty to receive an Advanced Grant. In 2008, grants were awarded to Prof. Jordi Galí (Director of CREI and Research Professor of the Barcelona GSE) and Prof. Joachim Voth (ICREA-UPF and affiliated professor of the Barcelona GSE, as well as Director of the Barcelona GSE Master in International Trade, Finance, and Development).
The GSE also counts four ERC Starting Grant recipients among its affiliated professors. The Starting Grants support early-career top research leaders who are about to establish or consolidate an independent research career in Europe. GSE affiliated recipients are CREI Researchers Gino Gancia and Nicola Gennaioli , and UPF Professors Marta Reynal-Querol and Jan Eeckhout.
All of the Starting and Advanced ERC Grant recipients of the Barcelona GSE also teach in some of the School's master programs.
Prof. Ventura teaches in two Barcelona GSE master programs (2009-10): Master in Economics and Master in International Trade, Finance, and Development
Barcelona-based newspaper La Vanguardia observed in an article this week that CREI, one of the Barcelona GSE’s founding academic bodies, has the highest concentration of ERC grant recipients in Europe. Together with the two recipients from the UPF, this puts seven of the GSE’s faculty in what the newspaper calls the “Champion’s League” of scientific research in Europe.
A new understanding of asset bubbles
The aim of Prof. Ventura’s research is to develop a new view of asset bubbles. “Advanced capitalist economies experience large and persistent movements in asset prices that are difficult to justify with economic fundamentals,” Prof. Ventura explained, citing the Internet bubble of the 1990s and the real state market bubble of the 2000s as two recent examples.
“The predominant view is that these bubbles are a market failure, and are caused by some form of, perhaps mild, individual irrationality on the part of market participants. This project is based instead on the view that market participants are individually rational, although this does not preclude sometimes collectively sub-optimal outcomes,” Prof. Ventura said.
He argues that bubbles are therefore not a source of market failure by themselves but instead arise as a result of a pre-existing market failure, namely, financial imperfections.
“The main objective of this project is to develop this view of asset bubbles, and produce an empirically-relevant macroeconomic framework that allows us to address pervading questions about the relationship between bubbles and financial markets, economic growth, and unemployment,” Prof. Ventura said. “This could help us develop the tools that allow policy makers to sustain those bubbles that have positive effects and burst those that have negative effects.”
About Prof. Jaume Ventura
Jaume Ventura is a senior researcher at CREI and a professor of economics at Universitat Pompeu Fabra. He received his PhD from Harvard in 1995. Prior to joining CREI and UPF, he was a tenured associate professor at MIT. He has also taught at the University of Chicago and INSEAD. Prof. Ventura has worked full-time for the World Bank, and acted as a consultant for the Inter-American Development Bank. His research specializes in macroeconomics and international economics.
Video: Roundtable Discussion
Barcelona GSE Prof. Jaume Ventura's project "Asset Bubbles and Economic Policy" is one of only nine to receive an ERC Advanced Investigator Grant in Economics this year. He shared some of his thoughts on bubbles with students and members of the Barcelona GSE Research Network during Economics Trobada VII in Fall 2009.
Watch the video (05:59)
Prof. Jordi Galí directs the CREI (Center for Research in International Economics), one of the four GSE academic bodies and the European institution with the highest concentration of ERC grant recipients.
Forthcoming Publications from Prof. Ventura
Article in La Vanguardia [pdf]