On May 17, as a part of the NES Economic Lectorium, Professor, Chairman of the Board of Directors of the Toulouse School of Economics, 2014 Nobel Prize winner in Economics Jean Tirole delivered a public lecture in Moscow. In his speech, the researcher focused on the problems of financial stability and the likelihood of new crises.
The crisis of 2008: who is to blame and have the lessons been learned?
At the beginning of the lecture, Jean Tirole analysed the results of the last financial crisis of 2008. According to him, it was "the crisis of the state, not inclined to work as a regulator".
Could economists prevent a crisis? According to Jean Tirole, experts can identify factors that lead to a crisis, but are not very good at predicting its occurrence and, all the more, name a specific date.
Jean Tirole believes that even 10 years after the crisis, the financial system is still quite fragile. However, during this time, significant success was achieved in the regulation system: the minimum capital requirements for financial institutions has increased and the use of over-the-counter transactions had reduced etc.
Should we expect a new financial crisis?
At the beginning of his lecture, Jean Tirole underlined that it is unlikely that anyone will give a specific answer to the question about the probability of a future crisis. However, he mentioned some of the trends that concern him.
First of all, he noticed that there is deregulation taking place in different countries. One of the numerous examples is the USA. There is a call for the repeal of the law of Dodd Frank, who streamlined and strengthened the regulation of the financial sector. They also question international rules of governing of the financial sector, as there are quite a few borrowers with a bad credit history.
Another serious danger is political changes and the rise to power of populists, who are calling for economically inexpedient but popular solutions among non-specialists.
Jean Tirole also mention a credit boom and artificially increased asset prices as potential dangers.
Download the presentation here.
Photos from the lecture are here.
Scientific seminar "Cooptation"
Also, on May 17, Jean Tirole spoke at a scientific seminar at the New Economic School. He presented his scientific article “Cooptation”, on which he works together with his PhD student Paul-Henri Moisson.
He said that many organizations which use cooptation, make the choice of a particular candidate for the position (membership) in it. Jean Tirole showed the conditions under which the organization chooses new members, focusing on their abilities, as well as the conditions under which the organization, on the contrary, makes a choice, based on the candidate's membership in the dominant group. The last option leads to even greater domination of this group and a drop of the level of organization.
The piblic lecture of Jean Tirole was held with the support of the "SAFMAR" Charitable Foundation.