This project combines unique data sources, alternative methodological approaches and new economic theories to analyse economic crisis and structural change. Our working hypothesis is that crisis events may have very different effects on the distribution of household income and firms earnings when the economy is undergoing structural changes, and this knowledge is important for policymakers. Against this background, this research project is organised in three work packages: First, we will explore the possibilities offered by various Big Data sources and alternative methodological approaches invented within the fields of, e.g., National Language Processing (NLP) and Machine Learning (ML), to address whether better predictions of rapid business cycle changes can be made, so as to provide a reliable early warning system. Understanding the sources behind economic fluctuations has been a core field in macroeconomics. In that respect, the Corona-virus pandemic is an unprecedented event, generating some of the largest business cycle swings ever recorded. Managing to predict and prepare for such events in the future would be welfare improving. Second, we will develop and evaluate macroeconomic theory which studies how the steady state of the economy changes as a result of large shocks and permanent changes, e.g., the corona crisis and persistent petroleum market changes, and how the transition to this new steady state comes by. Macroeconomic policy analysis will have an important role in these theories, as it can potentially facilitate (a preferable) structural change in the economy as well influence the optimal path towards this new steady state. Finally, we will develop and use new empirical models tailored for the analysis of large cross-sectional time series to facilitate empirical analysis of the short- and long-run heterogeneous effects households and firms might experience following major macroeconomic shocks and policy changes.
Project leader: Hilde Christiane Bjørnland
Category: Vitenskapelige høyskoler
Institution: STIFTELSEN HANDELSHØYSKOLEN BI