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Law & Business Events

Bridging Theory and Practice in Finance, Macroeconomics, and Regulation

Co-Sponsored: Owen Graduate School of Management & Vanderbilt Department of Economics

Funding from the Alfred P. Sloan Foundation
Friday, September 9, 2011

Conference Papers

8.45-10.30 Panel 1: Why didn't we see the crisis coming?

Peter Rousseau, Moderator

Lead Panelists:

• Varadarajan Chari, Professor of Economics, University of Minnesota
• Panicos Demetriades, Professor of Financial Economics, University of Leicester, United Kingdom
• Chris Brummer, Professor of Law, Georgetown University Law Center

Possible Issues:

• Financial market innovation/shadow banking
• Overconfidence that markets could adequately price risk
• Lack of transparency in large parts of the financial markets
• Macro models do not account for sophisticated financial sector
• Regulators not monitoring the right indicators
• Failure to understand impact of GSEs 

10.45-12.30 Panel 2: What does macroeconomics need to learn from finance?

Margaret Blair, Moderator

Lead Panelists:

• Douglas Diamond, Professor of Finance, University of Chicago
• Hans Stoll, Professor of Finance, Vanderbilt Owen Graduate School of Management
• Peter Rousseau, Professor of Economics, Vanderbilt University

Possible Issues:

• Modeling role of financial sector
• Understanding banking and shadow banking 
• Risk-shifting and the role of derivatives 
• Hedging vs. speculation
• Better measures of credit creation
• Formation of “bubbles”

1.30-3.15 Panel 3: What does finance need to learn from macroeconomics?

Hans Stoll, Moderator

Lead Panelists:

• Franklin Allen, Professor of Finance and Economics, Wharton School of Business, University of Pennsylvania
• John Laitner, Professor of Economics, University of Michigan
• Tom Ho, Owner, THC Financial Engineering

Possible Issues:

• Aggregate effect of financial innovation
• Costs and benefits of “fragility”
• Aggregate costs and benefits of leverage
• Shadow banking and monetary policy
• Asset pricing models with feedback effects?
• Causes of “confidence” in the markets, or its breakdown
• Formation of “bubbles”

3.30-5.15 Panel 4: What do regulators and legal scholars need to learn from finance and macroeconomics, and vice versa?

Yesha Yadav, Moderator

Lead Panelists:

• Craig Lewis, Professor of Management in Finance, Vanderbilt Owen Graduate School of Management, SEC Chief Economist
• Lawrence White, Professor of Economics, New York University Stern School of Business
• Anna Gelpern, Professor of Law, American University, Washington College of Law
• Erik Gerding, Associate Professor of Law, University of Colorado School of Law

Possible issues:

• Financial innovation and regulatory arbitrage
• Aggregate effects of regulatory arbitrage
• Can better information prevent bubbles?
• Reforming credit rating agencies 
• Problems in regulating global financial markets