Wouter den Haan
Encyclopedia
Wouter J. den Haan (born 22 July 1962) is a professor
of economics
at the London School of Economics
, research fellow and programmae director of the CEPR
, and editor of the Economic Journal
. Currently, his main areas of interest are business cycles, frictions in financial and labor markets, and numerical methods to solve models with a large number of heterogeneous agents.
for excellence in economics, an award also won by Nobel Laureates Oliver Williamson, Dale Mortensen, Finn Kydland and Edward Prescott. After earning his PhD he became an assistant professor at the University of California at San Diego, where he was a professor from 2001 to 2004. At the beginning of 2003 he moved back to Europe and became a professor of economics at London Business School. In 2006 he received a VICI award and became a professor of economics at the University of Amsterdam. He has been a visiting professor at the University of Rochester and the Wharton School and also a visiting scholar at the European Central Bank, the Board of Governors of the Federal Reserve System in Washington DC, and several regional Federal Reserve Banks.
and Wouter den Haan helped in making it feasible to analyze models with these features by developing computer algorithms to solve these models. Together with Albert Marcet
he developed the Parameterized Expectations Algorithm (PEA) and the “Denhaan-Marcet statistic” is used to evaluate the accuracy of numerical solutions. His more recent work deals with solving macroeconomic models in which heterogeneity and contracting
issues play a key role.
The key theme in Wouter den Haan’s research is the idea that to understand macroeconomic fluctuations one has to understand how transactions take place at the micro level. In particular, it is important to understand how agents find each other (and in particular what the search costs are and how long it takes), what agents know about each other (and in particular whether there are informational asymmetries), and what kind of contracts agents can write. The importance of these “frictions” for macroeconomics has been understood for quite some time but only recently do we have the computational tools to analyze macroeconomic models that are buildup from non-trivial micro foundations.
Wouter den Haan has applied this theme both to labour and financial markets. His research has shown that a job-market matching model
is very helpful in accounting for the high unemployment rates in several European countries. In particular, his research makes clear that the Growth and Stability pact — by keeping tax rates high until the number of unemployment has actually dropped—may make it more difficult to move towards the better equilibrium of low unemployment rates.
His work on the role of frictions in financial markets has shown how initially small shocks can lead to large fluctuations because of the feedback effects between the destruction of relationships of lending institutions and their clients and the amount that investors want to provide to these lending institutions. His research on financial markets also looks at the effects that changes in the interest rate by the central bank has on the economy. His recent work shows both empirically and theoretically that frictions between banks and consumers may actually be more important for economic fluctuations than frictions between banks and firms.
Professor
A professor is a scholarly teacher; the precise meaning of the term varies by country. Literally, professor derives from Latin as a "person who professes" being usually an expert in arts or sciences; a teacher of high rank...
of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
, research fellow and programmae director of the CEPR
Center for Economic and Policy Research
The Center for Economic and Policy Research is a progressive economic policy think-tank based in Washington, DC, founded in 1999. CEPR works on Social Security, the US housing bubble, developing country economies , and gaps in the social policy fabric of the US economy.According to its own...
, and editor of the Economic Journal
Economic journal
The Economic Journal is one of the leading scholarly journals of economics. It is published on behalf of the Royal Economic Society by Wiley-Blackwell....
. Currently, his main areas of interest are business cycles, frictions in financial and labor markets, and numerical methods to solve models with a large number of heterogeneous agents.
Biography
He graduated cum laude from the MA program at Erasmus University, he received his PhD degree at Carnegie Mellon University in 1991. This dissertation won him the Alexander Henderson AwardAlexander Henderson Award
The Alexander Henderson Award is presented to the student at the Tepper School of Business at Carnegie Mellon University who displays the best work in the field of economic theory. A large proportion of the winners of the award has later made contributions to economics that have changed the...
for excellence in economics, an award also won by Nobel Laureates Oliver Williamson, Dale Mortensen, Finn Kydland and Edward Prescott. After earning his PhD he became an assistant professor at the University of California at San Diego, where he was a professor from 2001 to 2004. At the beginning of 2003 he moved back to Europe and became a professor of economics at London Business School. In 2006 he received a VICI award and became a professor of economics at the University of Amsterdam. He has been a visiting professor at the University of Rochester and the Wharton School and also a visiting scholar at the European Central Bank, the Board of Governors of the Federal Reserve System in Washington DC, and several regional Federal Reserve Banks.
Research interests
Uncertainty and forward-looking agents play a crucial role in modern macroeconomicsMacroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
and Wouter den Haan helped in making it feasible to analyze models with these features by developing computer algorithms to solve these models. Together with Albert Marcet
Albert Marcet
Albert Marcet is a Spanish economist, specialized in Macroeconomics and Monetary Economics. He is professor of Economics at the London School of Economics...
he developed the Parameterized Expectations Algorithm (PEA) and the “Denhaan-Marcet statistic” is used to evaluate the accuracy of numerical solutions. His more recent work deals with solving macroeconomic models in which heterogeneity and contracting
Contract theory
In economics, contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of asymmetric information. Because of its connections with both agency and incentives, contract theory is often categorized within a field known as Law and economics...
issues play a key role.
The key theme in Wouter den Haan’s research is the idea that to understand macroeconomic fluctuations one has to understand how transactions take place at the micro level. In particular, it is important to understand how agents find each other (and in particular what the search costs are and how long it takes), what agents know about each other (and in particular whether there are informational asymmetries), and what kind of contracts agents can write. The importance of these “frictions” for macroeconomics has been understood for quite some time but only recently do we have the computational tools to analyze macroeconomic models that are buildup from non-trivial micro foundations.
Wouter den Haan has applied this theme both to labour and financial markets. His research has shown that a job-market matching model
Search theory
In microeconomics, search theory studies buyers or sellers who cannot instantly find a trading partner, and must therefore search for a partner prior to transacting....
is very helpful in accounting for the high unemployment rates in several European countries. In particular, his research makes clear that the Growth and Stability pact — by keeping tax rates high until the number of unemployment has actually dropped—may make it more difficult to move towards the better equilibrium of low unemployment rates.
His work on the role of frictions in financial markets has shown how initially small shocks can lead to large fluctuations because of the feedback effects between the destruction of relationships of lending institutions and their clients and the amount that investors want to provide to these lending institutions. His research on financial markets also looks at the effects that changes in the interest rate by the central bank has on the economy. His recent work shows both empirically and theoretically that frictions between banks and consumers may actually be more important for economic fluctuations than frictions between banks and firms.