Is it possible that machine learning and big data will dethrone „traditional” economic and econometric modelling? This was the main question of the presentation held by Balázs Muraközy, director of the Firms, Strategy and Performance Research Group, at the Computational Social Science Conference organized by the Hungarian Academy of Sciences on November 14, 2017, in Budapest, Hungary. During the one-day conference researchers explained how the latest big data trends could be channeled into the different fields of social sciences. The speech held by Muraközy highlighted the fact that machine learning and big data methods will not replace „traditional” econometrics, but they rather will complement each other, mainly because of their different goals during economic analysis.
Márta Bisztray at the 10th „Forschungsschwerpunkt Internationale Wirtschaft (FIW)“ Research Conference on International Economics
The “FIW” conference took place in Vienna, Austria in November 2017. The main objective of the event is to provide a platform for economists working in the field of International Economics in Austria and in its neighboring countries to present recent research. Márta Bisztray introduced her joint work with Gábor Békés, a working paper entitled „Do friends follow each other? FDI network effects in Central Europe”. The main research question of the paper is whether existing investments of connected firms make it more likely for a new foreign direct investment to locate close. Looking at FDI inflows to five Central-Eastern European countries, Bisztray and Békés find suggestive evidence for this pattern both for firms in the same business group and for firms with a shared background.
Márta Bisztray paricipated in the 19th Annual Conference of the European Trade Study Group (ETSG) in Florence, Italy
The European Trade Study Group (ETSG) is a forum for academic discussion and research on international trade among universities and research institutes. The presentation held by Márta Bisztray introduced her joint work with Miklós Koren and Adam Szeidl, entitled: „Learning to Import from Your Peers”. The presentation was built around the main research question of the paper, whether firms are more likely to start importing from a country if they have peers with country-specific trade experience. Their results show that there are significant knowledge spillovers among peers and highlight the benefit of the presence of business and spatial networks to facilitate the diffusion of business practices.
A paper by Stefano DellaVigna, Attila Lindner, Balázs Reizer and Johannes F. Schmieder was published in the 2017 November issue of the Quarterly Journal of Economics. The study, titled “Reference-dependent Job Search: Evidence from Hungary”, propose a model of job search with reference-dependent preferences, with loss aversion relative to recent income (the reference point). In this model, they find that newly unemployed individuals search hard since consumption is below their reference point. Over time, though, they get used to lower income and thus reduce their search effort. In anticipation of a benefit cut, their search effort rises again, then declines once they get accustomed to the lower postcut benefit level.To distinguish between this and other models, the authors use a unique reform, introduced in 2005 in Hungary, in the unemployment insurance (UI) benefit path. A model with optimal consumption, endogenous search effort, and unobserved heterogeneity is estimated. The results indicate a slow-adjusting reference point and substantial impatience, likely reflecting present-bias.
How could taxi drivers earn more money by working less? Behavioral economics can provide answers to this question among other things. Richard Thaler, the best-known researcher of this field, won this year’s Nobel Memorial Prize in Economics. An article written by Balázs Muraközy -the director of the Firms, Strategy and Performance Research Group- and based on the scientific collection of The Committee for the Prize in Economic Sciences summarizes the crucial role of Thaler played in the development of behavioral economics over the past four decades.
This August, Lindau hosted the one-week Nobel Laureate Meeting in Economics for the 6th time. The aim of the meeting is to bring together and promote discussion between Nobel Laureates and young economists from all over the world. With the support of CERS HAS Marta Bisztray qualified in a global competition among young economists worldwide to participate. It was a special experience listening to the lectures of 16 Nobel Laureates and their panel discussions on current hot topics in economics. There were many opportunities to talk to the Nobel Laureates personally as well, and to have inspirational discussions with other young economists.
All the lectures and panel discussions can be watched here.
The project of the members of our research group is also among the winners in the proposal of National Research, Development and Innovation Office (NKFIH). In the supported proposal named “Employment of the low-skilled in Hungary”, the participating researchers (Balázs Muraközy, Attila Lindner, György Molnár and Balázs Reizer) will study the following topics: (1) the effect of trade shocks on the employment and earnings prospects of low skilled workers in Hungary; (2) the relationship between innovation, employment and wages; (3) the effect of minimum wages on competitiveness and exporting; (4) the effect of minimum wage on firm-owners and consumers; (5) whether public employment crowd out private employment and entrepreneurship.
A recent country review of Kazakhstan has been released by OECD in July, in which Balázs Muraközy also participated as one of the consultants of the OECD. The purpose of the OECD Review of Kazakhstan’s Innovation Policy 2017 is to obtain a comprehensive understanding of the key dynamics that drive Kazakhstan’s innovation system and the opportunities to enhance it through government policy. Balázs mainly contributed to the chapters about broader economic environment, innovation of firms and related policies.
Gábor Békés, senior research fellow of CERS HAS and member of our research team was awarded the Bolyai Plaque award of Hungarian Academy of Sciences. The Bolyai János Research Fellowship Board grants a memorial to their scholarship holders with excellent final research report. The best of them earn the Bolyai Plaque award. Congratulations!