We’d like to congratulate Assistant Professor David Baqaee for being awarded a National Science Foundation (NSF) grant for his research titled “Macroeconomics as Explicitly Aggregated Microeconomics.” One of the biggest changes in economics in the 21st century is the increasing availability of comprehensive, high quality, micro-level data on households and firms. To utilize all this data meaningfully, we need macroeconomic models with enough flexibility to be able to leverage and organize all this information. However, such models can be so complex that they turn into unworkable black boxes, whereby it becomes difficult to know where the results are coming from, and how sensitively they depend on the assumptions. This project develops data-driven theory which aggregates granular data by combining the flexibility of computational models with the transparency of theoretical ones. The project then applies these theories to newly-available micro datasets to investigate important macroeconomic issues such as productivity, economic growth, trade and inequality.
This project will develop and apply new aggregation results for economies with non-neoclassical production like fixed costs, increasing returns to scale, entry-exit margins, and discontinuities. These are issues that are typically abstracted away from in both the measurement and analysis of national income and growth. This project will extend classical aggregation theorems that allow for non-linearities, distortions, heterogeneous agents, heterogeneous firms, production networks, and international trade further to environments with non-neoclassical, non-convex, and non-continuous production structures. The project will apply the theoretical results to recently available micro-level datasets that can discipline and put structure on the rich range of theoretical possibilities.
This award reflects NSF’s statutory mission and has been deemed worthy of support through evaluation using the Foundation’s intellectual merit and broader impacts review criteria.
The NSF funds research and education in most fields of science and engineering. It does this through grants, and cooperative agreements to more than 2,000 colleges, universities, k-12 school systems, businesses, informal science organizations and other research organizations throughout the United States. The Foundation accounts for about one-fourth of federal support to academic institutions for basic research. NSF receives approximately 40,000 proposals each year for research, education and training projects, of which approximately 11,000 are funded. Source