Tepper School of Business
News Detail
Chester Spatt Stresses Policymakers Can Benefit From Research in Financial Economics
Author:Mark D. Burd 412-268-3486
Release Date: Jun 19, 2009
SAN DIEGO—The enormous cost of policy uncertainty, the real effectiveness of the federal government fiscal stimulus strategy, and the mammoth challenge of reducing systemic risks were among the topics addressed during a keynote address today presented by Professor Chester Spatt, the distinguished speaker at the 44th Annual Conference of the Western Finance Association.
Spatt is the Pamela R. and Kenneth B. Dunn Professor of Finance and director of the Center for Financial Markets at Carnegie Mellon University’s Tepper School of Business. He served as chief economist and director for the Office of Economic Analysis of the U.S. Securities and Exchange Commission (SEC) from 2004 to 2007. Spatt has been an active participant in Western Finance Association meetings since 1983.
“In reacting to the dramatic challenges of our day and confronting unprecedented concerns, it is easy for policymakers not to internalize some of the crucial implications of economic principles for the new and challenging contexts that they confront,” Spatt said. “Financial economics has much to contribute to policy debates and from a research perspective these suggest interesting issues for financial theory and financial economics more generally.”
Spatt also discussed the importance of resource issues that have been longstanding practices of pension plans, which are now substantially underfunded because they assumed asset growth with expected return that did not adjust for risk. He reiterated comments he made from a an address he gave while serving as the SEC’s chief economist, in which he described the inevitability of pension plans becoming underfunded on a large scale. This due to the problematic aspect of projecting asset returns at risky, rather than at risk-neutral, expected returns.
The Western Finance Association is a professional society that hosts one of the two major broad-based scholarly conferences for academicians and practitioners focused upon the development and application of research in finance.
Spatt concluded his remarks by highlighting several of the major challenges that the economy faces and to which the research of financial economists can, and are expected to, make important contributions.
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