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Nobel Laureate Prof. Robert Engle Gives a Speech at UESTC Forum

published: 2011-09-27 15:25:28       hits: 

Nobel Laureate Prof. Robert Engle Gave a Speech at UESTC Forum On the afternoon of Sept. 24, 2011, Prof. Robert Engle, world-renowned economist and 2003 Nobel Laureate in Economics, came to UESTC and delivered a speech to faculty members and students on the topic of "How to Avoid the Next Financial Crisis——a discussion of how to measure and regulate systemic risk".

 Professor Engle is the Michael Armellino Professor of Finance at Stern School of Business, New York University, and he was awarded the 2003 Nobel Prize in Economics for his research on the concept of Autoregressive Conditional Heteroskedasticity (ARCH). ‘He developed methods to study the volatility properties of time series in economics, particular in financial markets. His method (ARCH) could, in particular, clarify market developments where turbulent periods, with large fluctuations, are followed by calmer periods, with modest fluctuations.’

Since 2008, the worldwide financial crisis has created a tremendous impact on the global economy and has effected a rapid change in trade, production, raw materials and financial sectors, thus causing considerable unrest and instability. The new round of European sovereign debt crisis has also cast a dark shadow on the global financial and economic recovery and stability. Prof. Engel’s talk focused on how to avoid global financial crisis with risk measurement and control and how to assess the crisis and to strengthen controls to prevent systemic risk.

Prof. Engel pointed out that lessons could be learned from this financial crisis. He put forward the ideas of risk identification, risk assessment and several stages and steps of risk prediction. He also described in detail the studies carried out in New York University Stern School of Business on systematic financial risk assessment and their applications and significance in Basel Concordat, corporal operation, and counter-economic cyclical regulation and controls.

Did the corporate financial distress cause the financial crisis? Or vice versa? According to Prof. Engle, there exists a reciprocal causal relationship between the two. If many enterprises performance poorly, the financial crisis is a sure result, and the company that suffers the most serious shortage of funds becomes the biggest initiator of the crisis. 

Prof. Engel also shared with the audience his opinion on the application of financial risk assessment system in the European market. He believes that regulation can reduce the risk of systemic financial institutions. However, Prof. Engel did not give a clear answer to the question whether a second financial crisis will occur in the future. He emphasized that the world economy is a community and that if another financial crisis does occur, no country can stay aloof. He likes the sentence, “Let us join hands and tide over the crisis."

After Prof. Engle’s speech, the participating students took the floor to ask questions. The professor was deeply impressed by the students’ choice of questions and their communication competence.

To students in the audience, this is indeed a rare chance to have direct interactions with the Nobel laureate in economics. They got not only information of the latest development in the economic field, but also inspiration of academic pursuit and motivations for further studies.

Before the speech, Vice President Wang Houjun had a short meeting with Prof. Engle. On behalf of UESTC, Prof. Wang extended a warm welcome and sincere gratitude to Prof. Engle for his visit. Representatives of "Management - Electronic Engineering Experimental Class" of UESTC presented a special gift — Prof. Engel's portrait drawn by students themselves. Prof. Engel gladly wrote his autograph for the students, together with his encouraging words "study hard."
This speech is part of the 55th anniversary celebrations of the university.