Program Director
: Lars Peter Hansen, University of Chicago Department of Economics, Statistics and the Booth School of Business

One of my great teachers, Wesley C. Mitchell, impressed on me the basic reason why scholars have every incentive to pursue a value-free science, whatever their values and however strongly they may wish to spread and promote them. In order to recommend a course of action to achieve an objective, we must first know whether that course of action will in fact promote the objective. Positive scientific knowledge that enables us to predict the consequences of a possible course of action is clearly a prerequisite for the normative judgment whether that course of action is desirable. The Road to Hell is paved with good intentions, precisely because of the neglect of this rather obvious point. This point is particularly important in economics. ― Milton Friedman, Nobel Lecture, Journal of Political Economy [read more on Friedman’s views and contributions to economic sciences here.]

This research program will expand our understanding of how financial markets affect the economy as a whole and, conversely, how the macroeconomy influences financial markets. It will do so by bringing together a community of elite scholars with common ambitions to tackle these important challenges. This program operates under the auspices of the Becker Friedman Institute with generous funding support from The University of Chicago Booth School of Business.

 The program explores the following themes:

Through sponsored research projects, conferences, and interactions with visiting scholars, this program focuses on these fundamental questions:

How do we best capture the interplay between monetary and fiscal policy?

How do we construct models and measurements that will better support the prudent oversight of system-wide risks to the financial system?

How do we provide a more coherent assessment of the financial obligations of government? 

How does the credit cycle influence the business cycle, and how does the business cycle affect the credit cycle?

What broader lessons can we extract from country-specific monetary and fiscal histories?

MFR Request for Proposals

The program welcomes proposals for University of Chicago faculty and advanced graduate students for research projects involving comparisons of existing linear and nonlinear economic models, linkages between economic sectors, new and improved software for macroeconomic models and other tools related to better measurement of systemic risk, broadly defined. In addition, we welcome studies of macroeconomic impacts of monetary and fiscal policy and their interactions.

Please see the following guidelines and contact Diana Petrova, MFR Associate Director at to submit:

MFR Program Advisory Committee

The Macro Finance Research Program (MFR) Advisory Committee oversees the research agenda of the program. Members of the committee are prominent experts in macroeconomics and finance with particular interests in exploring linkages between these fields. They have made important substantive research contributions and are well positioned to help the research agenda for the program.

  • Fernando Alvarez, Professor, University of Chicago Department of Economics
  • John Cochrane, Senior Fellow, Hoover Institution, and BFI Distinguished Research Fellow
  • Douglas Diamond, Professor, University of Chicago Booth School of Business
  • Zhiguo He, Professor, University of Chicago Booth School of Business
  • John Heaton, Professor, University of Chicago Booth School of Business
  • Anil Kashyap, Professor, University of Chicago Booth School of Business
  • Ralph Koijen, Professor, University of Chicago Booth School of Business
  • Thomas Sargent, Professor, New York University Department of Economics and BFI Distinguished Research Fellow
  • Amir Sufi, Professor, University of Chicago Booth School of Business
  • Harald Uhlig, Professor, University of Chicago Department of Economics

Forthcoming MFR Conferences and Events:

Previous MFR Conferences and Events:

For general program inquiries, please contact Diana Petrova, MFR Program Associate Director, at

Macro Financial Modeling (MFM) Project

Project Directors:
Lars Peter Hansen, University of Chicago, Program and Project Director
Andrew W. Lo, Massachusetts Institute of Technology, Project Director

Launched in 2012, this collaborative venture works to develop and assess enhanced macroeconomic models that better account for important financial sector influences on the economy. The aim is to close gaps in our ability to define, measure, and manage financial sector activities that pose risks to the macroeconomy as a whole.

The project brings together a network of prominent scholars and innovative early career researchers actively working in this field. Since 2012, the project group has met regularly to discuss and critique current and proposed models. With input and regular involvement of policymakers, the group is working to develop the next generation of policy tools.

One major focus of the effort is to cultivate emerging scholars in this area, through dissertation support and opportunities for students to present and refine their work. New this year is a 2016 summer session that will offer doctoral students and other young scholars and professionals working on related topics. Participants will gain insights from central bank research departments distinguished researchers, and peers at the frontiers of research in this area.
Browse this site to discover recent papers and research tools relevant to this work.

MFM dissertation fellowships are provided with funding from the Alfred P. Sloan Foundation, CME Group Foundation, and Fidelity Management & Research Company.

Upcoming MFM Meetings

2019 Macro Financial Modeling Winter Meeting – February 21-22, 2019 at NYMEX, 300 Vesey Street, New York, NY 10282, USA

Previous MFM Meetings

Macro Financial Modeling Winter 2018 Meeting – January 25-26, 2018 – NYMEX, 300 Vesey Street, New York, NY 10282, USA

2017 Macro Financial Modeling Summer Session for Young Scholars – June 18-22, 2017, Bretton Woods, NH

Macro Financial Modeling Winter 2017 – March 9-10, 2017, New York, NY

Latin American Fiscal Studies Project

Project Directors:
Juan Pablo Nicolini, Senior Research Economist, Federal Reserve Bank of Minneapolis
Timothy J. Kehoe, Advisor, Federal Reserve Bank of Minneapolis
Fernando Alvarez, University of Chicago, Department of Economics
Thomas J. Sargent, NYU, Department of Economics

Latin American economies have endured a wide variety of experiences in terms of the design, the implementation and the consequences of monetary and fiscal policies. While many country-specific narratives exist, this research project is assembling comprehensive historical time series for eleven countries to provide more complete and comprehensive accounts for each country and to facilitate cross-country comparisons. This project, as part of the MFR, has engaged scholars and experienced policy makers to provide accurate assessments for each country’s fiscal history. The lessons gleaned from analyzing these historical data will offer valuable guidance for policy makers, international financial institutions, and the academic community.

Visit the project website here.

Behavioral Implications of Uncertainty in Macroeconomics Project (BUMP)

Project Director: Thomas J. Sargent, NYU, Department of Economics

How people conceive of and respond to uncertainty is a critical behavioral ingredient of dynamic economic models. In many macroeconomic models today, uncertainty has only modest impacts. This is because these models embrace the assumption of rational expectations that says that people know the probabilities implied by the model. The rational expectations assumption is a valuable tool for evaluating many problems, but is dubious for analyzing many of the important situations we face today when concerns about temperatures, other physical determinants of long-term growth prospects, and demographic drivers of possible “secular stagnation” are on many peoples’ minds. Therefore, we propose to expand the usual rational expectations approach in macroeconomics by attributing uncertainty about to the probabilities to that people in our models are facing. We see this as having vital implications for formulating sensible economic policies. We push beyond the conventional risk-based, rational expectations analyses by building on probe more general paradigms coming from decision theory and modern mathematical control theory. Furthermore, we complement and extend other behavioral research that emphasizes psychological mechanisms. We accomplish this by using statistical theory to formalize how environmental complexities of the model framework can influence individual behaviors.

Click here to read a research brief summarizing the aim of the BUMP project.

Financing Investment in China Project (MFR-China)

Project Director: Zhiguo He, University of Chicago Booth School of Business

The instruments of finance are evolving quickly in China. China’s interbank market has experienced rapid growth and has turned the nation into the third largest economy in the world behind the United States and Japan. Participants in this market include commercial banks, insurance companies, mutual funds, and other qualified institutions. This project formally named “Chinese Financial Markets (CFM)” as part of the MFR, will provide a comprehensive study of the interbank market in China including its overall stability, its consequences for investment and its support for new productive ventures.

Read more about MFR-China here.

University of Chicago Joint Program in Financial Economics

This Macro Financial Research Program will seek to encourage the participation of interested and promising advanced graduate student researchers. One vehicle for doing this is the Joint Program in Financial Economics at the University of Chicago. This program is a collaboration between the Economics department and the Booth School of Business.

The aim of this program is to exploit the strengths of both sponsors in training PhD students interested in financial economics. Core economics training is valuable for students seeking to do research in financial economics, and advances in financial economics have important spillovers to other areas of economics.

Every year, the program holds a number of conferences, workshops and events designed to expose students to frontier research in financial economics and to encourage research collaborations aimed at supporting prudent policy-making.