An innovative research project at the University of Cambridge has been launched in response to the world financial crisis of 2008 and its continuing economic consequences.
The Keynes Fund for Applied Economics will provide grants for research, fellowships and teaching at the intersection of financial markets with the real economy of employment, production and consumption. The focus of the teaching and research supported by the Fund shall be: capital market mispricing; the design of incentive systems and mechanisms to reduce the incidence and significance of institutional or general economic failure, as well as responsive public policies.
The Fund will enable Cambridge scholars to follow in the footsteps of J. M. Keynes, the highly influential Cambridge economist, in promoting innovative research and teaching in Economics that will help meet the need for coherent practical solutions to economic problems.
Though based in the Faculty of Economics, the Fund will actively encourage input from other disciplines such as psychology, history, anthropology and biology. It will encourage academics to extend the frontiers of traditional economics to promote long-term thinking, improved economic growth and reduced disparities in income and wealth.
Dr Bill Janeway, founder member of the Cambridge Endowment for Research in Finance, Co-Chairman of the 800th Anniversary Campaign and a Senior Advisor to Warburg Pincus, explains: “Since 2008, economists, policymakers and the public at large have been awakened to the relevance of Keynes’ understanding of the deep interdependence of the financial system and the real economy. “Cambridge scholars are at the forefront of new economic thinking about the integration of finance and economics at the level of individual behaviour, the networks that link market participants and the macro-economy.”
The fund has been launched with an anonymous £4 million philanthropic gift to the University. Professor Lynn Gladden, Pro-Vice-Chancellor for Research, will chair the management board of the Fund. She said: “Establishment of the Keynes Fund for Applied Economics is a major milestone for Cambridge. This generous donation will amplify the contribution of Cambridge economists to understanding the manifest problems in our financial economy and designing corrective policy responses.”
Professor Richard Smith, Chair of the Faculty of Economics, said: “The Faculty of Economics is very pleased to acknowledge the generosity of the donor in establishing the Keynes Fund for Applied Economics. The Keynes Fund will help to develop the current research and teaching capabilities of the Faculty. It will also enable the Faculty to initiate new research programmes in applied economics, in particular addressing the linkages between the financial sector and the real economy.”
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