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| Areendam Chanda and Eric Hillebrand |
November 5, 2007
Areendam Chanda and Eric Hillebrand, both assistant professors in the Department of Economics in LSU’s E. J. Ourso College of Business, were awarded an LSU Board of Regents Research and Competitiveness Grant for a research project on which the two professors have collaborated. The grant totals $142,000.
Chanda and Hillebrand’s research project is entitled “Economic Recovery from Natural Disasters: A Dynamic Stochastic General Equilibrium Approach.” The project will estimate the medium to long-run economic consequences of Hurricane Katrina on the New Orleans economy.
One of the main advances of this project will be the application of a technique called "Dynamic Stochastic General Equilibrium” modeling. Unlike standard forecasting models, a DSGE model allows one to capture some important structural features of the pre-Katrina New Orleans economy such as the skill distribution of the labor force, the distribution of total output across various industrial sectors and differentiation among sectors on the basis of labor and capital intensities.
Implementation of the model will help researchers gauge the probability of recovery for different industrial sectors of the New Orleans economy, individual migration patterns, evolution of wage inequality and changes in the industrial structure in the medium to long run, all as a function of choices individuals make. Once the computational algorithm is finalized, it can be used to simulate economic recovery from natural disasters anywhere in the world.
It is only with recent advances in computational economics that such models can be solved. LSU's supercomputing facilities will assist Chanda and Hillebrand in implementing the model.
Hillebrand has been employed by LSU since 2003, and his research interests include Time Series Econometrics, Empirical Finance and Monetary Economics. Chanda has been employed by LSU since 2004, and his research interests include Growth Economics, Consumption and Savings and International Economics.
For more information about the Department of Economics in the E. J. Ourso College, visit www.bus.lsu.edu/academics/economics.
Wendy Osborn Luedtke
LSU E. J. Ourso College of Business
225-578-8865
