The Malta Independent 23 July 2019, Tuesday

Central Bank of Malta public lecture on Knightian uncertainty and asset prices

Thursday, 21 March 2019, 11:44 Last update: about 4 months ago

Professor Sujoy Mukerji, head of the School of Economics and Finance at Queen Mary University of London, delivered a public lecture at the Central Bank of Malta on Friday, 15 March with the theme Knightian uncertainty and asset prices. The speaker was introduced by the bank's chief economist Dr Aaron G. Grech.

Professor Mukerji studied at the Delhi School of Economics and at Yale University where he obtained his PhD. He came to QMUL from Oxford University (University College). His research has primarily been on decision-making under ambiguous uncertainty (sometimes called Knightian Uncertainty), its foundations and its relevance in economic and financial contexts. His broader research interests lie in the intersection of bounded rationality and economic theory. Professor Mukerji has published widely in the leading journals of economics and is associate editor at Econometrica, the profession's most highly regarded journal.


In his lecture, Professor Mukerji discussed some recent developments in the theory of decision-making under uncertainty and argued that these new theories and models are singularly useful in explaining and understanding the key facts of the 2008-12 credit crises and the time and cross-sectional variation in asset prices.

Moreover, he argued that the understanding of the credit crises based on these theories has significant policy implications about how such crises may be alleviated. While the formal articulation of the theories took place only recently, the seminal ideas were already put forward in the 1920s by Keynes and Knight, who pointed out that for many important economic decisions, the decision-maker faced "genuine" uncertainty of the kind where s/he did not have very reliable information about the relevant odds.

The Central Bank of Malta and QMUL have recently established an academic visitors' programme, which will enable the engagement of visiting scholars and interns to undertake research on jointly agreed projects. In 2018 the two institutions organised a joint conference in London on The euro: Views from the Commonwealth.

This was the third lecture by an international speaker at the bank this year. During 2018, the bank hosted 14 international lecturers.

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