Shanghai Forum 2016 Integration & Innovation Session

Household Finance and Economic Development

Co-organizers:
Centre for Economic Policy Research (CEPR) Network on Household Finance;
Goethe University Frankfurt;
Financial Research Center, Fudan Development Institute

Host: Michael Haliassos & Sun Lijian

Introduction of the Host:

Michael Haliassos holds the Chair for Macroeconomics and Finance at Goethe University Frankfurt. He is Director of the newly founded CEPR Network on Household Finance, Research Fellow of the Centre for Economic Policy Research and International Research Fellow of   NETSPAR (The Netherlands). He has been advisor to the European Central Bank on the Eurozone Survey of Household Finances and Consumption starting with its inception in 2006; and has recently been appointed consultant to the European Securities and Markets Authority (ESMA) on topics relevant for the Investor Protection and Intermediaries Standing Committee (IPISC). He has been Director of the Center for Financial Studies for six years since 2010 and Founding Director of the center SAFE, a multi-million center of excellence funded by the State of Hessen (2013-15).  Haliassos' research interests lie in Macroeconomics and Finance with emphasis on household finance. His papers have appeared in major international journals and high-impact volumes. He has recently edited a volume on Financial Innovation: Too Much or Too Little? (MIT Press), a 3-volume collection of Critical Writings in Household Finance (Edward Elgar, 2015), and co-edited a volume on Financial Regulation: A Transatlantic Perspective (Cambridge University  Press, 2015). Haliassos received a B.A. from Cambridge University, and a Ph.D. from Yale University in 1987 under the supervision of Nobel Laureate James Tobin. Prior to joining the faculty of Goethe   University Frankfurt in 2004, he was a faculty member at the University of Maryland, and then at the University of Cyprus, where he also served as Deputy Dean. He has held visiting appointments inter alia at the European University Institute and at the Center of Studies in Economics and Finance (CSEF). He recently completed a term on the 11-member Greek National Council on Research and Technology (ESET) advising the Greek government on how to fund   and promote research and innovation (2010-13).

Topic: Household Finance and Economic Development Household Finance is the study of how households make use of investment and borrowing opportunities provided by their economic   environment in order to smooth consumption over their life cycle, accumulate wealth, and manage the risks they face. Such opportunities are intertwined with a country’s stage of economic development. This determines the range of financial products available to households for asset accumulation, or borrowing to smooth consumption or finance investment in real assets, such as housing. It also influences society’s ability to support adequate living standards in retirement through the three pillars of the pension system: the social security system,   occupational pensions, and retirement accounts. Household finance has developed as a field over   the past 25 years, in tandem with major challenges posed by the demographic transition, asset market movements, and financial innovation. The growing dependency ratio, namely that of retirees to members of the working population contributing to the social security system, has meant that social security pensions can no longer be provided at adequate levels. This has inspired many developed countries to shift responsibility for financing retirement to their citizens, and to provide tax incentives for use of individual retirement accounts. It has also led to a transfer of risks, from sponsors of (Defined Benefit) occupational pensions based on formulas to workers making Defined Contributions to risky portfolios and bearing the consequences of   market movements in determining pension levels. This transfer of risks in the pension domain was accompanied by increased general tendency of households in developed countries to undertake financial risk, motivated partly by the exceptional performance of asset markets in the 1990s. 

Household portfolios became much more complex under the confluence of these factors, creating more challenges for households with varying degrees of financial knowledge, education, sophistication, and ability to withstand consequences of investment and borrowing mistakes. Research has had difficulty establishing a clear policy role for financial education in limiting mistakes, but has uncovered numerous issues with financial advice, including conflicts of   interest and difficulties of matching advisors to those who need advice the most. 

Does the Housing Reverse Mortgage Work for Household Asset Allocation in China's Aging Society?

Co-organizers: Centre for Economic Policy Research (CEPR) Network on Household Finance;
Goethe University Frankfurt;
Financial Research Center, Fudan Development Institute

Host: Michael Haliassos & Sun Lijian

Theme Interpretation:

When comparing life cycle models to data from developed countries, one typically finds less actual decumulation of assets during retirement than the optimal amount implied by the models. In addition to annuities, wealth decumulation could further support retirement financing but is inhibited by a number of factors, not least of which are the illiquidity and indivisibility of housing. Reverse mortgages have emerged as a possible way to draw income without paying interest while living in the primary residence. They are, however, complicated instruments that run into the problems of financial awareness, sophistication, and conflicts of interest confronting much of   financial innovation. European experts present and discuss with Chinese academics, officials, and practitioners the complex set of financial choices confronting households in their effort to smooth consumption, manage risks, and provide for retirement. 

Global Value Chain, Innovative Transition and Reshaping the Asian Manufacture Competitiveness

Co-organizers: School of Economics, Shanghai University;
Asia Research Center, London School of Economics and Political Science

Host: He Shuquan

Introduction of the Host:

Dr. HE Shuquan is a Professor and Ph.D. candidate supervisor in the fields of Economics and International Business, and Founding Director of Economic Innovation and Business Development Center at the School of Economics, Shanghai University and EAE/OBS Business School (Spain). He holds Ph.D. in Economics from Wuhan University (China, 2006). He was a visiting post-doc at Nanyang Technological University (Singapore) from October 2008 to October 2009, and visiting researcher at Cass Business School (London, the UK) from August 2012 to August 2013. He has been teaching and doing research in the fields of international economics and international business for more than 10 years. He has published papers in leading Chinese academic journals and international journals. He is interested in world economy and economic statistics, international trade, international commodities market, international business, the Chinese Economy and doing business in China. 

Theme Interpretation:

With the deepening of economy globalization, the evolution of international production model,   and the manufacture returning back to the America and Europe, the Asian manufacture   industry faces the pressure to transit from traditional industry to advanced manufacture to upgrade along the global value chain (GVC). Asia as a whole is at the lower position along the global value chain (GVC), this topic focuses on the path and requirement for the global   economy transition and upgrading under the environment of international production   fragmentation. Participants will evaluate Asia’s position along the global value chain (GVC),   industry 4.0, China Manufacture 2025 and smart manufacture, aiming to discuss how Asia   reshape its competitiveness in manufacture sector. Participants will come from manufacture   sector, government agency and universities.