Operating from real-world data, AIBE uses a variety of empirical techniques supported by economic theory to inform the development of business strategies and public policies on economic and social issues. Rather than utilise a single econometric model, researchers employ complimentary models in order to triangulate results and provide more robust recommendations. 

Expertise

Our Applied Economics researchers have expertise in:

• Economic modelling and forecasting
• Business economics
• Economics of innovation
• Consumer and firm behaviour
• Microeconomics
• Macroeconomics
• Labour and social economics
• Environmental economics
• Economics and law
• Transport, freight and logistics.

Models and techniques

Specific economic models and analysis techniques include:

• General equilibrium models:
  • Multi-sectoral general equilibrium models to capture sectoral linkages
  • Interaction and macroeconomic dynamic models to account for a closed macroeconomic system
  • Recursive dynamic general equilibrium models
  • Applications of the above to trade, environmental, and fiscal policy development
• Regional and non-linear input-output models
• Incursion assessment style models using Markov chains to analyse discrete events and actions
• Structured decision-making systems for cost-benefit analyses
• Optimised stochastic portfolio models for investments and technology diffusion
• Malliavin Calculus - useful for taking derivatives in situations with uncertainty - in particular, option pricing
• Production possibility frontier analysis
• Game theoretic analysis including auction theory, Bertrand, Cournot, Stackelberg, asymmetric information, principal-agent problems

Financial modelling

AIBE also utilises financial models including:

• Valuation methods (real options, Markov chains, debt sculpting)
• Optimisation in decision theory (data envelopment analysis, multi-criteria assessments, simulated annealing, genetic algorithms)
• Machine learning and applications (PCA, decision trees, minimum spanning trees, deep learning and neural networks)
• Risk assessment (credit + market + operational risk techniques, Bayesian updating, copula methods, distribution theory).