3Qs: A window into the U.S. economy

Economics professor William Dickens says the U.S. economy's fate in 2012 is inextricably linked to the European economy. Photo by Mary Knox Merrill.

from News@Northeastern

2011 was a tough year for the U.S. economy, with continued high rates of unemployment, surging food and gas prices and concern over struggling European economies in countries such as Greece and Italy. With an eye toward the future, we asked economics professor William Dickens to analyze the U.S. economic outlook in 2012.

What are the biggest obstacles on the road to economic recovery in the U.S.?

There is recovery and then there is real recovery. Economic activity reached its low point in June 2009 and we have been in “recovery” since then. But this recovery hasn’t felt much like a recovery because unemployment has remained stubbornly high. Recently unemployment has dropped a bit, and a few hundred thousand jobs have been added, but this hides the fact that job growth has been nowhere near large enough to accommodate our growing population.

Professor Bill Dickens and recent grad Matt Jordan are using game theory to gain a better understanding of the economics of microlending

Dickens microlending

New success model for microfinance: A matter of trust

In some countries, poor borrowers repay loans to microcredit lenders at rates of close to 100 percent while other countries see repayment rates so low that it makes microlending unsustainable – a disparity that economists have been unable to fully understand.

“Traditional economic indicators didn’t predict anything, and the game theory analysis we have of it was suspect,” said Matt Jordan, AS ’11, who has been working with Bill Dickens, a professor of economics in the College of Social Sciences and Humanities.

But now, the existing understanding of the economics of microlending may be changing, thanks to work by Dickens and Jordan, who, as an undergraduate, conducted field research in the Dominican Republic, where microlending has helped bring many out of abject poverty.

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