New faculty member: Luba Petersen

Luba Petersen research interests are experimental economics and macroeconomics. Her PhD is from the University of Santa Cruz and she has a MA in Economics from University of British Columbia.

What attracted you to SFU Economics?

I was thrilled to find colleagues that had diverse interests and applied an eclectic mix of tools to innovative research questions.  As an experimental macroeconomist, I appreciated the cutting edge and unconventional research being conducted in the SFU Economics Department.  SFU also houses the Centre for Research in Adaptive Behaviour in Economics (CRABE), one of the few experimental economics laboratories in Canada. I have long been interested in its research agenda and was eager to become a member of the expanding lab.

And, of course, Vancouver is an incredible place to live! I am originally from a very multicultural area of the Greater Toronto Area, and was drawn to the diversity of SFU and Vancouver.  I also love backcountry hiking and snowshoeing and B.C. is wonderful for both!

Your main research interests are in Experimental Economics and Macroeconomics. How did you get involved in these fields?

As an undergraduate at McMaster University, I was keen to do further research in macroeconomics. I wanted to obtain some research experience before applying for graduate studies but the only undergraduate research opportunity I could find at the time was at the McMaster Experimental Economics Laboratory (McEEL). Coincidentally, the project I worked on was studying the effects of different tax policies on workers' effort levels in a controlled laboratory setting. During the year that I worked at McEEL, I learned how to design, program, and conduct computerized laboratory market experiments. The hands-on experience and mentoring I received were instrumental in developing my interests in experimental economics.

I completed graduate work at University of British Columbia and University of California Santa Cruz. We studied conventional models of dynamic macroeconomics and monetary policy where firms and households are assumed to form rationally optimized and perfectly coordinated decisions. I found myself skeptical about the assumptions underlying these larger scale models, especially after observing failures of such assumptions in smaller laboratory settings.  During my PhD I worked in the Learning and Experimental Economics Projects of Santa Cruz (LEEPs) Lab at UC Santa Cruz where I received a great deal of support and encouragement to develop an experimental methodology for studying macroeconomic questions in the lab.

Can you describe what it means to be an experimental macroeconomist?

Many of the theoretical frameworks used by policy makers and academics analyze how economies made up of firms and workers respond to random events (e.g. increases in productivity, expansionary monetary policy or sudden changes in the cost of production). Testing these models with real-world data can be particularly challenging as it is not immediately clear what random events are the driving forces behind macroeconomic fluctuations.

What kind of innovative experiments are you creating and what issues are you currently researching?

 In ongoing research, I’ve been developing simple tools and experimental designs to study relatively complicated multi-market environments in the lab. In a recent project, I was investigating how different types of subjects respond to sudden changes in the interest rate. I found that consumer-worker behaviour was inconsistent with standard theoretical predictions. Subjects generally do not adjust their consumption and labour decisions by as much as we would expect or in a manner that would be consistent with their beliefs about the future. While beliefs about the future are very flexible, consumption and labour decisions are rather rigid, even with the ability to borrow and save.

In partnership with Guidon Fenig of UBC and Mariya Mileva of the Kiel Institute of the World Economy, I am studying how economies evolve and how effective different types of monetary policies are, when consumer-workers have the opportunity to speculate in asset markets. Our preliminary findings suggest that aggressive monetary policies aimed at minimizing asset price inflation have negative welfare consequences but do minimize asset price bubbles.

Experimental methods are increasingly being used to inform policy and I am excited to be working at the forefront of this area.