New Economic Thinker

(Jan. 26, 2013) Nicholas Mangee, assistant professor of economics at Armstrong, has been invited to serve as a featured speaker at the Institute for New Economic Thinking's elite 2013 Plenary Conference in Hong Kong in April.

He will join former Chairman of the Federal Reserve Alan Greenspan, acclaimed Nobel Prize laureates and top international economists at this prestigious global conference.

On April 5, Mangee will present “Understanding Stock Price Fluctuations: Imperfect Knowledge, Fundamentals, and Psychology” as part of a panel devoted to New Economic Thinking. He will share research conducted at the University of Copenhagen in Denmark in August 2012, when he received an Institute of New Economic Thinking (INET) scholarship to study advanced macroeconometrics and to conduct research on stock market price fluctuations.

An INET research associate, Mangee is an expert on Imperfect Knowledge Economics, a progressive school of thought developed by economists Roman Frydman of New York University and Michael D. Goldberg of the University of New Hampshire, which suggests that psychology and market fundamentals are inextricably linked. Goldberg served as Mangee's dissertation advisor at the University of New Hampshire.

Mangee's groundbreaking research focuses on how stock market price fluctuations are determined by a combination of fundamentals--think earnings and interest rates—and psychological, societal, and political forces.

“Stock prices are very volatile and we haven't made a lot of progress towards understanding what drives those fluctuations,” he explained. “Imperfect Knowledge Economics opens up models for non-routine change in investor behavior, social context, and institutions.”

In Copenhagen, Mangee analyzed two decades of data to decode the relationship between stock prices, economic fundamentals, and psychological factors.

“At the University of Copenhagen, I was taught a very sophisticated econometrics tool that enabled me to explore the larger implications of the Imperfect Knowledge Economics model for the stock market.”

Economics professor and department head Yassaman Saadatmand credits Mangee with conducting innovative research that has attracted international attention, noting that he is the first Armstrong economics professor to be invited to speak at the INET Plenary Conference.

“For Dr. Mangee to be selected to speak at a global economics conference is truly an honor for the department and for the university,” she said. “He will represent Armstrong well at this international conference in Hong Kong.”

For his dissertation at the University of New Hampshire, Mangee examined more than 4,000 Bloomberg News end-of-day stock market wraps, quantifying factors mentioned as driving the aggregate market and offering a window into how market fluctuations are driven by a wide variety of factors.

His dissertation results were published in Frydman and Goldberg's landmark book Beyond Mechanical Markets: Asset Price Swings, Risk, and the Role of the State, published by Princeton University Press in 2011.

“There are many puzzles in finance,” said Mangee. “Economists often find it difficult to reconcile economic models with the data. We need to allow for political events, changes in policy and other factors that cause changes in financial markets and the way investors think about the future.”