Markus Brunnermeier

{{Short description|German economist}} {{Infobox economist | name = Markus K. Brunnermeier | school_tradition =

| image = Markus Konrad Brunnermeier.jpg | image_size = | caption = | birth_date = {{birth date and age text|March 22, 1969}} | birth_place = Landshut, Bavaria, West Germany | death_date = | death_place = | institution = Princeton University | field = Economics | alma_mater = University of Regensburg {{small|(A.B.)}}<br>Vanderbilt University {{small|(M.A.)}}<br>London School of Economics {{small|(Ph.D.)}} | influences = Ben Bernanke | influenced = | contributions = | awards = Smith Breeden Prize, Sloan Fellowship, Germán Bernácer Prize, Guggenheim Fellowship, Econometric Society Fellowship, Lamfalussy Fellowship | signature = <!-- file name only --> | repec_prefix = e | repec_id =pbr31 }}

'''Markus Konrad Brunnermeier''' (born March 22, 1969) is an economist, who is the Edwards S. Sanford Professor of Economics at Princeton University.

Brunnermeier is a faculty member of Princeton's department of economics and director of the Bendheim Center for Finance. He is also a nonresident senior fellow at the Peterson Institute for International Economics. Brunnermeier is also the president of the American Finance Association in 2023.

His research focuses on international financial markets and the macro economy with special emphasis on bubbles, liquidity, financial crises and monetary policy. He promoted the concepts of Resilience, liquidity spirals, CoVaR as co-risk measure, the paradox of prudence, financial dominance, ESBies, the Reversal Rate, Digital currency areas, the redistributive monetary policy, and the I Theory of Money.

He is or was a member of several advisory groups, including to the IMF, the Federal Reserve Bank of New York, the European Systemic Risk Board, the German Bundesbank and the U.S. Congressional Budget Office. He is a research associate at CEPR, NBER, and CESifo.

==Education and academic career== Growing up in Landshut, West Germany, Brunnermeier was expected to follow his father into the business of carpentry.<ref>{{cite journal|title=Young Guns: Five Hot Minds in Economics: Markus Brunnermeier|journal=Yale Economic Review|publisher=Yale University|url=https://www.princeton.edu/~markus/CV/5_hot_economists.htm}}</ref> A slump in the construction industry led Brunnermeier onto a different path. He worked for the German tax office in Landshut and Munich and served in the German Army before enrolling as an undergraduate student at the University of Regensburg in 1991.<ref name="Bubble lab">{{cite news|url=https://www.wsj.com/articles/SB121089412378097011|title=Bernanke's Bubble Laboratory|last=Lahart|first=Justin|date=May 16, 2008|work=The Wall Street Journal|access-date=2009-08-15}}</ref> He continued his studies at Vanderbilt University, receiving a master's degree in economics in 1994. Subsequently, he joined the European Doctoral Program, first, at the Bonn Graduate School of Economics and, from 1995 to 1999, at the London School of Economics. He was awarded his Ph.D. by the London School of Economics (LSE) in 1999.<ref name="Profile">{{cite web|url=https://www.princeton.edu/~markus/|title=Markus Brunnermeier Profile|last=Brunnermeier|first=Markus|access-date=2009-08-15}}</ref> His thesis was titled [http://etheses.lse.ac.uk/4086/ Investor behaviour, financial markets and the international economy].<ref>{{cite thesis|last=Brunnermeier|first=Markus Konrad|date=1999|title=Investor behaviour, financial markets and the international economy|type=PhD|publisher=London School of Economics and Political Science|url=http://etheses.lse.ac.uk/4086/|access-date=28 June 2021}}</ref>

While at the London School of Economics, Brunnermeier parleyed a survey paper into a book on asset prices, bubbles, herding and crashes.<ref name="Bubble lab" /><ref>{{cite book|last=Brunnermeier|first=Markus|title=Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis and Herding|publisher=Oxford University Press|location=Oxford, UK|year=2001|isbn=978-0-19-829698-0}}</ref> He was subsequently hired by Princeton University as an assistant professor in 1999. He became full professor in 2006 and assumed his current chaired professorship as Edwards S. Sanford Professor of Economics in 2008. In 2011, he set up the Julis-Rabinowitz Center for Public Policy and Finance at the Princeton School of Public and International Affairs. In 2014, he became director of Princeton's Bendheim Center for Finance. Brunnermeier earned an honorary doctorate degree in 2022 from the faculty of economics at the University of Regensburg.<ref>{{cite web|url=https://bad-abbacher-kurier.de/universit%C3%A4t-und-wissenschaft/19849-ehrendoktorw%C3%BCrde-f%C3%BCr-prof-dr-markus-brunnermeier|title=Ehrendoktorwürde für Prof. Dr. Markus Brunnermeier|access-date=2023-02-26}}</ref>

==Selected awards, memberships, and editorial services== Brunnermeier received several career awards. In 1999, he was selected for the ''Review of Economic Studies'' Tour. He was named a Sloan Fellow in 2005,<ref>{{cite web|url=http://www.sloan.org/fellowships/list/filter/field/lastnamef/letter/B/page/325|title=Sloan Research Fellowships|publisher=The Alfred P. Sloan Foundation|access-date=2009-08-16}}</ref> a Guggenheim Fellow and a Fellow of the Econometric Society in 2010. In 2008 he was awarded the Germán Bernácer Prize, which is granted to a European economists under 40.<ref>{{cite web|url=http://www.bernacerprize.org/brunnermeier/brunnermeierBiography.htm|title=The Bernácer Prize 2008|access-date=2009-08-16|archive-url=https://web.archive.org/web/20150923183742/http://www.bernacerprize.org/brunnermeier/brunnermeierBiography.htm|archive-date=2015-09-23|url-status=dead}}</ref> In 2016, the Bank for International Settlements (BIS) appointed him as the Lamfalussy Senior Research Fellow.<ref>{{cite web |url=https://www.bis.org/research/lamfalussyfellows/appointment2016.htm |title=Lamfalussy fellow appointment 2016|publisher=Bank for International Settlements |access-date=2018-01-22|date=2016-03-18}}</ref> He was elected as President of The American Finance Association in 2023, where he previously served as vice president in 2022.<ref>{{cite web|url=https://afajof.org/officers-and-directors/|title=American Finance Association Board of Directors|access-date=2023-02-26}}</ref> thumb|Brunnermeier at AEA 2025 Brunnermeier is also affiliated with the National Bureau of Economic Research, the Centre for Economic Policy Research in London, and directs the "Macro, Money and International Finance" area at the CESifo network.<ref>{{cite web|url=http://www.newyorkfed.org/research/economists/visitor2006.html|title=Visiting Scholars |publisher=Federal Reserve Bank of New York|access-date=2009-08-16}}</ref><ref>{{cite web|url=http://www.cepr.org/researchers/details/rschcontact.asp?IDENT=138700|title=Professor Markus K Brunnermeier|work=Researcher Contact Details|publisher=Centre for Economic Policy Research|access-date=2009-08-16}}</ref><ref>{{cite web|url=https://www.nber.org/people/markus_brunnermeier|title=Markus K. Brunnermeier|publisher=National Bureau of Economic Research|access-date=2009-08-16}}</ref><ref>{{cite web|url=https://www.cesifo-group.de/de/ifoHome/research/Network/Areas/Area-MMIF-Macro-Money-and-International-Finance.html|title=CESifo "Macro, Money, and International Finance" Area|publisher=CESifo Group|access-date=2018-01-21}}</ref> He is or was a member of several advisory groups, including to the IMF, the Federal Reserve Bank of New York, the European Systemic Risk Board, the German Bundesbank and the U.S. Congressional Budget Office.

Brunnermeier was an associate editor of several journals, including ''The American Economic Review'', ''The Journal of Finance'', ''The Review of Financial Studies'', the ''Journal of the European Economic Association'' and the ''Journal of Financial Intermediation''.<ref>{{cite web|url=http://www.vanderbilt.edu/AEA/minutes/Apr24_09minExec.pdf|title=Minutes of the Meeting of the Executive Committee|date=April 24, 2009 |publisher=American Economic Association|access-date=2009-08-16}}</ref><ref>{{cite web|url=http://www.afajof.org/journal/edboard.asp|title=Journal of Finance Editorial Board|date=February 18, 2009|publisher=The American Finance Association|access-date=2009-08-16}}</ref><ref>{{Cite web|url=http://www.mitpressjournals.org/page/editorial/jeea|title=Journal of the European Economic Association Editorial Board|publisher = MIT Press | access-date = 2009-08-18}}</ref><ref>{{Cite book | url = http://www.elsevier.com/wps/find/journaleditorialboard.cws_home/622875/editorialboard#editorialboard | title = Journal of Financial Intermediation Editorial Board | publisher = Elsevier | access-date = 2009-08-18}}</ref>

In March 2020, he established the webinar series "Markus' Academy" as a platform for leading thinkers to share their research with the public.<ref>{{Cite web |date=2020-11-20 |title=Markus' Academy |url=https://bcf.princeton.edu/markus-academy/ |access-date=2023-03-04 |website=Bendheim Center for Finance |language=en}}</ref> The series' most popular lectures feature guests such as Economist Paul Krugman, former U.S. Secretary of the Treasury Lawrence Summers, Federal Reserve Chairman Jerome Powell, and former Chief Economist of the International Monetary Fund, Oliver Blanchard.<ref>{{Cite web |date=2020-10-20 |title=Events |url=https://bcf.princeton.edu/events/ |access-date=2023-03-04 |website=Bendheim Center for Finance |language=en}}</ref>

==Selected Research== Brunnermeier's research lies at the intersection of international macro, monetary and financial economics. He primarily studies distortions caused by financial frictions. These frictions invalidate the Efficient market hypothesis (EMH), a proposition that markets incorporate all information relevant to prices immediately and consequently the price of a given asset accurately represents the likely value of that asset.<ref group=note>There are multiple forms of the EMH, each with various levels of confidence among academics economists. Among the strong, semi-strong, and weak versions of the hypothesis, the latter have higher levels of support. See Beechey, Gruen & Vickery (2000) for more detail.</ref><ref>{{cite journal|last=Beechey|first=Meredith|author2=Gruen, David |author3=Vickery, James |date=January 2000|title=The Efficient Market Hypothesis: A Survey|journal=Research Discussion Papers|publisher=Reserve Bank of Australia|volume=2000-01|url=http://www.rba.gov.au/publications/rdp/2000/pdf/rdp2000-01.pdf}}</ref>

===Price efficiency, bubbles, liquidity, and systemic risk=== Faced with the empirical evidence that asset prices diverged from their fundamentals during the dot-com bubble, Brunnermeier crafted a model of trading where participants in the market would recognize bubbles in asset prices but continue to trade "into the wind".<ref>{{cite video| people =Brunnermeier, Markus; Hong, Harrison; Rose, Charlie (Host); Xiong, Wei| title =Charlie Rose | medium = Television| publisher = Public Broadcasting Service|date = 2008|url=http://www.charlierose.com/shows/2008/08/14/2/a-discussion-about-the-federal-reserve}}</ref> Brunnermeier's empirical paper, coauthored with Stefan Nagel, documents that hedge funds were riding the dot-com bubble. The paper won the Smith Breeden Prize in 2004.<ref>{{cite web|url=http://www.afajof.org/journal/prizeabs.asp#first04oct |title=Brattle and Smith Breeden Prizewinners |publisher=The American Finance Association |access-date=2009-08-16 |url-status=dead |archive-url=https://web.archive.org/web/20090529084848/http://www.afajof.org/journal/prizeabs.asp |archive-date=2009-05-29 }}</ref><ref>{{cite journal|last=Brunnermeier|first=Markus|author2=Nagel, Stefan|year=2004|title=Hedge Funds and the Technology Bubble|journal=Journal of Finance|volume=59|issue=5|pages=2013–2040|doi=10.1111/j.1540-6261.2004.00690.x|citeseerx=10.1.1.381.4441}}</ref>

Brunnermeier and Lasse Pedersen introduced different liquidity concepts and studied liquidity spirals, which are vicious cycles that amplify initial shocks and provide an explanation for the 2008 financial crisis.<ref>{{cite journal|last=Brunnermeier|first=Markus|author2=Pedersen, Lasse Heje|year=2009|title=Market Liquidity and Funding Liquidity|journal=The Review of Financial Studies|volume=22|issue=6|doi=10.1093/rfs/hhn098|pages=2201–2238|citeseerx=10.1.1.572.1746|s2cid=9093699}}</ref>

Brunnermeier with Tobias Adrian from the Federal Reserve Bank of New York created one of the first systemic risk measures, the CoVaR,<ref name="Adrian Brunnermeier pp. 1705–1741">{{cite journal | last1=Adrian | first1=Tobias | last2=Brunnermeier | first2=Markus K. | title=CoVaR | journal=American Economic Review | publisher=American Economic Association | volume=106 | issue=7 | date=June 1, 2016 | issn=0002-8282 | doi=10.1257/aer.20120555 | pages=1705–1741}}</ref> an alternative to value at risk which takes spillover and contagion effects between assets and industries into account.<ref>{{cite news|title=The revolution within|date=May 16, 2009 |newspaper=The Economist|url=https://www.economist.com/special-report/2009/05/16/the-revolution-within|access-date=July 22, 2021}}</ref>

===Macroeconomy and finance=== Brunnermeier and Yuliy Sannikov integrated financial frictions into macro and international economic models. Their macro models capture non-linearities that occur during crises episodes. They also introduced the concept of volatility paradox, which refers to the phenomenon that risk builds up primarily during tranquil times in background in the form of imbalances and only materializes when crises erupt.<ref>{{cite journal|last=Brunnermeier|first=Markus|author2=Sannikov, Yuliy|year=2014|title=A Macroeconomic Model with a Financial Sector|journal=American Economic Review|volume=104|issue=2|pages=379–421|doi=10.1257/aer.104.2.379|hdl=10419/144448|url=https://www.nbb.be/doc/oc/repec/reswpp/wp236en.pdf |hdl-access=free}}</ref>

===Monetary theory and financial regulation=== Brunnermeier and Sannikov's monetary paper, The I Theory of Money, studies debt deflation à la Fisher and the interaction between (redistributive) monetary policy and macroprudential policy. The "Paradox of Prudence" emerges: micro-prudent behavior of individual financial institutions is not necessarily macro-prudent. His approach provides an alternative to the predominant New-Keynesian view, in which price and wage rigidities are the primary frictions.<ref>{{cite journal |last1=Brunnermeier |first1=Markus |last2=Sannikov |first2=Yuliy |year=2016 |title=The I Theory of Money |journal=NBER Working Paper No. 22533 |doi=10.3386/w22533 |doi-access=free }}</ref>

===International financial markets=== Brunnermeier's work on international finance documents the link between carry trades and currency crashes.<ref>{{cite journal|last=Brunnermeier|first=Markus|author2=Nagel, Stefan |author3=Pedersen, Lasse H. |year=2008| title=Carry Trades and Currency Crashes |journal=NBER Macroeconomics Annual |volume=23 |pages=313–347|doi=10.1086/593088|citeseerx=10.1.1.147.4392|s2cid=15554090}}</ref> He also analyzes sudden stops in international credit flows and other inefficiencies due to pecuniary externalities.

===Economic philosophies and Euro=== Further work of Brunnermeier focuses on the architecture of the euro and the Eurozone. His book, ''The Euro and the Battle of Ideas'', (together with Harold James, from Princeton's Department of History, and Jean-Pierre Landau, from the Banque de France) shows how core problems of the euro are also linked to conflicting political and economic philosophies of the Eurozone's founding countries, especially those of Germany and France, and discusses ways to reconcile the competing views.<ref>{{cite book|last=Brunnermeier|first=Markus|author2=James, Harold|author3=Landau, Jean-Pierre|title=The Euro and the Battle of Ideas|publisher=Princeton University Press|location=Princeton, NJ, USA|year=2016|isbn=978-0691172927}}</ref> Brunnermeier also proposes European Safe Bonds (ESBies) in form of Sovereign Bond Backed Securities (SBBS) as a means to break the vicious circle between sovereign risk and bank risk in the Eurozone and to rechannel flight-to-safety capital flows from cross-border flows to flows across tranches of the ESBies.<ref>{{cite journal|last=Brunnermeier|first=Markus|author2=Langfield, Sam|author3=Pagano, Marco|author4=Reis, Ricardo|author5=Van Nieuwerburgh, Stijn|author6=Vayanos, Dimitrios |year=2017|title=ESBies: safety in the tranches|journal=Economic Policy|volume=32|issue=90|pages=175–219|doi=10.1093/epolic/eix004|doi-access=free|hdl=10.1093/epolic/eix004|hdl-access=free}}</ref>

=== Resilience === In his book, ''The Resilient Society'', Brunnermeier conceptualizes the notion of 'Resilience'. He argues that rather than simply avoiding risks (and therefore opportunities), the key is to distinguish between risk from which one can bounce back and risk that can trigger an adverse feedback loop. Across various policy areas, he describes how societies should be set up to increase societal resilience, which differs from individual resilience and resilience of a system.<ref>{{Cite web |title=Endeavor Literary Press—The Resilient Society |url=https://www.endeavorliterary.com/trs |access-date=2023-03-04 |website=Endeavor Literary Press |language=en-US}}</ref> ''The Resilient Society'' was named 'One of the Best Business Books of 2021' by the Financial Times<ref>{{Cite news |date=2021-11-17 |title=Best books of 2021: Economics |work=Financial Times |url=https://www.ft.com/content/25ca2b59-8047-4f9b-bf99-e7f7c15d8d51 |access-date=2023-03-04}}</ref> and won the 'Best German Business Book Prize' in 2021.<ref>{{Cite web |date=2021-10-25 |title=Markus Brunnermeier awarded the 2021 German Business Book Prize for "The Resilient Society" {{!}} Princeton University - Department of Economics |url=https://economics.princeton.edu/news/markus-brunnermeier-awarded-the-2021-german-business-book-prize-for-the-resilient-society/ |access-date=2023-03-04 |website=Department of Economics - Princeton University |language=en}}</ref>

==Notes== <references group=note/>

==References== {{Reflist|30em}}

{{Authority control}}

{{DEFAULTSORT:Brunnermeier, Markus}} Category:University of Regensburg alumni Category:Vanderbilt University alumni Category:Alumni of the London School of Economics Category:University of Bonn alumni Category:Princeton University faculty Category:21st-century German economists Category:20th-century German economists Category:German expatriate academics in the United States Category:Living people Category:1969 births Category:Fellows of the Econometric Society Category:Institute for New Economic Thinking