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Information für die Wissenschaft Nr. 48 | 15. September 2010
Priority Programme 1578 „Financial Market Imperfections and Macroeconomic Performance“

The DFG Senate has approved the establishment of the Priority Programme 1578 “Financial Market Imperfections and Macroeconomic Performance”. The initial funding period is three years.

The recent financial crisis and its subsequent economic repercussions have underscored the close link between financial market performance and macroeconomic outcome. The central purpose of this programme is to advance research in Germany at the intersection of macro-economics and financial economics. In particular, the programme aims at contributing to a better understanding of the way various financial market imperfections affect financial market stability, macroeconomic volatility, and long-run economic growth. We expect individual research projects to contribute to at least one of the following five research themes:

  • Incomplete Markets: the macroeconomic consequences of imperfections in credit and insurance markets
  • Imperfect Enforcement and Default Risk: limits on the enforceability of contracts and default risk as sources of macroeconomic volatility and as impediments to long-run growth
  • Bubbles and Expectations: financial market imperfections as the source of expectation-driven asset price movements, in particular asset price bubbles, and the effect on macroeconomic performance
  • Financial Intermediation: regulation of financial intermediaries (banks, insurance companies) and the implications for financial and macroeconomic stability
  • Monetary Policy: the interaction between monetary-fiscal policies and financial markets

Research proposals will also be evaluated based on their contribution to the programme’s aim of integrating macroeconomics and financial economics, which can be achieved in various ways. For example, research on more macro-based projects should address the financial market implications. Correspondingly, research on more finance-based projects should deal with the macroeconomic implications. Though not a requirement, we encourage the application of joint proposals that combine the expertise of individual researchers with different backgrounds (i.e. macroeconomics and financial economics).

Proposals for an initial three-year funding period should be submitted on paper (8 copies) and on CD-ROM (including the proposal and all appendices as pdf-files) not later than 8 December 2010. All proposals must be written in English and must be prepared according to the guidelines for individual research grants (1.02e). Submissions, marked as “SPP 1578 Financial Market Imperfections and Macroeconomic Performance”, should be addressed to Deutsche Forschungsgemeinschaft, Kennedyallee 40, 53175 Bonn. A further copy should be sent to the coordinator, Prof. Tom Krebs, Universität Mannheim, L7 3-5, 68131 Mannheim.

Further Information

A detailed description of the Priority Programme can be found at:

Please refer to the guidelines for individual research proposals under:

Questions regarding economic content can be addressed to:

Inquiries regarding the application process will be answered by:

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