Understanding data analytics at BICOD

Lucy Tallentire from the School of Business, Economics and Informatics reports on the biennial British International Conference on Databases (BICOD).

Award of Best Research Student paper prize to Alexandru Bogatu, by Alastair Green of Neo Technology

From 10-12 July, Birkbeck’s Department of Computer Science and Information Systems played host to a wealth of insightful research discussion at the biennial British International Conference on Databases (BICOD). Birkbeck has a long-standing association with BICOD since its inception in the 1980s, with three generations of Computer Science researchers at Birkbeck having contributed to its legacy.

In her opening address, Professor Alex Poulovassilis, Deputy Dean of Birkbeck’s School of Business, Economics & Informatics, and General Chair of this year’s BICOD, highlighted Birkbeck’s long-standing contributions to the conference. She gave special thanks to this year’s Keynote speakers and those delegates who had travelled from abroad for the occasion. The last time Birkbeck hosted the conference in 1997 it was still known as the British National Conference on Databases (BNCOD) but this name was changed in 2015 to reflect the aim of the conference to be a platform for research discussion both nationally and internationally: “The geographical and thematic scope of this year’s papers and the interest from all over the world serves to demonstrate the conference’s continuing success.”

The theme of this year’s BICOD was Data Analytics, and the programme kicked off with a Keynote talk from Dr Tim Furche, Lecturer in Computer Science at the University of Oxford and Co-Founder of Wrapidity Ltd. Tim stressed the importance of translating research in AI and Machine Learning into practically applicable technology – in the case of his company, in the large-scale extraction of useful data from websites.

Short presentations by the four students vying for the best PhD paper prize followed. The judges commended the quality of the competition and praised the investigation and presentation of all the students. The winner, Alex Bogatu, collected his prize from the sponsor Neo Technology.

Further conference sessions over the course of the event comprised of two more Keynotes, from Professor Elena Baralis and Dr Sihem Amer-Yahia; two Tutorials, from Professor Leopoldo Bertossi and Dr Vasiliki Kalavri; and further research paper presentations, with subjects ranging from Data Exploration, Multidimensional Data and Graph Data Querying.

Keynote Speaker Professor Elena Baralis

On the final morning of the conference, there was also a unique chance to enjoy a joint session between BICOD and the International Joint Conference on Rules and Reasoning (RuleML + RR), which followed the BICOD conference at Birkbeck. The leading international joint conference in the field of rule-based reasoning, RuleML + RR brought a number of new delegate perspectives to the audience, as well as a focus on theoretical advances, novel technologies and innovative applications for rules and reasoning.

The BiCOD team would like to thank the conference sponsors for their generous support: Neo Technology, ONS, Palgrave Macmillan and The Information Lab.

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Applying Big Data to Economics

Lucy Tallentire from the School of Business, Economics and Informatics at Birkbeck and CSIS PhD candidate Seongil Han report on a recent conference at the Birkbeck Centre for Data Analytics (BIDA).bidaWhat can we learn from Big Data, and how can Big Data analytics be applied to the field of Economics? These were just some of the questions answered by a one-day conference held by Birkbeck Institute for Data Analytics (BIDA) on Monday 5 June. The event was organised in collaboration with the Department of Economics, Mathematics and Statistics, to bring together researchers from statistics, applied mathematics, computer science, finance and economics to enhance the research environment and promote cross-disciplinary collaboration within the College, and with a wider external audience.

Birkbeck’s Professor Stephen Wright kicked off proceedings with an insightful presentation on the application of Big Data to large-scale surveys and maps. In his research project of residential land supply in 27 EU countries, he examines sources such as Google Maps, ONS/Ordnance Survey and Open Street maps to explain large differences across EU countries and identify whether there are restrictions on residential land. Professor Wright concluded that a large proportion of the regional variation in supply of residential land in the EU can be explained econometrically and is very strongly determined by regional geography and history.

Guest speaker Giovanni Mastrobuoni, Professor of Economics in Department of Economics, University of Essex, provided a unique insight into the role of Big Data analytics on police patrols and crime. Based on recent evidence that police deployment reduces crime, the project was designed to identify whether the elasticity of crime with regard to policing remains the same, and whether it is worth randomly increasing mobile police presence in an area. The results suggest, however, that big data is only useful with good prior identification; elasticity is negligible if identification is low, and random mobile patrolling cannot reduce crime significantly.

The second part of the conference focused on big data in business, economy and strategy. Professor Roger Maull, from the Department of Digital Economy in University of Surrey, discussed business models in relation to the digital economy, introducing 3 new approaches to the economy for big data – digitisation, datafication and digitalisation. He explained business models with industry dynamics and emphasised the following qualities:

  • value proposition, or what the customer pays for;
  • value creation, or how one delivers what the customer pays for;
  • value capture, or how the customer pays for it.

Big data has allowed significant advancements in personalisation and customisation, which also link to HAT (Hub of All Things): an IT business services to store and customise the personal data, as a real business model for personal data.

Final speaker Ernesto Damiani, from the Etisalat British Telecom Innovation Centre, Abu Dhabi, introduced the prospect of big data analytics as a service. He started by highlighting the 5 Vs of big data:

  • Variety in analytics model: static ways vs dynamic ways;
  • Volume;
  • Velocity;
  • Value;

He also compared traditional analytics with big data analytics and explained a change in paradigm for data analytics, which is supported by the example of Google.

The conference succeeded in providing a comprehensive introduction to the many ways in which big data analytics, such as text mining techniques, can be applied to Economics and business. Big data analytics continue to attract a great deal of attention in academia and industry, with an increasing amount of unstructured data available on web; it is vital to apply big data analytics to various problems to supplement qualitative information to conventional descriptive analytics and infer the predictive analytics.

BIDA would like to thank the presenters and all those who attended for their insightful comments and discussion. You can find out more about the Birkbeck Institute for Data Analytics on their website.

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The Inaugural BCAM Policy Talk: “Fiscal Buffers, Private Debt and Stagnation: The Good, the Bad and the Ugly” by Giovanni Melina

This post was written by Veronika Akhmadieva,  an MPhil/Phd Economics student at Birkbeck

One group is targeted for marketing outreach with a bulls-eye under the figures

In 2015, global debt hit a record high of $152 trillion (225% of world GDP), raising the possibility of a new global financial crisis striking the economy in the near future. That prompted the International Monetary Fund (IMF) to conduct an in-depth analysis of global debt and economic growth. The results of this research formed the basis of the inaugural BCAM (Birkbeck Centre for Applied Macroeconomics) policy talk at Birkbeck, given by Dr Giovanni Melina (IMF).

Dr Melina presented an academic paper, a result of his joint work with Nicoletta Batini (IMF) and Stefanie Villa (KU Leuven), that focuses on fiscal buffers, debt and stagnation, and has strong policy implications. In the period from 2002 to 2008, the bulk of the increase in debt of large advanced economies was due to borrowing by the private sector. Then, as some might recall, the Great Recession happened, and the picture changed dramatically; the increase in private debt was rather modest while government debt increased drastically.

A curious mind might wonder why government debt went up during the financial crisis 2007-2008. Dr Melina proposed two possible reasons. The first explanation is based on the denominator effect and on the mechanism of government automatic stabilisers. Government spending, in nominal terms, increased during the financial crisis, partially because more people applied for unemployment benefits, and this in turn boosted government debt. The second explanation derives from the fact that many governments attempted to cover part of private debt – through the recapitalisation of banks, for instance – and that led to the fall in government revenues and the rise in public debt.

“Deleveraging”

The deleveraging is a well-known concept in economics that refers to the process of economic entities reducing their debt to income ratio. The deleveraging of the economy often follows global economic catastrophes, and the financial crisis of 2007-2008 was no exception. Deleveraging can yield important real effects in the economy. Advanced economies can resort to public debt to a very large extent in order to cushion the effects of the negative shocks. For emerging markets raising government debt can be tricky. In some of them deleveraging is still to take place. So what are the best ways for governments to tackle potential deleveraging?

Dr Melina might just have the answer. But first two preliminary questions must be considered – do the levels of private and public debt have tangible effects on output growth? And should government extend financial assistance to credit-constrained agents and firms at times of financial distress?

The paper addresses these questions by first revisiting the literature on the effects of public and private debt on economic growth. Then the authors build a theoretical framework that reproduces the leverage cycle. The authors examine links between private and public debt, in order to capture the mechanisms through which private debt may become public. Finally, the model is used to analyse the effects of government interventions targeted towards financially constrained agents.

Private debt proved to have a negative effect on output. As for public debt, when authors differentiated between high (greater than 95% of GDP) and low public debt countries, they found that when the public debt is low, the government has more room for manoeuvre (more fiscal buffers) and can help to support economic activities in the deleveraging phase. However, if the level of public debt is high to begin with, the further increase is detrimental to the economic growth.

On the question of government financial assistance to credit-constrained agents, it appears that intervention mitigates the extent of the deleveraging and reduces the deflationary effect of the negative house price shocks. Another somewhat counterintuitive finding is that the peak increase in government debt is decreased by government intervention; if government intervenes, it sustains the economic activity and by doing so it reduces its debt. If the level of inefficiency of government spending is high or the level of intervention is excessive, the above may not be true. According to Dr Melina – with about 10% inefficiency costs, the optimal size of intervention is about 7-8% of GDP.

Targeted Intervention

One step further, the authors compare the policy of targeted intervention with other types of fiscal stimuli, such as government investment and government consumption. They found that targeted intervention is more effective in the deleveraging phase, as it is aimed at financially constrained individuals that have high marginal propensity to consume. Hence, most of the funds that are channelled towards these individuals are consumed and that translates into a stronger output effect. Some economies, such as Southern European countries, have limited fiscal space to begin with and can only intervene to a very small extent. These countries may benefit from using limited government funds for targeted intervention rather than increasing the general level of government spending, which might be a less efficient option.

Targeted intervention works best if adequately planned and complemented by appropriate monetary and fiscal policies. In addition, it can be direct, meaning targeted at firms and private sector, or indirect, through banks, recapitalization, asset purchases and guarantees. When banks are in distress, direct targeted intervention might be preferable, because banks may use the funds provided by the government to repair their balance sheets, instead of increasing lending to the private sector.

In practice, targeted intervention might not be the easiest task for governments, as they have to find a way to discriminate between agents, to provide funds to specific firms or industries. Targeted intervention naturally raises moral hazards and competition issues, too. Dr Melina emphasised that targeted intervention is not something to be practised by the government on a regular basis, but should be reserved for disastrous times, when the economy is in distress and in urgent need of stabilisation policies. Could it be that now is just the right time?

Further information:

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Understanding the European financial crises: Martin Sandbu at Birkbeck

Martin Sandbu, the economics leader writer for the Financial Times (FT), was the special guest at a recent talk at Birkbeck on 19 February. This event was organised under the auspices of the Birkbeck Politics Department’s MSc programme in European Politics & Policy in association with Birkbeck’s Departments of Management and Economics, Mathematics & Statistics.

As one of the UK’s most influential UK economics commentators, Martin provided his insight into whether Europe’s economy has turned a corner, and whether the Eurozone’s fragile recovery is sustainable. Here, Charles Shaw and Ahmed Razzaq of the Birkbeck Economics and Finance Society report from the event

In a recent talk at Birkbeck, FT’s Martin Sandbu located the economic failure of the Eurozone in institutional arrangements and policy choices that laid the basis for organisational deficiencies.

Financial Times columnist, Martin Sandbu

Financial Times columnist, Martin Sandbu

During the Eurozone crisis, the message from European policymakers was abundantly clear: that the euro fostered many of the recent problems, or at least was a strong contributor to the high budget deficits at the heart of the crisis, and that there was no alternative to the bailout packages. Subsequent large transfers from Germany to the debtor countries were therefore justified along these lines, in exchange for harsh austerity, overly tight monetary policy, and structural reforms.

In his new book – “Europe’s Orphan: The Future of the Euro and the Politics of Debt” – Martin Sandbu perceptively argues that this accepted orthodoxy is in fact at odds with history and evidence from the period. Nothing is wrong with the euro itself, he suggests. It is rather the policies of the governments of the Eurozone and the European Central Bank that were and are wrong. If true, what implication does this have for our understanding of the wider economy and the implementation of policy initiatives? Further, what can we expect in the short to medium term, given the costly spillover effects of a sustained drop in energy and commodity prices, and revived fears of a new recession in advanced economies?

BNP Paribas recently noted that last month was “the worst for risky assets for many years, if not on record.” Given this current affairs backdrop – of a recently announced date for the UK’s referendum on EU membership, and extremely negative levels of sentiment and investor positioning – Martin’s talk on the politics of Eurozone debt could not have been more timely.

Dispelling some of the post-crisis myths

European Central Bank in Frankfurt (Image copyright Eoghan OLlonnain via Flickr)

European Central Bank in Frankfurt (Image copyright Eoghan OLlonnain via Flickr)

On the evening, Sandbu lucidly examined the case for the Euro, not by focussing on virtues of a single currency, but focusing instead on the failure of European macroeconomic policy and in particular the inflexibility of the European Central Bank, European Commission, and Member State Governments to allow for restructuring of private, and later sovereign, debt.

Many analyses of the crisis blamed an unholy trinity of weak financial regulation, ineffective supervision, and profligacy on the periphery. Sandbu was able to provide an important corrective to such gross simplifications and dispel some of the post-crisis myths by pointing out, for example, that profligacy was not at the core of the problem. With the exception of Greece, the economies that had to resort to bailouts were not those with the highest debt-to-GDP ratios.

This and other forms of evidence allowed Martin to convincingly make a nuanced case for the Euro being more of a scapegoat than catalyst in this affair. If there was a smoking gun in the run up to the crisis then, Sandbu argued, it was not the Euro per se. He went further, stating that the sovereign debt crisis would have likely occurred without the single currency due to the magnitude of nominal rigidities observed at macro level, incomplete institutional infrastructure, and the fact that Eurozone governments that ran into trouble had no lender of last resort.

When questioned on whether he would agree that a more centralised Europe would be better able to cope with these issues in the future, Sandbu would not be coaxed. Whilst sceptical of the utility of European fiscal and political union, Sandbu did identify efforts made in establishing Eurozone equity markets as conducive to heading off some of the risk of a similar debt crisis in the region going forward.

The ‘liquidationist’ alternative

If there was one take away from the evening it is that the Euro may not have caused the crisis but the main actors, in dealing with the crisis, compounded the severity of events. In what Martin Wolf described as the “liquidationist” alternative, Sandbu made the case for restructuring of debt and a softer landing, albeit with the pain of haircuts for bond holders.

This was a point of view recently echoed by Professor Lord King, Governor of the Bank of England throughout the period, who, in a recent talk at the London School of Economics, supported Sandbu’s call for a restructuring of Greek debt as the only way out of a Depression that he could not fathom getting so out of hand in the post-war period, let alone in the twenty-first century.

Sandbu is not a lone voice on this issue. Others, such as Ashoka Mody, the former IMF bail-out chief in Europe, have argued that ECB not only failed to provide stimulus to the Eurozone economy when needed, but, as a result of an apparent battle between political will and economic arithmetic, allowed it to slip into a “low-inflationary trap” (i.e. a negative feedback loop where inflation is dropping because the economy is weak, whilst the same economy being weakened by falling inflation).

According to Mody, the fact that ECB allowed the Eurozone to slip into such a predicament is a reflection of the monetary union’s faulty architecture. Such comments echo Milton Friedman’s infamous 1997 letter to The Times, which suggested that the economic foundations for the Eurozone are built on sand, and that the demise of the euro is possible, if not probable.

The Eurozone crisis appears to be in remission. However, with the expectation of a U.S. Federal Reserve interest rate rise, combined with the possibility of global shocks due to China’s rebalancing, the Eurozone cracks look set to increase in prominence. Martin Sandbu’s timely analysis is carefully defined, clearly presented, and one that serves as an important contribution to the current debate. His book, “Europe’s Orphan”, should be required reading for anyone seeking to understand the European financial crises, and is a sophisticated and accessible insight on an otherwise too commonly obfuscated and misrepresented topic.

Further Information

The School of Business, Economics and Informatics will hold an Open Evening on Thursday 14 April 2016. Find out more

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