Gabaix Finance
Gabaix Finance: Extreme Events and Macroeconomic Interactions
Xavier Gabaix, a prominent figure in the field of behavioral and macro finance, is known for his groundbreaking work on understanding how seemingly small, idiosyncratic shocks can have significant macroeconomic impacts. His research challenges traditional economic models that often assume perfect rationality and smooth, continuous processes. Instead, Gabaix emphasizes the role of complexity, heterogeneity, and infrequent but impactful “extreme events” in shaping financial markets and the broader economy.