Johan Walden

Wallenberg Academy Fellows 2012

 Social science

Associate prof. Johan Walden
Stockholm School of Economics

Market crashes are more common than predicted by traditional theory. Johan Walden will develop economic models that can explain large fluctuations on the stock market.

On October 19, 1987, the market plummeted 20%, a drop that from a statistical point of view never should have occurred, at least not during the lifetime of the universe. The trading volume of the stock market also varies strongly; one day it is much higher than it should be, and another day, too low.
The question is what causes those fluctuations?

As a Wallenberg Academy Fellow, Johan Walden will try to understand what triggers variations in the stock market and how this impacts the economy. For example, how can an economic shock that strikes one single company result in a snowball effect where the economy of a whole country or a whole continent is affected?

Scientists have tried to explain past stock market fluctuations by pinning them to public news events; however, those can only explain a third of all market movements. In his earlier research, Walden has shown that information that spreads through networks outside common news channels also matters.

Walden is currently a researcher at the University of California at Berkeley (USA). As a Wallenberg Academy Fellow, he is offered to transfer to the Stockholm School of Economics.