Using economics to answer the most important questions
Engle’s scientific study was vital for his economic research, particularly in the field of econometrics, which uses mathematical and statistical analysis to forecast trends, and which Engle helped pioneer.
He’s developed models that not only serve academics but investors, companies and regulators too. Widely used to foresee volatility and risk in financial markets, it gives answers to the most common questions: What is the tradeoff between risk and return? How do you make money in finance without taking risk? How much risk should you take? How much do you make when you take more risk?
His most profound work, the groundbreaking ARCH-model is "everywhere in finance," Engle admits. He explains that not only has it been the basis for many other more accurate tools, but it also ended up being the reason he changed his focus from macroeconomics to finance.