What does a Financial Economist do?

Generally, the distribution of resources in a society is the main concern of an economist. Through a variety of research avenues, economists collect data that help them understand the many financial functions of society and business. One specialization in this field is that of the financial economist, who focuses on economic variables. Financial economists study historic trends in the money and banking system with the aim of using that financial knowledge to build models for financial success. The financial economist might also study the changes in interest rates and the effects of those changes.

A financial economist might have to conduct research on a specific area of the field and present that information in an academic or professional setting. For instance, he or she might study the payout from issuing a certain type of loan to a certain type of person and build a model based on what has worked in the past. He or she might then present the model to a client or to an academic publication. As part of the research, he or she could be expected to analyze economic data, recommend financial action or establish methods for financial gain based on historical analysis.

Specifically, the financial economist might study the history of a certain type of bond and use that historical data to build a new model for navigating today's economic environment. He or she might also focus on commodities, stocks, interest rates or derivatives — important tools for navigating financial economics. A financial economist is concerned about providing solid financial plans, so his or her work can apply to many organizations that are looking to build solid financial plans.

Many types of organizations need to secure long-term funding or balance the factors of risk and opportunity in any financial act, so the work of a financial economist might be used to support individual, corporate, state or national decisions. Financial economics might inform a family's decision about whether to take out a specific type of mortgage, for example. If a specific type of mortgage has worked for a family in the past, it might work for similar families. Furthermore, the use of financial economics might help a bank decide whether to lend to a specific type of person based on various models and historical financial data.