Computational economics
Encyclopedia
Computational economics is a research discipline at the interface between computer science
and economic and management science. Areas encompassed include agent-based computational modeling
, computational modeling of dynamic macroeconomic systems and transaction costs, other applications in mathematical economics
, computational econometrics
and statistics, computational finance
, computational tools for the design
of automated Internet markets, programming tools specifically designed for computational economics, and pedagogical tools for the teaching of computational economics. Some of these areas are unique to computational economics, while others extend traditional areas of economics by solving problems that are difficult to study without the use of computers.
Computational-economics researchers use computer-based and economic modeling and for solution of analytically and statistically formulated economic problems. An important example is agent-based computational economics
(ACE), the computational study of economic processes, including whole economies
, as dynamic systems of interacting agents
. As such it is an economic adaptation of the complex adaptive system
s paradigm
. Here the "agent" refers to "computational objects modeled as interacting according to rules," not real people. Agents can represent social, biological, and/or physical entities. The theoretical assumption of mathematical optimization by agents is replaced by the less restrictive postulate of agents adapting to market forces. Starting from initial conditions determined by the modeler, an ACE model develops forward through time driven solely by agent interactions. The ultimate scientific objective of the method is "to ... test theoretical findings against real-world data in ways that permit empirically supported theories to cumulate over time, with each researcher’s work building appropriately on the work that has gone before."
Computational solution tools include for example software for carrying out various matrix operations (e.g. matrix inversion) and for solving systems of linear and nonlinear equations. For a repository of public-domain computational solution tools, visit here.
The following journals specialize in computational economics:
Computational Economics, Journal of Applied Econometrics,Journal of Economic Dynamics and Control
, and the Journal of Economic Interaction and Coordination.
Computer science
Computer science or computing science is the study of the theoretical foundations of information and computation and of practical techniques for their implementation and application in computer systems...
and economic and management science. Areas encompassed include agent-based computational modeling
Agent-Based Computational Economics
Agent-based computational economics is the major aspect of computational economics that studies economic processes, including whole economies, as dynamic systems of interacting agents. As such, it falls in paradigm of complex adaptive systems...
, computational modeling of dynamic macroeconomic systems and transaction costs, other applications in mathematical economics
Mathematical economics
Mathematical economics is the application of mathematical methods to represent economic theories and analyze problems posed in economics. It allows formulation and derivation of key relationships in a theory with clarity, generality, rigor, and simplicity...
, computational econometrics
Econometrics
Econometrics has been defined as "the application of mathematics and statistical methods to economic data" and described as the branch of economics "that aims to give empirical content to economic relations." More precisely, it is "the quantitative analysis of actual economic phenomena based on...
and statistics, computational finance
Computational finance
Computational finance, also called financial engineering, is a cross-disciplinary field which relies on computational intelligence, mathematical finance, numerical methods and computer simulations to make trading, hedging and investment decisions, as well as facilitating the risk management of...
, computational tools for the design
of automated Internet markets, programming tools specifically designed for computational economics, and pedagogical tools for the teaching of computational economics. Some of these areas are unique to computational economics, while others extend traditional areas of economics by solving problems that are difficult to study without the use of computers.
Computational-economics researchers use computer-based and economic modeling and for solution of analytically and statistically formulated economic problems. An important example is agent-based computational economics
Agent-Based Computational Economics
Agent-based computational economics is the major aspect of computational economics that studies economic processes, including whole economies, as dynamic systems of interacting agents. As such, it falls in paradigm of complex adaptive systems...
(ACE), the computational study of economic processes, including whole economies
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
, as dynamic systems of interacting agents
Agent (economics)
In economics, an agent is an actor and decision maker in a model. Typically, every agent makes decisions by solving a well or ill defined optimization/choice problem. The term agent can also be seen as equivalent to player in game theory....
. As such it is an economic adaptation of the complex adaptive system
Complex adaptive system
Complex adaptive systems are special cases of complex systems. They are complex in that they are dynamic networks of interactions and relationships not aggregations of static entities...
s paradigm
Paradigm
The word paradigm has been used in science to describe distinct concepts. It comes from Greek "παράδειγμα" , "pattern, example, sample" from the verb "παραδείκνυμι" , "exhibit, represent, expose" and that from "παρά" , "beside, beyond" + "δείκνυμι" , "to show, to point out".The original Greek...
. Here the "agent" refers to "computational objects modeled as interacting according to rules," not real people. Agents can represent social, biological, and/or physical entities. The theoretical assumption of mathematical optimization by agents is replaced by the less restrictive postulate of agents adapting to market forces. Starting from initial conditions determined by the modeler, an ACE model develops forward through time driven solely by agent interactions. The ultimate scientific objective of the method is "to ... test theoretical findings against real-world data in ways that permit empirically supported theories to cumulate over time, with each researcher’s work building appropriately on the work that has gone before."
Computational solution tools include for example software for carrying out various matrix operations (e.g. matrix inversion) and for solving systems of linear and nonlinear equations. For a repository of public-domain computational solution tools, visit here.
The following journals specialize in computational economics:
Computational Economics, Journal of Applied Econometrics,Journal of Economic Dynamics and Control
Journal of Economic Dynamics and Control
The Journal of Economic Dynamics and Control is a peer-reviewed scholarly journal devoted to computational economics, dynamic economic models, and macroeconomics. It is edited at the University of Amsterdam and published by Elsevier...
, and the Journal of Economic Interaction and Coordination.
External links
- Society for Computational Economics
- Journal of Economic Dynamics and Control - publishes articles on computational economics
- Agent-Based Computational Economics - maintained by Leigh Tesfatsion
- The Use of Agent-Based Models in Regional Science - a study on agent-based models to simulate urban agglomeration
- Computational Economics with Python - a series of lectures
- Computational Finance and Economic Agents
- Journal of Economic Interaction and Coordination - official journal of the Association of Economic Science with Heterogeneous Interacting Agents