Model (macroeconomics)
Encyclopedia
A macroeconomic model is an analytical tool designed to describe the operation of the economy
of a country or a region. These models are usually designed to examine the dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.
Macroeconomic models may be logical, mathematical, and/or computational; the different types of macroeconomic models serve different purposes and have different advantages and disadvantages. Macroeconomics models may be used to clarify and illustrate basic theoretical principles; they may be used to test, compare, and quantify different macroeconomic theories; they may be used to produce "what if" scenarios (usually to predict the effects of changes in monetary
, fiscal
, or other macroeconomic policies); and they may be used to generate economic forecasts
. Thus, macroeconomic models are widely used in academia, teaching and research, and are also widely used by international organizations, national governments and larger corporations, as well as by economics consultants and think tank
s.
of Keynesian macroeconomics, and the Solow model of neoclassical growth theory. These models share several features. They are based on a few equations involving a few variables, which can often be explained with simple diagrams. Many of these models are static, but some are dynamic, describing the economy over many time periods. The variables that appear in these models often represent macroeconomic aggregates (such as GDP or total employment) rather than individual choice variables, and while the equations relating these variables are intended to describe economic decisions, they are not usually derived directly by aggregating models of individual choices. They are simple enough to be used as illustrations of theoretical points in introductory explanations of macroeconomic ideas; but therefore quantitative application to forecasting, testing, or policy evaluation is usually impossible without substantially augmenting the structure of the model.
data, economists set out to construct quantitative models to describe the dynamics observed in the data. These models estimated the relations between different macroeconomic variables using (mostly linear) time series analysis. Like the simpler theoretical models, these empirical models described relations between aggregate quantities, but many addressed a much finer level of detail (for example, studying the relations between output, employment, investment, and other variables in many different industries). Thus, these models grew to include hundreds or thousands of equations describing the evolution of hundreds or thousands of prices and quantities over time, making computers
essential for their solution. While the choice of which variables to include in each equation was partly guided by economic theory (for example, including past income as a determinant of consumption, as suggested by the theory of adaptive expectations
), variable inclusion was mostly determined on purely empirical grounds.
Dutch
economist
Jan Tinbergen
developed the first comprehensive national model, which he built for the Netherlands
in 1936. He later applied the same modeling structure to the economies of the United States
and the United Kingdom
. The first global macroeconomic model, Wharton Econometric Forecasting Associates
' LINK project, was initiated by Lawrence Klein
. The model was cited in 1980 when Klein, like Tinbergen before him, won the Nobel Prize. Large-scale empirical models of this type, including the Wharton model, are still in use today, especially for forecasting purposes.
. Empirical macroeconomic forecasting models, being based on roughly the same data, had similar implications: they suggested that unemployment could be permanently lowered by permanently increasing inflation. However, in 1968, Milton Friedman
and Edmund Phelps
argued that this apparent tradeoff was illusory. They claimed that the historical relation between inflation and unemployment was due to the fact that past inflationary episodes had been largely unexpected. They argued that if monetary authorities permanently raised the inflation rate, workers and firms would eventually come to understand this, at which point the economy would return to its previous, higher level of unemployment, but now with higher inflation too. The stagflation
of the 1970s appeared to bear out their prediction.
In 1976, Robert Lucas, Jr.
, published an influential paper arguing that the failure of the Phillips curve in the 1970s was just one example of a general problem with empirical forecasting models. He pointed out that such models are derived from observed relationships between various macroeconomic quantities over time, and that these relations differ depending on what macroeconomic policy regime is in place. In the context of the Phillips curve, this means that the relation between inflation and unemployment observed in an economy where inflation has usually been low in the past would differ from the relation observed in an economy where inflation has been high. Furthermore, this means one cannot predict the effects of a new policy regime using an empirical forecasting model based on data from previous periods when that policy regime was not in place. Lucas argued that economists would remain unable to predict the effects of new policies unless they built models based on economic fundamentals
(like preferences, technology
, and budget constraint
s) that should be unaffected by policy changes.
, economists of the 1980s and 1990s began to construct microfounded
macroeconomic models based on rational choice, which have come to be called dynamic stochastic general equilibrium (DSGE) models. These models begin by specifying the set of agents
active in the economy, such as households, firms, and governments in one or more countries, as well as the preferences, technology
, and budget constraint
of each one. Each agent is assumed to make an optimal choice
, taking into account prices and the strategies of other agents, both in the current period and in the future. Summing up the decisions of the different types of agents, it is possible to find the prices that equate supply with demand in every market. Thus these models embody a type of equilibrium
self-consistency: agents choose optimally given the prices, while prices must be consistent with agents’ supplies and demands.
DSGE models often assume that all agents of a given type are identical (i.e. there is a ‘representative
household’ and a ‘representative
firm’) and can perform perfect calculations that forecast the future correctly on average (which is called rational expectations
). However, these are only simplifying assumptions, and are not essential for the DSGE methodology; many DSGE studies aim for greater realism by considering heterogeneous agents or various types of adaptive expectations
. Compared with empirical forecasting models, DSGE models typically have less variables and equations, mainly because DSGE models are harder to solve, even with the help of computers
. Simple theoretical DSGE models, involving only a few variables, have been used to analyze the forces that drive business cycles; this empirical work has given rise to two main competing frameworks called the real business cycle model and the New Keynesian DSGE model
. More elaborate DSGE models are used to predict the effects of changes in economic policy and evaluate their impact on social welfare
. However, economic forecasting is still largely based on more traditional empirical models, which are still widely believed to achieve greater accuracy in predicting the impact of economic disturbances over time.
on assumptions about preferences, technology, and budget constraints. However, CGE models focus mostly on long-run relationships, making them most suited to studying the long-run impact of permanent policies like the tax system or the openness of the economy to international trade. DSGE models instead emphasize the dynamics of the economy over time (often at a quarterly frequency), making them suited for studying business cycles and the cyclical effects of monetary and fiscal policy.
modeling. Like the DSGE methodology, ACE seeks to break down aggregate macroeconomic relationships into microeconomic decisions of individual agents
. ACE models also begin by defining the set of agents that make up the economy, and specify the types of interactions individual agents can have with each other or with the market as a whole. Instead of defining the preferences of those agents, ACE models often jump directly to specifying their strategies
. Or sometimes, preferences are specified, together with an initial strategy and a learning rule whereby the strategy is adjusted according to its past success. Given these strategies, the interaction of large numbers of individual agents (who may be very heterogeneous) can be simulated on a computer, and then the aggregate, macroeconomic relationships that arise from those individual actions can be studied.
, representative agent
case remains the simplest and thus the most common type of DSGE model to solve. Also, unlike ACE models, it may be difficult to study local interaction
s between individual agents in DSGE models, which instead focus mostly on the way agents interact through aggregate prices. On the other hand, ACE models may exaggerate errors in individual decision-making, since the strategies assumed in ACE models may be very far from optimal choices unless the modeler is very careful. A related issue is that ACE models which start from strategies
instead of preferences may remain vulnerable to the Lucas critique
: a changed policy regime should generally give rise to changed strategies.
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...
of a country or a region. These models are usually designed to examine the dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.
Macroeconomic models may be logical, mathematical, and/or computational; the different types of macroeconomic models serve different purposes and have different advantages and disadvantages. Macroeconomics models may be used to clarify and illustrate basic theoretical principles; they may be used to test, compare, and quantify different macroeconomic theories; they may be used to produce "what if" scenarios (usually to predict the effects of changes in monetary
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
, fiscal
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....
, or other macroeconomic policies); and they may be used to generate economic forecasts
Forecasting
Forecasting is the process of making statements about events whose actual outcomes have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term...
. Thus, macroeconomic models are widely used in academia, teaching and research, and are also widely used by international organizations, national governments and larger corporations, as well as by economics consultants and think tank
Think tank
A think tank is an organization that conducts research and engages in advocacy in areas such as social policy, political strategy, economics, military, and technology issues. Most think tanks are non-profit organizations, which some countries such as the United States and Canada provide with tax...
s.
Simple theoretical models
Simple text book descriptions of the macroeconomy involving a small number of equations or diagrams are often called ‘models’. Examples include the IS-LM model and Mundell-Fleming modelMundell-Fleming model
The Mundell–Fleming model, also known as the IS-LM-BP model, is an economic model first set forth by Robert Mundell and Marcus Fleming. The model is an extension of the IS-LM model...
of Keynesian macroeconomics, and the Solow model of neoclassical growth theory. These models share several features. They are based on a few equations involving a few variables, which can often be explained with simple diagrams. Many of these models are static, but some are dynamic, describing the economy over many time periods. The variables that appear in these models often represent macroeconomic aggregates (such as GDP or total employment) rather than individual choice variables, and while the equations relating these variables are intended to describe economic decisions, they are not usually derived directly by aggregating models of individual choices. They are simple enough to be used as illustrations of theoretical points in introductory explanations of macroeconomic ideas; but therefore quantitative application to forecasting, testing, or policy evaluation is usually impossible without substantially augmenting the structure of the model.
Empirical forecasting models
In the 1940s and 1950s, as governments began accumulating national income and product accountingNational Income and Product Accounts
The National Income and Product Accounts are part of the national accounts of the United States. They are produced by the Bureau of Economic Analysis of the Department of Commerce...
data, economists set out to construct quantitative models to describe the dynamics observed in the data. These models estimated the relations between different macroeconomic variables using (mostly linear) time series analysis. Like the simpler theoretical models, these empirical models described relations between aggregate quantities, but many addressed a much finer level of detail (for example, studying the relations between output, employment, investment, and other variables in many different industries). Thus, these models grew to include hundreds or thousands of equations describing the evolution of hundreds or thousands of prices and quantities over time, making computers
Computational economics
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...
essential for their solution. While the choice of which variables to include in each equation was partly guided by economic theory (for example, including past income as a determinant of consumption, as suggested by the theory of adaptive expectations
Adaptive expectations
In economics, adaptive expectations means that people form their expectations about what will happen in the future based on what has happened in the past...
), variable inclusion was mostly determined on purely empirical grounds.
Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
Jan Tinbergen
Jan Tinbergen
Jan Tinbergen , was a Dutch economist. He was awarded the first Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1969, which he shared with Ragnar Frisch for having developed and applied dynamic models for the analysis of economic processes...
developed the first comprehensive national model, which he built for the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
in 1936. He later applied the same modeling structure to the economies of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. The first global macroeconomic model, Wharton Econometric Forecasting Associates
Wharton Econometric Forecasting Associates
Wharton Econometric Forecasting Associates, Inc was a world-leading economics forecasting and consulting organisation founded by Nobel Prize winner Dr. Lawrence R. Klein....
' LINK project, was initiated by Lawrence Klein
Lawrence Klein
Lawrence Robert Klein is an American economist. For his work in creating computer models to forecast economic trends in the field of econometrics at the Wharton School of the University of Pennsylvania, he was awarded the Nobel Memorial Prize in Economic Sciences in 1980...
. The model was cited in 1980 when Klein, like Tinbergen before him, won the Nobel Prize. Large-scale empirical models of this type, including the Wharton model, are still in use today, especially for forecasting purposes.
The Lucas critique of empirical forecasting models
Econometric studies in the first part of the 20th century showed a negative correlation between inflation and unemployment called the Phillips curvePhillips curve
In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of inflation...
. Empirical macroeconomic forecasting models, being based on roughly the same data, had similar implications: they suggested that unemployment could be permanently lowered by permanently increasing inflation. However, in 1968, Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
and Edmund Phelps
Edmund Phelps
Edmund Strother Phelps, Jr. is an American economist and the winner of the 2006 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. Early in his career he became renowned for his research at Yale's Cowles Foundation in the first half of the 1960s on the sources of economic growth...
argued that this apparent tradeoff was illusory. They claimed that the historical relation between inflation and unemployment was due to the fact that past inflationary episodes had been largely unexpected. They argued that if monetary authorities permanently raised the inflation rate, workers and firms would eventually come to understand this, at which point the economy would return to its previous, higher level of unemployment, but now with higher inflation too. The stagflation
Stagflation
In economics, stagflation is a situation in which the inflation rate is high and the economic growth rate slows down and unemployment remains steadily high...
of the 1970s appeared to bear out their prediction.
In 1976, Robert Lucas, Jr.
Robert Lucas, Jr.
Robert Emerson Lucas, Jr. is an American economist at the University of Chicago. He received the Nobel Prize in Economics in 1995 and is consistently indexed among the top 10 economists in the Research Papers in Economics rankings. He is married to economist Nancy Stokey.He received his B.A. in...
, published an influential paper arguing that the failure of the Phillips curve in the 1970s was just one example of a general problem with empirical forecasting models. He pointed out that such models are derived from observed relationships between various macroeconomic quantities over time, and that these relations differ depending on what macroeconomic policy regime is in place. In the context of the Phillips curve, this means that the relation between inflation and unemployment observed in an economy where inflation has usually been low in the past would differ from the relation observed in an economy where inflation has been high. Furthermore, this means one cannot predict the effects of a new policy regime using an empirical forecasting model based on data from previous periods when that policy regime was not in place. Lucas argued that economists would remain unable to predict the effects of new policies unless they built models based on economic fundamentals
Microfoundations
In economics, the term microfoundations refers to the microeconomic analysis of the behavior of individual agents such as households or firms that underpins a macroeconomic theory....
(like preferences, technology
Production function
In microeconomics and macroeconomics, a production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs...
, and budget constraint
Budget constraint
A budget constraint represents the combinations of goods and services that a consumer can purchase given current prices with his or her income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices...
s) that should be unaffected by policy changes.
Dynamic stochastic general equilibrium models
Partly as a response to the Lucas critiqueLucas critique
The Lucas critique, named for Robert Lucas′ work on macroeconomic policymaking, argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data.The basic idea...
, economists of the 1980s and 1990s began to construct microfounded
Microfoundations
In economics, the term microfoundations refers to the microeconomic analysis of the behavior of individual agents such as households or firms that underpins a macroeconomic theory....
macroeconomic models based on rational choice, which have come to be called dynamic stochastic general equilibrium (DSGE) models. These models begin by specifying the set of 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....
active in the economy, such as households, firms, and governments in one or more countries, as well as the preferences, technology
Production function
In microeconomics and macroeconomics, a production function is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs...
, and budget constraint
Budget constraint
A budget constraint represents the combinations of goods and services that a consumer can purchase given current prices with his or her income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices...
of each one. Each agent is assumed to make an optimal choice
Optimization (mathematics)
In mathematics, computational science, or management science, mathematical optimization refers to the selection of a best element from some set of available alternatives....
, taking into account prices and the strategies of other agents, both in the current period and in the future. Summing up the decisions of the different types of agents, it is possible to find the prices that equate supply with demand in every market. Thus these models embody a type of equilibrium
Nash equilibrium
In game theory, Nash equilibrium is a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally...
self-consistency: agents choose optimally given the prices, while prices must be consistent with agents’ supplies and demands.
DSGE models often assume that all agents of a given type are identical (i.e. there is a ‘representative
Representative agent
Economists use the term representative agent to refer to the typical decision-maker of a certain type ....
household’ and a ‘representative
Representative agent
Economists use the term representative agent to refer to the typical decision-maker of a certain type ....
firm’) and can perform perfect calculations that forecast the future correctly on average (which is called rational expectations
Rational expectations
Rational expectations is a hypothesis in economics which states that agents' predictions of the future value of economically relevant variables are not systematically wrong in that all errors are random. An alternative formulation is that rational expectations are model-consistent expectations, in...
). However, these are only simplifying assumptions, and are not essential for the DSGE methodology; many DSGE studies aim for greater realism by considering heterogeneous agents or various types of adaptive expectations
Adaptive expectations
In economics, adaptive expectations means that people form their expectations about what will happen in the future based on what has happened in the past...
. Compared with empirical forecasting models, DSGE models typically have less variables and equations, mainly because DSGE models are harder to solve, even with the help of computers
Computational economics
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...
. Simple theoretical DSGE models, involving only a few variables, have been used to analyze the forces that drive business cycles; this empirical work has given rise to two main competing frameworks called the real business cycle model and the New Keynesian DSGE model
New Keynesian economics
New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of New Classical macroeconomics.Two main assumptions define the New...
. More elaborate DSGE models are used to predict the effects of changes in economic policy and evaluate their impact on social welfare
Social welfare function
In economics, a social welfare function is a real-valued function that ranks conceivable social states from lowest to highest. Inputs of the function include any variables considered to affect the economic welfare of a society...
. However, economic forecasting is still largely based on more traditional empirical models, which are still widely believed to achieve greater accuracy in predicting the impact of economic disturbances over time.
DSGE versus CGE models
A closely related methodology that pre-dates DSGE modeling is computable general equilibrium (CGE) modeling. Like DSGE models, CGE models are often microfoundedMicrofoundations
In economics, the term microfoundations refers to the microeconomic analysis of the behavior of individual agents such as households or firms that underpins a macroeconomic theory....
on assumptions about preferences, technology, and budget constraints. However, CGE models focus mostly on long-run relationships, making them most suited to studying the long-run impact of permanent policies like the tax system or the openness of the economy to international trade. DSGE models instead emphasize the dynamics of the economy over time (often at a quarterly frequency), making them suited for studying business cycles and the cyclical effects of monetary and fiscal policy.
Agent-based computational macroeconomic models
Another modeling methodology which has developed at the same time as DSGE models is Agent-based computational economics (ACE), which is a variety of Agent-basedAgent based model
An agent-based model is a class of computational models for simulating the actions and interactions of autonomous agents with a view to assessing their effects on the system as a whole...
modeling. Like the DSGE methodology, ACE seeks to break down aggregate macroeconomic relationships into microeconomic decisions of individual 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....
. ACE models also begin by defining the set of agents that make up the economy, and specify the types of interactions individual agents can have with each other or with the market as a whole. Instead of defining the preferences of those agents, ACE models often jump directly to specifying their strategies
Strategy (game theory)
In game theory, a player's strategy in a game is a complete plan of action for whatever situation might arise; this fully determines the player's behaviour...
. Or sometimes, preferences are specified, together with an initial strategy and a learning rule whereby the strategy is adjusted according to its past success. Given these strategies, the interaction of large numbers of individual agents (who may be very heterogeneous) can be simulated on a computer, and then the aggregate, macroeconomic relationships that arise from those individual actions can be studied.
Strengths and weaknesses of DSGE and ACE models
DSGE and ACE models have different advantages and disadvantages due to their different underlying structures. DSGE models may exaggerate individual rationality and foresight, and understate the importance of heterogeneity, since the rational expectationsRational expectations
Rational expectations is a hypothesis in economics which states that agents' predictions of the future value of economically relevant variables are not systematically wrong in that all errors are random. An alternative formulation is that rational expectations are model-consistent expectations, in...
, representative agent
Representative agent
Economists use the term representative agent to refer to the typical decision-maker of a certain type ....
case remains the simplest and thus the most common type of DSGE model to solve. Also, unlike ACE models, it may be difficult to study local interaction
Network effect
In economics and business, a network effect is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.The classic example is the telephone...
s between individual agents in DSGE models, which instead focus mostly on the way agents interact through aggregate prices. On the other hand, ACE models may exaggerate errors in individual decision-making, since the strategies assumed in ACE models may be very far from optimal choices unless the modeler is very careful. A related issue is that ACE models which start from strategies
Strategy (game theory)
In game theory, a player's strategy in a game is a complete plan of action for whatever situation might arise; this fully determines the player's behaviour...
instead of preferences may remain vulnerable to the Lucas critique
Lucas critique
The Lucas critique, named for Robert Lucas′ work on macroeconomic policymaking, argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data.The basic idea...
: a changed policy regime should generally give rise to changed strategies.
See also
- Economic model
- Mathematical modelMathematical modelA mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling. Mathematical models are used not only in the natural sciences and engineering disciplines A mathematical model is a...
- MacroeconomicsMacroeconomicsMacroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
- EconomicsEconomicsEconomics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
- EconometricsEconometricsEconometrics 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...
- Computational economicsComputational economicsComputational 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...
- Lucas critiqueLucas critiqueThe Lucas critique, named for Robert Lucas′ work on macroeconomic policymaking, argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data.The basic idea...
- Dynamic stochastic general equilibriumDynamic stochastic general equilibriumDynamic stochastic general equilibrium modeling is a branch of applied general equilibrium theory that is influential in contemporary macroeconomics...
- Agent-Based Computational EconomicsAgent-Based Computational EconomicsAgent-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...
- History of macroeconomic thought
- Time seriesTime seriesIn statistics, signal processing, econometrics and mathematical finance, a time series is a sequence of data points, measured typically at successive times spaced at uniform time intervals. Examples of time series are the daily closing value of the Dow Jones index or the annual flow volume of the...
External links
- Classical & Keynesian AD-AS Model - An on-line, interactive model of the Canadian Economy
- FAIRMODEL - US models to download
- JAMEL - An on-line, interactive agent-based macroeconomic model