Table of Contents:
"[In] the face of crisis, we felt abandoned by conventional tools. ... The key lesson ... is the danger of relying on a single tool, methodology or paradigm. The atomistic, optimising agents underlying existing models do not capture behavior during a crisis period. Agent-based modelling ... allows for more complex interactions between agents. ... we need to better integrate the crucial role played by the financial system into our macroscopic models."
"I would very much welcome inspiration from other disciplines: physics, engineering, psychology, biology. Bringing experts from these fields together with economists and central bankers is potentially very ... valuable."
"A large number of aspects of the observed behaviour of financial markets is hard to reconcile with the efficient market hypothesis... But a determinedly empirical approach -- which places a premium on inductive reasoning based on the data, rather than deductive reasoning grounded in abstract premises or assumptions -- lies at the heart of these methods ... simulations will play a helpful role."
The Rebuilding Macroeconomics project interprets economies as consisting of evolving networks of agents who interact to interpret a world of unfolding uncertainty. The modeling of economies should thus entail a realistic portrayal of human social interaction to understand how economic systems evolve dynamically over time. The phenomena that emerge from such models – growth, cycles, crashes, technological revolutions and climate degradation – are examples of real-world macro phenomena that project members seek to understand.
To encourage new research in macroeconomics from a complexity perspective, the Rebuilding Macroeconomics project is hosting a competition seeking original, innovative and important research papers. This must be work that has not previously been circulated or published. The first prize will be c.$16,000 (depending on the exchange rate). Authors must state clearly which important real-world macroeconomic question they are addressing, and how their analysis provides insight and understanding beyond standard methods of analysis. Applicants are encouraged to prioritise insight, exposition and policy relevance. Applications are particularly welcome from young scholars. The competition rules can be found here.