Computational economics

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Computational economics explores the intersection of economics and computation. Areas encompassed under computational economics include agent-based computational modeling, computational econometrics and statistics, computational finance, computational modeling of dynamic macroeconomic systems, of transaction costs, 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 computational tools both for computational economic modeling and for the computational solution of analytically and statistically formulated economic problems.

For example, with regard to computational modeling tools, Agent-Based Computational Economics (ACE) is the computational study of economic processes modeled as dynamic systems of interacting agents. Here "agent" refers broadly to a bundle of data and behavioral methods representing an entity constituting part of a computationally constructed world. Agents can represent social, biological, and/or physical entities. Starting from initial conditions determined by the modeler, an ACE model develops forward through time driven solely by agent interactions.

With regard to computational solution tools, examples include 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, and the Journal of Economic Dynamics and Control.