Computational economics

Computational economics is a research discipline at the interface of computer science, economics, and management science.[1] Areas and subjects encompassed include computational modeling of economic systems, whether agent-based,[2] general-equilibrium,[3] macroeconomic,[4] or rational-expectations,[5] computational econometrics and statistics,[6] 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 and associated numerical methods.[7]

Computational economics uses computer-based economic modeling for solution of analytically and statistically formulated economic problems. A research program to that end is agent-based computational economics (ACE), the computational study of economic processes, including whole economies, as dynamic systems of interacting agents.[8] As such, it is an economic adaptation of the complex adaptive systems paradigm.[9] Here the "agent" refers to "computational objects modeled as interacting according to rules," not real people.[2] Agents can represent social, biological, and/or physical entities. The theoretical assumption of mathematical optimization by agents in equilibrium is replaced by the less restrictive postulate of agents with bounded rationality adapting to market forces,[10] including game-theoretical contexts.[11] 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."[12]

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,[1] Journal of Applied Econometrics,[13] Journal of Economic Dynamics and Control,[14] and the Journal of Economic Interaction and Coordination.[15]

References

  1. 1 2 Computational Economics. ""About This Journal" and "Aims and Scope."
  2. 1 2 Scott E. Page, 2008. "agent-based models," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  3. ↑ The New Palgrave Dictionary of Economics, 2008. 2nd Edition:
      • "computation of general equilibria" by Herbert E. Scarf. Abstract.
      • "computation of general equilibria (new developments)" by Felix Kubler. Abstract.
  4. ↑ • Hans M. Amman, David A. Kendrick, and John Rust, ed., 1996. Handbook of Computational Economics, v. 1, ch. 1-6, preview links.
  5. ↑ Ray C. Fair "Computational Methods for Macroeconometric Models," Hans M. Amman, David A. Kendrick, and John Rust, ed., 1996. Handbook of Computational Economics, v. 1, ch. , pp. 143-169. Outline.
  6. ↑ • Vassilis A. Hajivassiliou, 2008. "computational methods in econometrics," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Keisuke Hirano, 2008. "decision theory in econometrics," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • James O. Berger, 2008. "statistical decision theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  7. ↑ • Hans M. Amman, David A. Kendrick, and John Rust, ed., 1996. Handbook of Computational Economics, v. 1, Elsevier. Description & chapter-preview links.
       • Kenneth L. Judd, 1998. Numerical Methods in Economics, MIT Press. Links to description and chapter previews.
  8. ↑ • Scott E. Page, 2008. "agent-based models," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Leigh Tesfatsion, 2006. "Agent-Based Computational Economics: A Constructive Approach to Economic Theory," ch. 16, Handbook of Computational Economics, v. 2, [pp. 831-880]. Abstract and pre-pub PDF.
       • Kenneth L. Judd, 2006. "Computationally Intensive Analyses in Economics," Handbook of Computational Economics, v. 2, ch. 17, pp. 881- 893. Pre-pub PDF.
       • L. Tesfatsion and K. Judd, ed., 2006. Handbook of Computational Economics, v. 2, Agent-Based Computational Economics, Elsevier. Description & and chapter-preview links.
       • Thomas J. Sargent, 1994. Bounded Rationality in Macroeconomics, Oxford. Description and chapter-preview 1st-page links.
  9. ↑ • W. Brian Arthur, 1994. "Inductive Reasoning and Bounded Rationality," American Economic Review, 84(2), pp. 406-411.
       • Leigh Tesfatsion, 2003. "Agent-based Computational Economics: Modeling Economies as Complex Adaptive Systems," Information Sciences, 149(4), pp. 262-268.
       • _____, 2002. "Agent-Based Computational Economics: Growing Economies from the Bottom Up," Artificial Life, 8(1), pp.55-82. Abstract and pre-pub PDF.
  10. ↑ • W. Brian Arthur, 1994. "Inductive Reasoning and Bounded Rationality," American Economic Review, 84(2), pp. 406-411.
       • John H. Holland and John H. Miller (1991). "Artificial Adaptive Agents in Economic Theory," American Economic Review, 81(2), pp. 365-370.
       • Thomas C. Schelling, 1978 [2006]. Micromotives and Macrobehavior, Norton. Description, preview.
       • Thomas J. Sargent, 1994. Bounded Rationality in Macroeconomics, Oxford. Description and chapter-preview 1st-page links.
  11. ↑ • Joseph Y. Halpern, 2008. "computer science and game theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Yoav Shoham, 2008. "Computer Science and Game Theory," Communications of the ACM, 51(8), pp. 75-79.
       • Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, 70(4), pp. 1341–1378.
  12. ↑ Leigh Tesfatsion, 2006. "Agent-Based Computational Economics: A Constructive Approach to Economic Theory," ch. 16, Handbook of Computational Economics, v. 2, sect. 5, p. 865 [pp. 831-880]. Abstract and pre-pub PDF.
  13. ↑ "Journal of Applied Econometrics - Wiley Online Library". onlinelibrary.wiley.com. 2011. Retrieved October 31, 2011.
  14. ↑ Journal of Economic Dynamics and Control, including Aims & scope link.
     For a much-cited overview and issue, see:
      • Leigh Tesfatsion, 2001. "Introduction to the Special Issue on Agent-based Computational Economics," Journal of Economic Dynamics & Control, pp. 281-293.
      • [Special issue], 2001. Journal of Economic Dynamics and Control, Agent-based Computational Economics (ACE). 25(3-4), pp. 281-654. Abstract/outline links.
  15. ↑ "Journal of Economic Interaction and Coordination". springer.com. 2011. Retrieved October 31, 2011.

External links

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