Model Building In Economics

Concern about the role and the limits of modeling has heightened after repeated questions were raised regarding the dependability and suitability of the models that were used in the run-up to the 2008 financial crash. In this book, Lawrence Boland provides an overview of the practices of and the problems faced by model builders to explain the nature of models, the modeling process, and the possibility for and nature of their testing. In a reflective manner, the author raises serious questions about the assumptions and judgments that model builders make in constructing models. In making his case, he examines the traditional microeconomics-macroeconomics separation with regard to how theoretical models are built and used and how they interact, paying particular attention to the use of equilibrium concepts in macroeconomic models and game theory and to the challenges involved in building empirical models, testing models, and using models to test theoretical explanations.

The major methodological task for modern economists has been to establish the testability of models. Too often, however, methodological assumptions can make a model virtually impossible to test even under ideal conditions, yet few theorists have examined the requirements and problems of assuring testability in economics. In The Methodology of Economic Model Building, first published in 1989, Lawrence Boland presents the results of a research project that spanned more than twenty years. He examines how economists have applied the philosophy of Karl Popper, relating methodological debates about falsifiability to wider discussions about the truth status of models in natural and social sciences. He concludes that model building in economics reflects more the methodological prescriptions of the economist Paul Samuelson than Popper’s ‘falsificationism’. This title will prove invaluable to both students and researchers, and represents a substantial contribution to debates about the scientific status of economics.

Textbook on the theoretics and methodology of economic model construction - discusses the use of the scientific method and creative thinking in the construction of dynamic models (incl. Economic policy models amd econometrics models), etc. One-page bibliography.

Model Building is the most fruitful area of economics, designed to solve real-world problems using all available methods such as mathematical, computational and analytical, without distinction. Wherever necessary, we should not be reluctant to develop new techniques, whether mathematical or computational. That is the philosophy of this volume. The volume is divided into three distinct parts: Methods, Theory and Applications. The Methods section is in turn subdivided into Mathematical Programming and Econometrics and Adaptive Control System, which are widely used in econometric analysis. The impacts of fiscal policy in a regime with independent monetary authority and dynamic models of environmental taxation are considered. In the section on "Modelling Business Organization," a model of a Japanese organization is presented. Furthermore, a model suitable for an efficient budget management of a health service unit by applying goal programming method is analyzed, taking into account various socio-economic factors. This is followed by a section on "Modelling National Economies," in which macroeconometric models for the EU member countries are analyzed, to find instruments that stabilize inflation with coordinated action.

Textbook on the theoretics and methodology of economic model construction - discusses the use of the scientific method and creative thinking in the construction of dynamic models (incl. Economic policy models amd econometrics models), etc. One-page bibliography.

During the last two centuries, the way economic science is done has changed radically: it has become a social science based on mathematical models in place of words. This book describes and analyses that change - both historically and philosophically - using a series of case studies to illuminate the nature and the implications of these changes. It is not a technical book; it is written for the intelligent person who wants to understand how economics works from the inside out. This book will be of interest to economists and science studies scholars (historians, sociologists and philosophers of science). But it also aims at a wider readership in the public intellectual sphere, building on the current interest in all things economic and on the recent failure of the so-called economic model, which has shaped our beliefs and the world we live in.

This book offers a practical guide to Agent Based economic modeling, adopting a “learning by doing” approach to help the reader master the fundamental tools needed to create and analyze Agent Based models. After providing them with a basic “toolkit” for Agent Based modeling, it present and discusses didactic models of real financial and economic systems in detail. While stressing the main features and advantages of the bottom-up perspective inherent to this approach, the book also highlights the logic and practical steps that characterize the model building procedure. A detailed description of the underlying codes, developed using R and C, is also provided. In addition, each didactic model is accompanied by exercises and applications designed to promote active learning on the part of the reader. Following the same approach, the book also presents several complementary tools required for the analysis and validation of the models, such as sensitivity experiments, calibration exercises, economic network and statistical distributions analysis. By the end of the book, the reader will have gained a deeper understanding of the Agent Based methodology and be prepared to use the fundamental techniques required to start developing their own economic models. Accordingly, “Economics with Heterogeneous Interacting Agents” will be of particular interest to graduate and postgraduate students, as well as to academic institutions and lecturers interested in including an overview of the AB approach to economic modeling in their courses.

A leading economist trains a lens on his own discipline to uncover when it fails and when it works.