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Building an economy simulator from scratch

thomassimon.dev

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Re: Building an economy simulator from scratch

#91

Post by 01100011 »

js8 wrote: post #82

First, I really appreciate author trying to understand economy better in this way, even though this simulation is quite naive. I think everybody should do that. But as others have noted, it has no concept of capital, private property, and labor market. Therefore, it's not capitalism. It's not anarchism or communism either - it lacks flexibility of workers to do something else, or state planning telling workers to do…

> rich people don't want that

You had a great comment until you went off the rails. Sadly, economic ignorance is much more easily explained by apathy and the rarity of systems level thought in the general population.

Re: Building an economy simulator from scratch

#93

Post by JoshMBN »

I'm currently in my second year of my Bach degree for Information Technology and I have had this exact same idea but never really knew how to go about it. But I think I might attempt it next year during my A.I. and Data Science paper. Just as proof of concept for neural network practice and learning.

Re: Building an economy simulator from scratch

#94

Post by rsrsrs86 »

nylonstrung wrote: post #7
orangepurple wrote: post #2

Great start! Some things to consider for future versions: more sophisticated tax code, financial regulations, monopsonies, monopolies, collusion, corruption, oligarchies, demand elasticity, cascading effects from supply chain disruptions, central bank quantitative easing.

A lot of this is Macroeconomics- Microeconomics (what this focused on) is effectively a different discipline. You can't really model both of them within the same framework Source: econ major

Undergrad Econ courses still present micro and macro economics as two disciplines, but that’s theory from the 70s at best.

Graduate level economics packs a lot of economic models where for example the interest rate depends on the intertemporal preferences of different types of agents.

It just gets terribly complicated.

Re: Building an economy simulator from scratch

#95

Post by rsrsrs86 »

econorew wrote: post #4
orangepurple wrote: post #2

Great start! Some things to consider for future versions: more sophisticated tax code, financial regulations, monopsonies, monopolies, collusion, corruption, oligarchies, demand elasticity, cascading effects from supply chain disruptions, central bank quantitative easing.

All of this is emergent behaviour. Agents need to be smarter and the networks need to be larger and information needs to have a cost.

One really cool thing to do is consider the agents to have limited computational capacity. There are a few NP economic problems, and you can’t expect agents to really be solving enormous computational problems in their heads.

Re: Building an economy simulator from scratch

#97

Post by Galanwe »

rsrsrs86 wrote: post #88

One way to make this realistic is to add game theory to the simulation. Otherwise, the most important assumption in economics will be left out: rationality in decision making.

I don't think the objective is realism here, but rather education.

Also, I'm not convinced "rationality" is key in reaching realism.

Re: Building an economy simulator from scratch

#98

Post by rsrsrs86 »

econperplexed wrote: post #9

OT: I see economists of various ideological tilts constantly arguing about how macroeconomic variables will respond to specific government policies. You know: "this new tax will increase inflation; no it will not, it will increase unemployment". What I don't get is why there are no readily available online macroeconomic simulators with real world data that make these sort of predictions. For a lot of countries, up-to…

Economics is a science and what an economist calls economics is not what the market things an economist knows.

In a science you are interested in testing hypothesis.

Econometric/statistical models will generally serve to test general hypothesis. What happens if we raise interest rates? Will inflation go down? This can be tested in many ways. But it is not a concern to actually predicate the values of macroeconomic variables. It’s really not interesting academically and basically impossible to do right.

This is of course completely out of vogue since ML wiped out the scientific method education of us all.

Re: Building an economy simulator from scratch

#99

Post by Galanwe »

kamel3d wrote: post #92

In this day and age of AI, I think it's worth trying to build a better economy simulator without having any existing economic models in mind. Addressing this from a programming point of view could lead to interesting results.

That's more or less what every quantitative hedge fund out there is doing.

Re: Building an economy simulator from scratch

#100

Post by rsrsrs86 »

econperplexed wrote: post #26
logicchains wrote: post #14

Earlier quoted context omitted.

>[1] Much like the standard model of particle physics or of cosmology. Fairly dirty and complicated models with lots of tunable parameters. Anyone capable of making models that can predict the future with a reasonable degree of accuracy is probably in finance, making 5-10x what they could in economics. The economy is an incredibly complex system, subject to emergent behaviour and chaotic effects, much more so than in…

Any model has some precision associated with it. I am not asking for 5 sigma level of precision. But if the economists are fighting about what will happen to a particular macroeconomic variable, they are making a prediction even if it is a log_2(3) bit prediction [1]. There must be some math that is backing that. I want to see it explicitly put into a computational model that runs on live data. Otherwise is there any…

Best you can get is some bounds for whatever effect you want to predict and those bounds will open wide very fast.

As for lots of data, doing proper econometric models requires really well gathered data. Data is published quarterly or yearly, so you do have comparable series for international country level macroeconomics, but those are actually short considering how many variables must interact.

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