Building an economy simulator from scratch
thomassimon.dev
thomassimon.dev
Just yesterday I listened to Planet Money talk about how Bill Phillips got a position at the London School of Economics on the strength of his hydraulic computer simulating the economy: https://en.wikipedia.org/wiki/MONIAC
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> "Mr. Hubert believes that this... device is a sort of crystal ball for showing the future," said Bent, and rolled his eyes.
> "Possible futures. Would Mr Lipstick like to see it in operation?" said Hubert, vibrating with enthusiasm and eagerness. Only a man with a heart of stone would have said no, so Moist made a wonderful attempt at indicating that all his dreams were coming true.
> "I'd love to," he said, "but what does it actually do?"
> Too late, he saw the signs. Hubert grasped the lapels of his jacket, as if addressing a meeting, and swelled with the urge to communicate, or at least talk at length in the belief that it was the same thing.
> "The Glooper, as it is affectionately known, is what I call a quote analogy machine unquote. It solves problems not by considering them as a numerical exercise but by actually duplicating them in a form we can manipulate: in this case, the flow of money and its effects within our society become water flowing through a glass matrix--the Glooper. The geometrical shape of certain vessels, the operation of valves and, although I say so myself, ingenious tipping buckets and flow-rate propellers enable the Glooper to simulate quite complex transactions. We can change the starting conditions, too, to learn the rules inherent in the system. For example, we can find out what happens if you halve the labour force in the city by the adjustment of a few valves, rather than by going out into the streets and killing people."
> "A big improvement! Bravo!" said Moist desperately, and started to clap.
What the public servant actually does is impose a tribute on the workers in a denomination the public servant determines. If you don't provide the denomination then the public servant confiscates your assets by force.
The population then offers their goods and services in return for the denomination the public servant issues. The public servant then determines the level of the tribute required by how much of its own denomination it gives in exchange for the tribute.
That's the source of money, and the source of the price level.
There is no 'universal exchange commodity'. Money is really just promises between people.
Fred would say to Jim: "here's a pig, owe me one". Fred now has Jim's IOU as an asset which he could give to Bob in exchange for something Bob made so Bob can claim a pig from Jim.
The vast majority of money in the modern economy is created by banks, not by the tax agencies or even the mint. When the bank lends you $1000 they just create it out of thin air and credit your account by $1000.
So there is a limit to how much money can the bank create.
Yes - via the central bank, right? I thought that was how quantitative easing worked.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
Reserve requirements of that type still do exist in some places (though in some places they've been abolished) but don't really play much of a role in determining how quickly money supply grows any more.
Control over money supply growth is mostly down to interest rates these days.
Similarly, the role reserve requirements used to play in protecting depositors has been replaced by the various "Basel" rules which determine what sources of funding banks can use to fund their loans which depend on the loan book's credit quality, tenor etc.
Loans create deposits and the deposits just change ownership tag from then on.
A wad of cash isn’t money. It is nothing more than a receipt for a deposit held at an institution somewhere - that was created as an advance in the past in response to an equivalent loan.
When you deposit a wad of cash in a bank, the bank takes ownership of the deposit in the institution and creates a new deposit in the bank for you. It’s just another loan creating a deposit.
A loan creates an advance. That advance is the bank owing a person in return for the person owing the bank.
The advance is then used to pay you so you have a deposit. All that does is change the ownership tag on the advance.
They are nothing more than a centralised optimisation of what would otherwise be a full mesh network of point to point exchanges
Absolutely false. For starters, in many jurisdictions including the US, the reserve fraction is now 0% and has been for quite some time.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
Except the bank is an intermediary of a completely different kind between creditor and lender. What the bank does is aggregate illiquid credits and debts to create liquid credit and debt.
You have a coupon that says you are owed X products by person A. Person B has a coupon that says he is owed Y by person C. The bank takes these coupons and transforms these illiquid promises into a liquid promise that lets you buy both X and Y products from person A and C. Think of it as a many to many relationship. The bank essentially acts as a blender that takes many things of non uniform quality and it produces a product of uniform quality.
When you go to the bank and bring a stack of coupon that says "I will work for one hour for you" and the bank puts a stamp on the coupons that says "Bank B vouches for this coupon". Except this is inconvenient. What the bank does instead is print its own coupons that everyone recognizes and it deposits your coupons in its bank vaults. The bank writes down that you owe it all the coupons representing your labor time that you deposited as debt. Except this again is inconvenient, we can do away with the individual coupons entirely. Since paying your own coupon debt requires you to withdraw the coupons using bank coupons, we can just decide that you owe the debt in bank coupons instead.
Yes banks create money but all they do is discount what already exists.
As every budding entrepreneur finds out when they try to get a loan at 17 years old.
Banks provide liquidity after the fact. They don’t kick the system off.
If a bank lends $10 for every $1 of capital reserves, it will have a capital leverage ratio of 1/10 = 10%.
According to the Basel III standards, this ratio must be at least 3%, though country-wise regulations may vary.
https://www.wallstreetmojo.com/leverage-ratios-for-banks/
But money is also created in other ways. Here is a short article on how money creation, value creation and wealth creation are related:
https://nickrogers.tech/money-creation-wealth-creation-value...
Cheers!
What do you mean?
Should the state decide, for example, to increase the price it pays for its soldiers to $55,000 per year, it would be redefining the value of its currency downward and increasing the general price level by 10%, as market forces reflect that increase in the normal course of allocating by price and determining relative value. And for as long as the state continues to pay soldiers $55,000 per year, assuming constant relative values, the price level will remain unchanged. And, for example, the state would have to continually increase the rate of pay by 10% annually to support a continuous annual increase of the price level of 10%."
https://warrenmosler.com/aframeworkfortheanalysisofpriceandi...
Big thread on it from last year here: https://news.ycombinator.com/item?id=31586833
As Chancellor of the Exchequer, you set the tax-rate, interest rate, level of public spending and so on; then you ran a cycle. I can't remember whether a cycle was a month or a year. After about three years, the workers would be on strike and there would be rioting in the streets. Every time.
I wasn't particularly interested in macroeconomics at the time; I certainly had no idea how to run an economy. I have no idea how realistic the economic model was. I assume it was just a bit of fun.
But I'd like to tinker with a realistic economic model that is flexible enough to, for example, model Modern Monetary Theory.
It's an "agent" based modelling environment, so you have to "discretize" (yuck) your problem first.
I learned about it because Scott Page uses it for his "Model Thinking" class [1].
[0] https://ccl.northwestern.edu/netlogo/
[1] https://modelthinker.wordpress.com/
There is also the MIT "systems modelling for a complex world"
Because I don't understand it. Having a model to tinker with might help me to understand it better. It looks a bit like voodoo, but then a lot of economics looks like voodoo to me; I'm not an economist.
The bulk of it is obvious Capitalism vs Communism political jokes though, so I wouldn't consider it a very serious economic simulator. But its better than most IMO.
An interesting thing you can do with a simulator is pause, rewind, make arbitrary experiments, run counterfactuals, etc -- all of which are prohibited in Eve since it needs to respect the users who are there to have fun, not be test subjects.
I couldn't find anything on the author's GitHub. I'm mostly just curious how it's built.
It'd go well as comparison vs. this code I've been playing around with from Phillip Rosedale (Founder of Second Life) where he's simulating economy for purposes of determining wealth distribution scenarios: https://editor.p5js.org/PhilipRosedale/sketches/odl5elMWy
I’d love to see the code with a permissive license for others to build upon.
Reminds me a little of ncase’s fantastic simulations — for example: https://ncase.me/sim/
For me I’m particularly interested in how you’ve done the presentation interface.
If you just want the javascript file (195 lines of code), let me know too
I'm currently working on Simulation 15
…In that Empire, the Art of Cartography attained such Perfection that the map of a single Province occupied the entirety of a City, and the map of the Empire, the entirety of a Province. In time, those Unconscionable Maps no longer satisfied, and the Cartographers Guilds struck a Map of the Empire whose size was that of the Empire, and which coincided point for point with it. The following Generations, who were not so fond of the Study of Cartography as their Forebears had been, saw that that vast Map was Useless, and not without some Pitilessness was it, that they delivered it up to the Inclemencies of Sun and Winters. In the Deserts of the West, still today, there are Tattered Ruins of that Map, inhabited by Animals and Beggars; in all the Land there is no other Relic of the Disciplines of Geography.
the lesson is, never try
edit OH and the other part is that it was staged literary forgery by "Suarez Miranda, Viajes de varones prudentes, Libro IV, Cap. XLV, Lerida, 1658." Borges overclocked the meta
Simplifying from a non-complex source is a waste of time.
https://www.thebehavioralscientist.com/articles/the-death-of...
It’s just that some have had more apparent prediction success than others (non-coincidentally, it’s those that don’t directly involve humans as subjects), while some are liable to affect people’s lives in more direct and drastic ways (non-coincidentally, it’s those that do directly involve humans as subjects).
Economic modeling based on game theory with extensions (say, requiring that certain agent choices are computable and are so under a limited computational budget, or non determinism, or learning) you still get sensible results under much weaker hypothesis.
https://www.atariarchives.org/basicgames/showpage.php?page=7...
I had a lot of fun playing and modifying that game. Learned a lot about programming with it.
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 something else. At best, it could be a model of a feudal society (where the "state servants" are the landed nobility).
Furthermore, it has no concept of natural resources, energy, labor and goods. That has to be there before we even get to things like money.
Also, the money definition is problematic. Money is essentially a contract, and can be created even between three private parties as resoldable bonds. This isn't there.
I would also suggest, if the author (or anybody else) is interested, look at Steve Keen's work in economic simulation and his Minsky program. This guy is far ahead of everybody else in actually trying to understand how real economies work.
To people who wonder why don't we have good economy simulators that would reflect a real world. Well, I think the answer is pretty simple - rich people don't want that. They don't want plebes to understand what it means to be rich, most rich people know they wealth is undeserved, and don't want other people to see it flaunted openly. So they prefer hegemony (in Gramsci terms) of neoliberal economics, which is misleading about what is happening in reality.
So you need to understand the real-world monetary flows to a sufficient level of detail. You need to understand who actually owns what, and how the power is exerted. And the rich people are against that, for example, in most developed countries (with IIRC notable exception of Norway and Sweden) the tax fillings are private.
Also, it's kind of difficult to understand actual production, because private companies keep the data on production costs secret.
On top of that, there is little culture of data sharing in economics profession. Again, mostly because the data are very valuable to companies and individuals, profit takes precedence to public understanding.
So the fact of the matter is, lot of powerful people (and perhaps most middle class as well) don't want the level of transparency required to build a meaningful model.
It's true that nobody will come after you if you try to program it. But also, you won't get much support from the existing, mostly neoliberal, institutions.
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.
The comment above is an example of an explanatory theory [1]
> An explanatory analysis will try not only to describe the information but also to provide causal relationships between the various data presented.
Simple, yes, but also too simplistic. It isn't very persuasive. For the theory to be useful, then "rich people not wanting that" would have to be causally relevant. The comment above only provides an implied incentive (e.g. rich people would benefit by preventing knowledge dissemination that undermines their status). However, there is no convincing argumentation showing how such incentives play out, much less that they are significant enough to be causally important.
I don't want to reject the entirety of what the commentor above might be trying to say. There are probably aspects that are interesting, surprising, or maybe even troubling. Perhaps there have been documented cases of influential elites shaping economic theories and how they get communicated. Maybe; I haven't studied the history of bias in the field of economics per se. I know of many biases, but so far I've tended to think about them as being largely intellectual oversimplifications rather than designed misdirections.
Let's look to some other 'simple' explanations. One competing theory would be that economists and modelers want to earn status and earn a living. There doesn't have to be any malicious nor coordinated action to explain such behavior. There are many levels of systemic behavior that align with powerful interests without any causal chain. This is sometimes referred to as co-evolution or co-adaptation.
I do want to reject the whole family of (not so good) explanatory theories that fail to give sufficient argumentation for causality.
[1] https://philosophy.stackexchange.com/questions/30827/what-is...
You already seem to accept that there is evidence that powerful people do not want economic transparency. This is my (anecdotal) observation as well, some of it directly from economists.
As far as economics as a profession, it's odd that (neo)classical economics held for a century despite many criticisms against it over the years (in particular the criticism that it is never really positivist). It seems pretty inline with the idea that powerful people are willing to pour a lot of money to maintain its hegemony.
Whether the economists realize it.. Steve Keen discusses this a lot. Lot of neoclassical economists did some research themselves that disputed basic neoclassical assumptions, only for these assumptions to be continued to be taught to the next generation. So lot of them are probably pretty honest, just misguided.
Where does this sentiment come from? And what do you define as rich? I have been acquainted with rich people for decades now and many of them seem pretty darn open to me.
I wouldn't use the word 'program' here; I think it misses the essence of quantitative modeling. Quantitative models can be defined on purely mathematical terms. Some of these also benefit tremendously from computer simulation. Still, many can be analyzed and understood based on mathematical properties.
The worlds of declarative programming and formal analysis can come together in very interesting ways w.r.t. modeling and simulation.
P.S. This comment isn't aimed particularly at the commenter above; I'm writing this comment because I don't think the domain of 'modeling and simulation' is generally well-understood among software developers nor HN participants.
For example, I see a farmer with 7 food, 7 water and 7 wood, buying water. According to the description, their QoL would be 7 both before and after the transaction, so they are not supposed to buy because there wouldn't be an increase of their QoL:
> People are potential buyers of the resources that increase their quality of life
Additionally the average QoL indicator seems wrong. This is what I see at step 72:
Farmer 1: 50$ 6 6 5 => QoL 5
Farmer 2: 90$ 4 4 5 => 4
Farmer 3: 10$ 7 7 7 => 7
Avg QoL 3.0
The average QoL is sampled each end of day, step 73-75 depending on the random seed. At step 72 you are seeing the zeroth day average QoL ,with nearly all the intraday mutations of the first day.
Can someone explain why in Simulation 16, 4 producing workers can support 3 non-producing workers consuming just as much as them with just 10% taxation and yet they have similar QOL? It doesn't make sense to me intuitively.
If we ignore money and just look at goods this implies 3 people can do "nothing" (the government workers don't buy from anyone in this simulation) and yet consume as much as 4 people who do produce, and the 4 taxed people only have to pay 10% taxes while everyone enjoys similar quality of life as 60% taxation.
It would be like imagine you have four cartons of ten eggs and you tax 10% of each one. How can you end up with 3 whole cartons just from that taxes, it would only be four eggs, less than half of one carton rather than three extra cartons of the same size as the new reduced carton size of 9.
We could even remove the tax entirely, and still support the 3 public servants. To be convinced you can look at each unit transaction and see that all resource are accounted for.
Another way to look at it, is that the QoL of producing workers is lower than if there was no public servants. Every resource a public servant has, is bought from a worker at some point, whether the money for the purchase comes from taxation or inflation.
I didn’t realize that inflation (where money is created and given to government to spend) is exactly the same as taxation.
Source: econ major
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.
The gravity at work here is economics, as seen through the lens of people. People, it turns out, don't flourish in captivity.
For some reason, capital is currently consolidating at the top.
Disadvantage: the kulaks.
It is buoyancy. It lifts few people up very high as they push down more that go down under the waves.
Even weather forecasting moved to dynamical systems models decades ago, economics still hasn't caught up.
You will never find a non taxpayer funded entity promise something like this:
>After 30 years of service, LA lifeguards can retire as young as 55 on 79-percent of their pay.
Go ask an insurance company how much an annuity for even $80k would cost starting at age 55 until death. It would be $1M+.
Social Security averages out your earnings for your whole lifetime to calculate the benefit, and that is with the power of the federal government. City and state governments regularly promise employees final average 1, 3, 5, and at best 10 pay formulas. So you see cops/firefighters/lifeguards/etc spiking their overtime and working 80 hours per week for the last few years, doubling and tripling their DB pension benefit.
And you simply will not see this outside of taxpayer funded entities.
That would solve politicians being able to pay with unaccounted for benefits that become a burden decades later, and increase labor price transparency and result in better functioning markets once employers are out of the health/vision/dental/public transport/retirement benefit business.
And a third bird it kills is reducing the advantage big businesses have over small businesses.
I understand that unions like OT for their members (of course they would!) but as an employer it's insane to be handing it out as regularly as government employees get it.
No CEO or programmer dies in the line of duty, yet you can't throw a rock on this site without hitting thkse kinds of compensation.
While people get to be force-fed all sorts of complex subjects at school, economics does not feature prominently.
The result of this widespread economic illiteracy is easily seen at the quality of political discourse.
If we’re talking about money printing then we need to talk about money shredding as well.
If government prints money to buy thing then taxation feeds old money into the shredder.
Print is always matched with a shred.
Even bank loans are paid off (shredded)
There’s no consistent way to make money. You can exploit small details about how each market works, but in a short time everyone will notice and copy you. It’s like a market without patents. People talk, the trade ideas spread. Like wildfire. Too fast even for a quant to make sense - good managers can tell if a piece of info is hot. No manager will ever be able to tell whether a stock will outperform.
The objective is to maximize profit per unit of risk taken. If hedge fund made 20% less than market but took 50% less risk, that's a MASSIVE value proposition.
(now, one could argue they fail at that too, but that's more difficult to prove)
It’s just really hard to get precise predictions. Really hard. Not like settling P=NO hard, but like moto perpetuo hard.
Also, I'm not convinced "rationality" is key in reaching realism.
On simulation #13, where tax is fixed at 10%, the government workers all eventually starve. Surprisingly, the libertarians are correct because at this point the quality of life index abruptly rockets up to twice what it used to be. But there's some sort of robotic overlord AI going on, it still collects the tax.
But then in simulation #18, things become a little insane. I call this one the Massachusetts simulation... only 3 workers, but 9 government employees. For a 3:1 ratio. The simulation suggests that some sort of economic meltdown occurs and they all starve, but I suspect that things were a little more violent than that.
After, the developer then introduces ration tickets. This is simulation #20, and I'm pretty sure it's Zimbabwe. But it's not the real world Zimbabwe, it somehow works. That is, if you're ok printing trillion dollar bills.
Simulation #21 takes a new direction entirely. FDR has been elected, and tries to stamp out competition... but he is too late, evil capitalist farmers have grown too many apples, which perversely leads to starvation. Careful apple quotas are needed. The government has disappeared though, probably because late stage capitalism destroyed it. Only the corporations survive.
Surprisingly, no farm subsidies yet. I predict the introduction of a new private sector worker, the ConAgra lobbyist. We'll see if he shows up in a later simulation. That is, assuming another government is elected.
In simulation #25, one of the warlords has settled down and become a government again. But this is the last of the simulations. No lobbyists, though the central bank has returned. This might be because Andrew Jackson has died. I did not like the man, he will not be missed. But quite clearly the inflation is through the roof again, and 30% taxes are here to stay.
What I've learned from these is that history is a lie. Rhodesia probably never existed, and Zimbabwe happened before the US civil war.
That's because on this simulation the government isn't doing any useful work.
The ration tickets work because the people were programed to actually follow the law. It fails every time on the real world because real people aren't.
And the simulation #20 works because the simplistic model actually works. At a first approximation, inflation isn't a problem at all. Things only start to fail after you have competition, corruption, very limited resources, etc.
Simulation #21 is a great visualization of why people must be able to set prices with enough freedom, and why forced price-fixing bankrupts countries.
Is anyone working on the problem of programming people? Or are we just hoping for a solution to that to fall into our laps?
> and why forced price-fixing bankrupts countries.
Ah ha! On this one I paid very close attention. No secret libertarians hiding in woodpiles, and sneaking out at night (or any other time) and stealing from the people. The only rational conclusion is that the simulation was set up to fail as some sort of propaganda.
Besides, only a few people died anyway, which for any socialist country is miraculously impressive success. So maybe not propaganda.
I'm beginning to think these simulations don't offer any insight into the real world at all.
We gave The New Soviet Man[1] a try for a couple of decades, but it didn't really stick.
As the late-20th, early 21st century has shown, programming that seeks to amplify our vices[2], as opposed to turn us against them turned out to be far more effective.
[1] https://en.wikipedia.org/wiki/New_Soviet_man
[2] Don't think, just buy.
At the beginning of #13 eve thing is fine, until all firefighter die and the quality of life index abruptly rockets for a while. Then for example the apple producer dies, and after a few days everyone starves and dies.
It may be a more complicated criteria, like each firefighter can protect only 2 or 3 producers, so the ratio of producers to government workers must be always not too high.
In a cashless society, I suspect the zimbabwe method would actually probably work. The only hangup was "Now I need to crate around boatloads of money". In a cashless society, we can just move the decimal point every so often.
But the simulation doesn't do much to validate that concept. It introduced inflation to a group of agents who never think about the future value of their goods or money.
In a runaway inflation situation, some producers of apples aren't going to sell you apples today for 1,000 Simoleons, when they know tomorrow those apples will fetch 1,100 Simoleons... and by Friday they'll be worth 10,000. And some holders of Simoleons will think 'These 10,000 Simoleons could buy be ten apples today, but tomorrow they'll only buy me 9, and by Friday they'll only buy me one... so I should buy 10 apples today, then sell them on Friday'.
Without capital accumulation, time valued money, or investment, this simulation barely scratches the surface of what effects inflation has on an economy.
Simulation might also want to take into account that you can’t stock pile apples indefinitely before they spoil.
There is no accounting for capital goods. Interest in terms of numeraire is modeled in an internally coherent way, but this is not reflective of how distributional struggles between owners of means of production and workers play out (or, to be precise, among agents whose property ownership levels are not unimodal, which is the inevitable result of capitalist social relations).
The distinctive characteristic of a capitalist economy is that the direct producers are separated from their means of production, such that they must sell their ability to work to those who own said means. Throughout the modern period, there has been a strong desire to have a market economy without this separation into classes.
Without capital and wage labor, the author's assumption that terms of exchange are determined by producer/consumer preferences (their "quality of life" function). But in reality world capitalist economies, the capital relation instead constrains behavior to ensure the endless expansion of capital (the so-called "valorization imperative").
It is important to note that a society with produced means of production, which are commonly referred to as "capital goods" or "producer goods", need not be a capitalist society in principle.
On a completely different note, at first glance it seems that this model could be expressed as a convex program, possibly even a linear program?
Aside from this nonsense remark, it was an entertaining post.
We should have one that's more based on incentives instead. Separate people from companies, create labor and make companies only care about profits at all cost.
Finally, add a finite amount of resources and let's play it out.
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-date macroeconomic and demographic is readily available.
Surely, economists of every ideological tilt have their own standard model of macroeconomics [1] which they use to make rough predictions? If not, how complicated is it really?
[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 physics. You'll see papers from the large hadron collider where they prove stuff to within p=0.000001; it's impossible to prove anything to that degree of confidence in economics. Especially because it's not possible to create true controlled experiments: you can't have two otherwise identical societies that differ by just one factor, rather there will always be other ways in which they differ to, and how these are accounted for can have a big effect on the output of models.
> Especially because it's not possible to create true controlled experiments
Cosmology has zero-experiments. It is a completely observational science [2]. And in fact, has very bad data. Basically a time-frozen snapshot of the universe from a particular point in space. They can't even make predictions about the future, only about what some new dataset of that same time-frozen universe will say. Economics on the other hand has the benefit of lots data about interventions and their consequences. There is so much opportunity to develop models by making predictions and checking what happens.
[1] variable goes up or down or stays the same.
[2] The fact that the roots of modern science lie in a purely observational no-experiment discipline of astronomy is lost on many.
This is what (some) people in finance do: make models to predict things, because if something about the future can be predicted to a sufficient degree of accuracy, it's generally possible to make money from it. In economics, the incentives are slightly different; in academia, the incentives are to publish interesting/novel/topical papers, like with other social sciences, not necessarily to make repeatable predictions. In social science nobody gets punished for making an interesting model that hasn't been rigorously proven to make repeatable predictions, while in finance on average better models make more money and get rewarded more. But sharing an effective model means other people can use the predictions too, meaning you capture less value from the predictions yourself, so people with an effective model have an incentive not to share it
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.
I _also_ want to see it. But I do not want to build it, since it seems incredibly boring.
You aren't the first person to have this thought. It just turns out to be incredibly difficult.
- mathematical macro-economic simulation run by differential dependencies (like Minsky)
- agent-based Monte-Carlo platform for behavioural experiments to find or validate the macro rules
There would be a core set of models, with parametrized instances running for each country, loosely coupled through trade flows, capital flows, FX markets and migration.
So many things that effect economic behavior just aren't really quantifiable. Even Keynes who was a proponent of modeling and economic planning acknowledged this[1]. Hayek talked about information being too decentralized and preferences arising organically, which made planning(modeling) imprecise and inefficient if not impossible[2].
Are you high or what?
The problem is so complex that people don't even agree how to take a measurement, let alone how to simulate the system. If nowadays people disagree when looking at the same numbers, imagine if each one could point to the numbers in his own simulator.
The data they use is usually publicly available, the models used by these must not be very secret. Is it not possible to hook this all up into a nice package, where I can go in and tune some knobs to my liking (there will always be knobs) to get a prediction on the inflation over the next three quarters.
Then, I can publicly claim, "Given this data, and this model, and my knob settings, here are my prediction." Then some other economist can come and dispute the data, model and the knob settings. They select a different data source, model and their own knobs.
Then three quarters later we check who made the right prediction.
Notice, I am not asking for the correct model of reality. Only a playground where people can argue using concrete data, models and knobs.
But if you say model - yeah, central banks do that. I'm not really familiar how public their models are. I would bet you that they intentionally don't want people to know "here's the exact model and here's the exact inputs", because they want to keep some discretion for themselves. They want to be able say "I know that this model with these inputs says X, but as a thinking human being I know that the model doesn't account for Y which has been crucial in these past few months, and so instead of X we'll do Z".
What you said makes a lot of sense, but it would require collaboration from the decision makers. There's no incentive, I believe, for someone to do this "open source stye", because the moment that their effort pays off, some hedge fund will take it and use it to trade on it.
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.
Edit>> It appears to be the state.
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The parent's point is that an economic simulator that does not include them is probably not something that's useful to draw conclusions about capitalist societies from.
It is a fun toy, though.
That's not really true; people who own and profit from their ownership of the means of production exist in feudal economies; the fact that their ownership of the means of production is a sonetimes a consequence of rights associated with land tenure and, whether or not that is the case, not marketable or less freely so than under capitalism the capital, makes the system not capitalism, but doesn't make the owners of capital not capitalists.
Capitalists qua capitalists aren’t the ruling class outside of capitalism (though being a capitalist was also a subordinate part of being part of the labded aristocracy, and control of certain elements of the means of production was connected to land tenure), but they still can exist. Capitalism as a system is mostly a result of the non-landholding capitalists progressively leveraging their existing wealth to gain more systemic advantage (at the express of the landed aristocracy) than they enjoyed in pre-capitalist economies.