Economy wide, dynamic and agent based models: Their empirical credibility and usefulness, and why they should be preferred to macro models - Experience from the Swedish model
Prof. Gunnar Eliasson, Professor em of Industrial Economics, KTH Royal Institute of Technology, Stockholm
To evaluate large structure changing public projects, that permanently change relative prices in an economy, economy wide, dynamic and agent based cost benefit (CB) models are needed. To understand the complex dynamics of an advanced market economy, and to identify the “surprise behaviour” of such an economic system, one needs a detailed and well grounded representation of how agents behave, how market processes are organized, how the population of agents are changed through entrepreneurial entry and exit, how competition among agents is incited, and what kind of institutions promote desirable behaviour in all these respects. In both cases the analysis has to be taken down to the agent level, empirically well grounded model specification aimed for, appropriate measurement conducted and empirically credible calibration of parameters carried out. Because data is now abundantly available and computer capacity hardly a restriction, compared to a couple of decades ago, the critical issues of empirical credibility should in principle be solvable as conventionally understood, and with time macro modelling moved aside as a second best descriptive approximation of macro economic relationships. Such is the story I am going to tell – or more precisely I will give an account of the challenges met with during a decades long project of building an empirically implemented economy wide, dynamic and agent based model of the Swedish economy.
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About the speaker
Gunnar Eliasson is Professor (em) of Industrial Economics/Dynamics at the Royal Institute of Technology (KTH, Stockholm) and associated researcher at the Swedish Entrepreneurship Forum in Stockholm. He was previously President of the Industrial Institute for Economic and Social Research (IUI) in Stockholm, and before that Chief Economist and Director of the Economic Policy Department at the Federation of Swedish Industries. He has been a consultant to many firms and Government agencies and to the OECD. From 1994 to 1996 he was the President of the International Joseph A. Schumpeter Society.
Gunnar Eliasson is the father of the Swedish micro to macro simulation model, MOSES, and the theory of the Experimentally Organized Economy and of Competence Blocs. He has published many books and journal articles in the fields of industrial economics, the theory of the firm, business economic planning and management, labor and education economics and simulating the links between firm and market behavior and the macro economy.
Among Eliasson´s publications (in English) may be mentioned Business Economic Planning (Willey 1976), “ Competition and market processes in a simulation model of the Swedish economy” (AER 1977), Technological Competition and Trade in the Experimentally Organized Economy (IUI 1987), The Knowledge Based Information Economy (Telekom 1990), “ The firm as a competent team “ (Journal of Ec. Behavior and Organization, JEBO,1990), “Modeling the Experimentally Organized Economy” (JEBO 1991), Firm Objectives, Controls and Organization (Kluwer 1996), The Birth, the Life and the Death of Firms (Ratio 2005), “The nature of economic change and management in a new knowledge based information economy” (Information Economics and Policy, 2005), Advanced Public Procurement as Industrial Policy – The aircraft industry as a technical university ( Springer 2010), “The Incomplete Schumpeter Stockholm School Connection” (J Evol Econ, 2015), Visible Costs, Invisible Benefits- Military procurement as innovation policy (Springer 2017), documenting the role of professional customers in economic development, and “Why Complex, Data Demanding and Difficult to Estimate agent Based Models” (Int Journal of Microsimulation, 2018). Together with Richard Day and Clas Wihlborg he edited The Markets for Innovation, Ownership and Control (North- Holland 1993). Together with his wife, Ulla, he has authored a study on the 15th century art markets in Northern Italy and Florence (1997).
For years Gunnar Eliasson´s research interest has been dominated by the micro foundations of macro economic development. His research has covered the economics of the firm and management, the role of technology and entrepreneurship, and of professional customership in economic development, the use of highly educated people in production, and the competence demands in the labor markets of the New Economy – all with a view to achieving a better understanding of the economy wide consequences of agent behavior in dynamic markets.
Venue: via Zoom (please contact us at seminars@merit.unu.edu for the Zoom link)
Date: 21 January 2021
Time: 12:00 - 13:00 CET
