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106 points jfantl | 1 comments | | HN request time: 1.591s | source
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dlojudice ◴[] No.43552972[source]

Agent-based modeling offers a more realistic approach to economic systems than traditional equilibrium models. New approachs including generative agents (ABM+LLMs) are promising. J. Doyne Farmer's recent book "Making Sense of Chaos: A Better Economics for a Better World" is a great reading for those interested in this field.

https://www.amazon.com/Making-Sense-Chaos-author/dp/02412019...

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huitzitziltzin ◴[] No.43553188[source]

No. There is no macroeconomist who wouldn’t adopt these approaches if they were “better”.

Agent based models have been around since the 1980’s at least. No one uses them in central banks, no one uses them in industry, and you can be very confident that they’ve tried.

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1. littlestymaar ◴[] No.43562368[source]

Right, Agent-based models are only useful as “exploration” tool, you cannot really use them for forecast because there's an impractically high number of parameter to tune.

Micro-founded macro economics models (say DSGE) are much easier to tune based on available historical data so they are much preferred, and nobody seams to care that they have the same predicting power as astrology.