Professor Cars Hommes (Centre for Nonlinear Dynamics in Economics and Finance, CeNDEF) recently co-authored a paper that won the first prize in the ‘Complexity in Macroeconomics’ research paper competition.
This competition is part of the ‘Rebuilding Macroeconomics’ project that seeks new interdisciplinary approaches to the study of complexity, macroeconomics, and research policy in this area.
The CeNDEF director wrote the paper Economic Forecasting with an Agent-based Model together with Sebastian Poledna and Michael Miess (respectively the 1st and 2nd authors) in May 2021. The researchers developed a detailed Agent-Based Model (ABM) of the Austrian economy with calibrated micro and macro data (from a variety of agents such as households, firms and banks). Their ABM provides accurate macroeconomic forecasts that can compete with forecasts based on more traditional models, such as VAR and DSGE. Economists believe that the use of ABMs is a promising new direction for economic modelling.
The full paper can be read or downloaded on the Rebuilding Economics website.