IDEAS home Printed from https://ideas.repec.org/h/spr/eccchp/978-3-319-62009-1_7.html
   My bibliography  Save this book chapter

Micro to Macro Evolutionary Modeling: On the Economics of Self Organization of Dynamic Markets by Ignorant Actors

In: Foundations of Economic Change

Author

Listed:
  • Gunnar Eliasson

    (Royal Institute of Technology (KTH))

Abstract

The Micro to Macro model MOSES, for Model of the Swedish Economic System, is presented as a synthesis of Austrian/Schumpeterian and Swedish/Stockholm school economics. That connection unfortunately failed to be achieved at the time, as Swedish economists abandoned their ambition to take their Ex ante Ex post analysis down to the micro level for neoclassical static equilibrium economics, and therefore also failed to establish a Swedish platform for evolutionary economics. I argue that evolutionary models have to be micro based to make sense as driven by entrepreneurial competition and selection among autonomous market agents, be economy wide as an economic system, and should feature endogenous evolutions of firm populations, a complex dynamic that makes the model unsolvable for a market clearing equilibrium. The initial state dependency of such highly non linear selection models furthermore makes them unavoidably empirical. Since empirical models are always related to a case economy, the Moses model has been drawn up within the general theoretical framework of what I call an Experimentally Organized Economy (EOE), and applied to the Swedish economy. The estimation/calibration problems associated with such models are addressed, and the empirical credibility of the surprise economics that they generate discussed. Entrepreneurial entry drives competition and growth of the Micro to Macro model economy through a Schumpeterian type Creative Destruction process, that however also endogenously both raises the rate of exit, changes the population of actors, and lowers (because of the consequent structural change) the reliability of market price signaling as predictors of future prices. Simulation experiments suggest that an optimal growth maximizing rate of firm turnover exits. When MOSES is deprived of its micro based evolutionary features and firms are aggregated to sectors a traditional computable general equilibrium (CGE) sector model is shown to emerge as a special case. The static equilibrium properties of that model, however, are incompatible with the operating domain of the dynamic MOSES model, and a neoclassical capital market equilibrium comes out as an undesirable state to aim policies for. I conclude by demonstrating that the Wicksellian Cumulative Process can be nicely fitted into the Micro to Macro model.

Suggested Citation

  • Gunnar Eliasson, 2017. "Micro to Macro Evolutionary Modeling: On the Economics of Self Organization of Dynamic Markets by Ignorant Actors," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 123-185, Springer.
  • Handle: RePEc:spr:eccchp:978-3-319-62009-1_7
    DOI: 10.1007/978-3-319-62009-1_7
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eliasson, Gunnar, 2023. "Bringing markets back into economics," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 686-710.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eccchp:978-3-319-62009-1_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.