Virtual Model Validation for Economics

5 Pages Posted: 12 Aug 2011

See all articles by David K. Levine

David K. Levine

Washington University in St. Louis - Department of Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Date Written: September 9, 2010

Abstract

How can economic policies lead us to greater wealth, welfare and happiness? There is no bigger question in economics. The answer lies in correct economic theories that capture the causality linking policies to outcomes. Economic theories are a dime a dozen – we have more theories than we have human beings. The key need to answer any economic question lies in our ability to validate theories. Do we live in an Austrian world? In a Keynesian world? A world of rational expectations? This White Paper proposes that major advances in simulating virtual economies is possible and would form the basis for rapid and accurate assessment of current and future economic models. I make general proposals for developing infrastructure, as well as presenting specific ideas about the nature of models of sophisticated expectations that are needed to allow artificial agents to mimic the behavior of real human beings.

Suggested Citation

Levine, David K., Virtual Model Validation for Economics (September 9, 2010). American Economic Association, Ten Years and Beyond: Economists Answer NSF's Call for Long-Term Research Agendas, Available at SSRN: https://ssrn.com/abstract=1889317 or http://dx.doi.org/10.2139/ssrn.1889317

David K. Levine (Contact Author)

Washington University in St. Louis - Department of Economics ( email )

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HOME PAGE: http://www.dklevine.com

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

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50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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