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Published: 24 July 2013

Re-thinking approaches to macroeconomics

While the Dynamic Stochastic General Equilibrium (DSGE) approach to macroeconomics is widely used in the economic professions, some dissenting voices have noted fundamental flaws in the method – even suggesting that we should reject mainstream macro models and instead adopting the ‘agent-based’ modelling approach often used in sociology.

Surrey economists Professor Paul Levine and Tom Holden – in conjunction with Professor Nigel Gilbert from the Department of Sociology – have secured £600k of funding from the Economic and Social Research Council (ESRC) to investigate the merits of this agent-based approach.

The research will address existing flaws in the agent-based method by importing newly developed methods from computational biology and developing a theory of optimal heuristics.

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