Escape from model-land

Erica L. Thompson and Leonard A. Smith

No 2019-23, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Both mathematical modelling and simulation methods in general have contributed greatly to understanding, insight and forecasting in many fields including macroeconomics. Never-theless, we must remain careful to distinguish model-land and model-land quantities from the real world. Decisions taken in the real world are more robust when informed by our best estimate of real-world quantities, than when "optimal" model-land quantities obtained from imperfect simulations are employed. The authors present a short guide to some of the temptations and pitfalls of model-land, some directions towards the exit, and two ways to escape.

Keywords: modelling and simulation; decision-making; model evaluation; uncertainty; structural model error; dynamical systems; radical uncertainty (search for similar items in EconPapers)
JEL-codes: C52 C53 C6 D8 D81 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-cmp, nep-hpe, nep-ore and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201923

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