On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms

Giorgio Fagiolo () and Andrea Roventini

Voprosy Ekonomiki, 2009, issue 6

Abstract: The article considers and compares two modern approaches to the scientific foundation of economic policy. The first one is a part of mainstream economics and involves developing dynamic stochastic general equilibrium models for analyzing business cycles and exogenous monetary shocks. The second one (which the authors prefer) is a creation of "agent-based models" with more realistic assumptions on the behavior and interactions of agents, absence of equilibrium and analytical solutions, but with computer simulations. The article criticizes an equilibrium approach, describes some results of application of agent-based computational economics to the analysis of economic policy and mentions some difficulties arising whenever this new theoretical paradigm is applied.

Date: 2009
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Working Paper: On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms (2008)
Working Paper: On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprec:y:2009:id:882

DOI: 10.32609/0042-8736-2009-6-24-47

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