ESRC Conference 2014
Diversity in macroeconomics: new perspectives from agent-based
computational, complexity and behavioural economics
The February 2014 conference was co-hosted with the
Economic and Social Research Council and organised by Sheri Markose from
the Department of Economics.
The conference critically examined established thinking and brought together a range of new perspectives
on identifying future directions for macroeconomics and policy.
Developments from at least three new branches of economics, agent-based
computational, complexity and behavioural economics, arising from highly
interdisciplinary studies of computational and digital technologies,
complexity sciences and neuro-physiology of the brain, were also addressed.
- Our conference report is now available for all highlights.
- Critiques on macroeconomics by Charles Goodhart and Marcus Miller.
- New perspectives by Doyne Farmer, Eric Beinhocker, Eshel Ben-Jacob, Michelle Baddeley, Ithzak Gilboa,
Sujit Kapadia, Paul de Grauwe, Sheri Markose and Kathy Yuan.
- Leading neuro-scientists Vittorio Gallese and Scott Kelso on mirror
neurons and their role in social cognition, mimetic behaviours and also
- Policy makers included David Miles (MPC), Laura Kodres (IMF), Luiz de Mello (OECD), James
Richardson (HMT), Neil Ericsson (Federal Reserve Board of Governors) and also those from five central banks.
In response to concerns of students and the media on the lack of diversity in
the economics curricula, the conference held a panel discussion,
Why do we need diversity in macroeconomics? How do we build capacity in
new approaches?, looking at pressing matters regarding engineering
change on the ground.
Pannelists included Mark Buchanan (Science Writer), Michelle Baddeley (University College London), Eric Beinhocker
(Director, INET), Michel Ghassibe (President, Cambridge Society for Economic Pluralism), Philip Davis (ISER) and Adria Porta Caballe (Post Crash Economics Society, University of Essex).
In October 2012, the ESRC and the Oxford Martin School organised an
International Scientific Conference on macroeconomics, identifying an urgent
need for new perspectives to deal with coordination problems arising from highly
interconnected and complex global financial and industrial organisations.
The crisis and its aftermath have revealed something of a mono-culture in
established macroeconomic models which appears to lack relevance to the
scale of the challenges we face and has an inadequate tool-box to deal with
‘big data’, real time systems and a largely protean and evolving financial,
monetary and industrial environment.
For a number of decades, macroeconomics has parted company with the drivers
of dynamism and boom-bust crises in capitalist economies. These include private
credit and protean co-evolutionary arms races underpinning economic innovations
and regulatory arbitrage.
Scant recognition has been paid to the negative externalities and
non-linear dynamics that arise from the interconnectedness of a
macro-economy. Likewise, to date, models of ultra rationality, as in the
Rational Expectations Hypothesis (REH), or its behavioural opposite of
‘animal spirits’ have not offered much in the way of biological
underpinnings, arguably dependent more on assumptions rather than science.
The 2014 ESRC Conference on Diversity in Macroeconomics aimed to follow up
on the conclusions reached at the 2012 ESRC Oxford Symposium that 'action is
required to catalyse new approaches to macroeconomic questions and help
develop the discipline's responses, perhaps in partnership with other
disciplines within or beyond social science.'
Following the lead of the ESRC and Oxford Martin School Conference, the
University's Department of Economics offers a
MSc Computational Economics, Financial Markets and Policy.
- Robert Axtell
- Michelle Baddeley
- Jagjit Chadha
- Itzhak Gilboa
- Paul De Grauwe
- Charles Goodhart
- Sheri Markose
- David Miles
- Marcus Miller
- Richard Werner
- Kathy Yuan
- Eric Beinhocker
- Eshel Ben-Jacob
- Mark Buchanan
- Doyne Farmer
- Vittorio Gallese
- Scott Kelso
- David Hales
- Klaus Schenke-Hoppe
- David Tuckett
- Oliver Burrows and Sujit Kapadia, Bank of England
- Marco Gross, European Central Bank
- Neil Ericsson, Federal Reserve Board of Governors
- Laura Kodes, IMF
- Mark Manning, Australian Reserve Bank
- James Richardson, HM Treasury
The themes aimed to widen the scope of inquiries that have been considered
in the mainstream to address some of the unresolved foundational and policy
oriented issues in macroeconomics.
Theme 1: Re-uniting of macro-models with money, leverage
and financial markets
Starting with 'toy' models that add financial frictions to extant
macro-models, theme 1 extended to data based digital maps for financial
systems in the form of macro-networks.
Theme 2: Policy design and computational simulation
Prompted by the catastrophic regulatory failures that led to the 2007
economic crisis, theme 2 covered issues to do with robust policy design,
relating to complex non-linear dynamics, uncertainty and negative externalities
Theme 3: Investigating endemic shortcomings of rationality
These shortcomings of rationality which manifest in herding behaviours and
‘animal spirits’ were investigated in boom-bust macro-dynamics using a range
of models that inject small deviations to rational expectations to those that
offer neuro-physiological evidence for mimetic coordination and protean
strategic behaviour from anti-coordination.