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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.

Highlights

  • 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 anti-coordination.
  • 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).

  • Background

    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 unique course, MSc Computational Economics, Financial Markets and Policy.

Documents

Speakers

  • Leading economists


    • Robert Axtell
    • Michelle Baddeley
    • Jagjit Chadha
    • Itzhak Gilboa
    • Paul De Grauwe
    • Charles Goodhart
    • Sheri Markose
    • David Miles
    • Marcus Miller
    • Richard Werner
    • Kathy Yuan

  • Interdisciplinary scientists


    • Eric Beinhocker
    • Eshel Ben-Jacob
    • Mark Buchanan
    • Doyne Farmer
    • Vittorio Gallese
    • Scott Kelso
    • David Hales
    • Klaus Schenke-Hoppe
    • David Tuckett

  • Policy makers


    • 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

Themes

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 platforms

    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 from leverage.

  • Theme 3: Investigating endemic shortcomings of rationality for macroeconomics

    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.