Agent-based and DSGE macroeconomic models: A comparative study

Paul Levine, Nigel Gilbert, Tom Holden, Ozge Dilaver

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 an ‘agent-based’ modelling approach.

This is a collaboration between the Centre for Research in Social Simulation and the Economics department here at Surrey. The investigators 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 apply agent-based methods to macro-economic modelling and will investigate the applicability of newly developed methods from computational biology and techniques of optimal heuristics

Funding: ESRC

Duration: September 2013 to August 2016