A complex systems approach to constructing better models for managing financial markets and the economy Articles uri icon

authors

  • SANCHEZ SANCHEZ, ANGEL
  • FARMER, J. DOYNE
  • GALLEGATI, M.
  • HOMMES, C.
  • KIRMAN, A.
  • ORMEROD, P.
  • CINCOTTI, S.
  • HELBING, D.

publication date

  • November 2012

start page

  • 295

end page

  • 324

issue

  • 1

volume

  • 214

International Standard Serial Number (ISSN)

  • 1951-6355

Electronic International Standard Serial Number (EISSN)

  • 1951-6401

abstract

  • We outline a vision for an ambitious program to understand the economy and financial markets as a complex evolving system of coupled networks of interacting agents. This is a completely different vision from that currently used in most economic models. This view implies new challenges and opportunities for policy and managing economic crises. The dynamics of such models inherently involve sudden and sometimes dramatic changes of state. Further, the tools and approaches we use emphasize the analysis of crises rather than of calm periods. In this they respond directly to the calls of Governors Bernanke and Trichet for new approaches to macroeconomic modelling.

keywords

  • interbank market; uncertainty; risk; equilibrium; rationality; criticality; simulation