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I don’t think modeling can be done. Unlike thermodynamics an economy doesn’t follow reproducible natural laws. You can model some aspects but as soon as you ma
by spaetzleesser 5y ago
I don’t think modeling can be done. Unlike thermodynamics an economy doesn’t follow reproducible natural laws. You can model some aspects but as soon as you make decisions based on the model somebody will take advantage of it and the model won’t work anymore.
An economy is way more psychology than natural science.
- SantalBlush 5y agoI think this is a common misconception about the economy and the study of economics. Everyone who participates in the economy has some mental model of the economy. That means anyone who accepts money as payment, or takes out a loan, or opens a bank account. In their model, cash will hold its value reasonably well, interest rates won't change too dramatically, etc. There is no agnosticism when it comes to the economy, and you make decisions based on your mental model of the economy on a daily basis.