Thread by @RebuildMacro

Big thanks @MESandbu for including @rebulidmacro in last week’s @FT Opinion piece ft.com/content/5a92d0… pointing out we start from ‘different assumptions’ abt how world works & leads us to depart from ‘methodological respectability’. Here’s a follow up w/ examples. 1/n

Let’s start with a reminder @ESRC 2016 call: an interdisciplinary research network to promote methodological innovation & develop pilot studies to test ground & demonstrate value of larger scale initiative 2/n

Looking across 37 pilot studies, over 52 papers (so far) & many workshops we see two common observations on social reality: (1) we are social animals, (2) radical uncertainty is ubiquitous. These are @rebulidmacro’s ‘different assumptions’ 3/n

Meaning what? That we meet our social needs & interpret novel uncertain contexts via social interaction. In such interactions, we have individual and collective goals – deriving satisfaction from both (latter enforced by norms & ethics etc) 4/n

Direct interactions between agents means economics system is not only an allocation mechanism, but also source of novelty or emergent outcomes. Such properties cannot be deduced easily from individual action 5/n

Collective social goals and emergent outcomes imply we are indeed willing to go beyond a narrow interpretation of methodological individualism (‘respectability’ as @MESandbu calls it!) 6/n

Why do this? Viewing macro as economic system (i.e., including feedbacks) allows us to perhaps tackle important macro questions differently e.g., add to existing toolkit. Four examples (@Rebuildmacro researcher named only) 7/n

Ex 1: Data & models contested (world uncertain) @dtuckett had access to @bankofengland agents to observe how contacts interpret economy through causal narratives, exploring how information can best be structured for forward looking info to MPC BoE WP bankofengland.co.uk/working-paper/… 8/n

Ex 2: Doyne Farmer & @lafond @INETOxford commission survey of critical suppliers & combine social distancing data & network analysis to answer ‘how to open-up UK econ?’ Published in May, spoiler: open consumer-facing industries last #EOHO Paper here rebuildingmacroeconomics.ac.uk/covid-19
9/n

Ex 3: Tim Jackson @CUSP_uk create multi-sector ABM-SF model to analyse different transitions to a Green Economy on output, inequality, bank assets and interconnections. Code is Open Access ahead of @COP26 10/n

Ex 4: Rosa Lastra @QMUL examine nature of central bank reserves & conclude not liabilities after all: better seen as social equity conveying participation in payments system and wider economy. Consequences for CBDC & debt sustainability Paper here rebuildingmacroeconomics.ac.uk/legal-and-econ…
11/n

@Rebuildmacro approach shows different insights to traditional/multiple equilibria models. Greater diversity of modelling surely makes for more resilient policy in a radically uncertain world
All our publications are here rebuildingmacroeconomics.ac.uk/publications
@angusarmstrong8 @OECD_NAEC
12/12