Simulation technology could help prevent future financial crises
How will economic policies adapt in 2020 when a quarter of the EU population is over 65? Can economics better predict how banks will react to credit crunches in the future, and what their impact will be on the wider economy? How will the economy work when dwindling natural resources make it harder to satisfy our energy needs? The European Commission today unveiled breakthrough research that could help economists answer questions like these by using economic simulation software. Produced by an EU-backed research project worth €2.5 million that came to a successful end today, the software applies simulation technology also used for computer generated images (CGI) in movies. It predicts the interaction between large populations of different economic actors, like households and companies, banks and borrowers or employers and job-seekers, who trade, and compete like real people. By giving each simulated agent individual and realistic behaviour and interactions that show how markets will evolve, these massive scale simulations can better test new policies tackling future societal challenges.