Designing economic policy thanks to complex systems modelling
Today in the EU monetary policy is handled by several authorities, the European Central Bank, National Banks etc. while responsibility for national budgetary policy and structural policies still belongs to Member States.
In this integrated market where regional differences are still huge, such complex interrelations are a big challenge for policy making in the event of asymmetric (macro) economic shocks. And as new economic actors enter the global economy and the different scales of economic behaviour get increasingly twinned, the problem is becoming more complex. To tackle these issues, the FET project EURACE is developing an innovative approach to macroeconomic modelling and economic policy design at the European level using scientific, technological and societal tools.
In EURACE, scientists will study the development of multi-agent models that reproduce the emergence of global features as a self-organized process from the complex pattern of interactions among heterogeneous individuals. The technological challenge is to develop a powerful software environment for large-scale agent-based economic simulations. The idea is to be able to simulate scenarios for the European economy. This should lead to knowledge and innovative technologies that can take into account economic differences, both at micro level and at macro level. A major issue will be the study of fiscal and monetary policy coordination in the Euro area. The project should also clarify if there is a role for industrial policy in macroeconomic stabilization.
This project was funded by the European Commission's Future and Emerging Technologies research scheme