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The question revolves around another motivating question: How does economics become more effective at predicting the behavior of the macro economy? For example, how does economics develop methods that allow it to predict with some certainty, more certainty than current methods provide, that a recession in country A will occur?

How much is simulation used by economists and institutions? I know that the Federal Reserve in the US conducts bank 'stress tests', which are a sort of simulation. I'm wondering if this approach has been expanded and scaled to answer other sorts of economic questions.

Are there any institutions or researchers developing simulations as a core part of their research?

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  • $\begingroup$ Minsky is an example of economic simulation programs. But it's out of the mainstream, as it throuws out the assumption of long-run equilibria, and rather uses a system dynamics approach, which has been almost forgotten for the past 25+ years. AND it incorporates Godley "accounting" tables, which are used to stay in accordance with stock-flow consistency. As for mainstream, of course there are plenty of software that simulates for example traditional DSGE models, but they are now becoming a bit redundant. $\endgroup$ – Rokis1990 Feb 11 '18 at 19:42

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