| 1. |
- Eliasson, Gunnar
(författare)
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Bringing markets back into economics : On economy wide self - coordination by boundedly rational market agents
- 2023
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Ingår i: Journal of Economic Behavior and Organization. - : Elsevier BV. - 0167-2681 .- 1879-1751. ; 216, s. 686-710
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Tidskriftsartikel (refereegranskat)abstract
- Markets, I argue, matter significantly for macroeconomic development. The reason for this strange statement is that policy practice in industrialized market economies is routinely governed by models that ignore the role of markets. Policy makers are therefore at risk of misunderstanding the economic situation and of mismanaging the economy. Some macroeconomic models with sufficient nonlinearities and a production lag, two pioneering articles by Day (1982,1983) demonstrated, exhibit phases of erratic fluctuations (or deterministic chaos). Shortly thereafter Eliasson (1983, 1984) observed the endogenous emergence of similar unpredictable irregularities in simulating a complex, agent based, market self-coordinated economy wide model implemented on Swedish data. The irregularities originated in a failure of markets to coordinate production, employment, and investment decisions as they were pushed excessively by policy to become more efficient. In this agent based model of an Experimentally Organized Economy, called MOSES, progress is governed by a dominant flow of successful business experiments conducted by firms, trailed by a flow of mistaken projects. The coordination of these flows by autonomous market agents was shown to be easily disturbed by external interferences, for instance unwitting policies. Markets, simulation experiments however also showed have great endogenous capacities to restore disturbed order. Large private investment mistakes at the agent level, experiments furthermore indicate, incur only minor social costs if production on the site is promptly terminated, and markets organized to efficiently reallocate resources. Bold private investments should therefore be encouraged, corrections of identified mistakes made without delay, and the efficiency of markets to reallocate resources paid attention to. I conclude that central policy in “Sweden like industrial economies” can only effectively be pursued by taking advantage of the endogenous capacity of functioning markets of effective self-coordination. Coordination failure being created by policy failure masquerading as market failure should be considered before market failure is blamed.
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| 2. |
- Carlsson, Bo, et al.
(författare)
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The Swedish industrial support program of the 1970s revisited
- 2018
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Ingår i: Journal of evolutionary economics. - : Springer. - 0936-9937 .- 1432-1386. ; 28:4, s. 805-835
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Tidskriftsartikel (refereegranskat)abstract
- The economy-wide dynamic cost-benefit study of the Swedish industrial subsidy program 1976 through 1984 (Carlsson et al. Res Policy 10(43):336-354 1981; Carlsson J Ind Econ 32(1):9-14, 1983a, b) is revisited in light of later economic development. Since the Swedish Micro to Macro model (Eliasson Am Econ Rev 67(1):277-281 1977a, 2017a) was used for quantification, this article is both (1) a study on the calibration of high dimensional micro-based and nonlinear economic systems models, and (2) a post inquiry into the empirical credibility of the cost-benefit calculations performed. We find that the Micro-based Macro model represents the minimum of detailed resolution necessary for the dynamic cost benefit calculations of the micro interventions in the Swedish economy we study. Even though the increased model complexity meant significant parameter calibration difficulties, a thoroughly researched model specification with exactly defined policy interfaces (with the markets of the economy) should take priority over parameter estimation problems, and always be preferred to estimating the parameters of a wrongly specified model perfectly. The oil price shocks of the 1970s caused radical market disorder in the western economies, bankrupting some 35% of Swedish manufacturing and threatening the Swedish government with massive unemployment. We confirm the earlier results that the government choice of a radical employment rescue policy came at enormous social cost in the form of economic stagnation, and still did not prevent the unemployment of the rest of OECD Europe from hitting Sweden a decade later, and persisting well into the next millennium. According to an alternative simulated policy scenario on the model, had the subsidies been replaced with a general lowering of the payroll tax of the same magnitude and the consequent increase in unemployment taken immediately during 1976-1980, production structures would have been radically and rapidly reorganized, normal employment would have been rapidly restored, and neither the stagnation nor the radical increase in unemployment of the early 1990s would have occurred. In retrospect we see no reason to worry about the empirical credibility of this computed dynamic trade off between Keynesian demand and Schumpeterian supply effects (caused by resource reallocations and endogenous structural change due to the price change), as we did then. We conclude with certainty that this trade-off would not even have been discovered as a possibility had we used a traditional model that did not embody these micro-macro linkages.
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| 3. |
- Eliasson, Gunnar
(författare)
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Why complex, data demanding and difficult to estimate agent based models? : Lessons from a decades long research program
- 2018
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Ingår i: International Journal of Microsimulation. - : International Microsimulation Association. - 1747-5864. ; 11:1, s. 4-60
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Tidskriftsartikel (refereegranskat)abstract
- Questions are often raised about the economy-wide long-term consequences of micro (policy) interventions in an economy. To answer such questions, complex high dimensional, agent-based and difficult to estimate models are needed. This soon takes the economist outside the range of mathematics s/he is comfortable with. Such was, however, the ambition of the Swedish micro firm to macroeconomic systems modelling project presented in this essay, initiated almost 45 years ago. This model is presented as a Reference model for theoretical and empirical studies, with the ambition to understand the roles of the "birth, life and death" of business agents in the evolution of a self-coordinated market economy, without the help of a Walrasian central planner. Mathematical simulation is argued to be the effective tool for such theoretical and empirical analyses. Four problems have been chosen that demand a model of the Reference type to address, and that the Reference model has been used to address. They are (1) exploring the interior structures of the model for surprise analytical outcomes not previously observed, or thought of; (2) quantifying the long-term costs and benefits of large structure changing micro-interventions in the economy; (3) studying long-term historical economic systems evolutions, and asking what could have happened alternatively, if the historic evolution would have originated differently, and (4) generalizing from case observations.
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| 4. |
- Eliasson, Gunnar
(författare)
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Micro to Macro Evolutionary Modeling : On the Economics of Self Organization of Dynamic Markets by Ignorant Actors
- 2017
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Ingår i: Foundations of Economic Change. - Cham : Springer Science and Business Media Deutschland GmbH. ; , s. 123-185
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Bokkapitel (refereegranskat)abstract
- The Micro to Macro model MOSES, for Model of the Swedish Economic System, is presented as a synthesis of Austrian/Schumpeterian and Swedish/Stockholm school economics. That connection unfortunately failed to be achieved at the time, as Swedish economists abandoned their ambition to take their Ex ante Ex post analysis down to the micro level for neoclassical static equilibrium economics, and therefore also failed to establish a Swedish platform for evolutionary economics. I argue that evolutionary models have to be micro based to make sense as driven by entrepreneurial competition and selection among autonomous market agents, be economy wide as an economic system, and should feature endogenous evolutions of firm populations, a complex dynamic that makes the model unsolvable for a market clearing equilibrium. The initial state dependency of such highly non linear selection models furthermore makes them unavoidably empirical. Since empirical models are always related to a case economy, the Moses model has been drawn up within the general theoretical framework of what I call an Experimentally Organized Economy (EOE), and applied to the Swedish economy. The estimation/calibration problems associated with such models are addressed, and the empirical credibility of the surprise economics that they generate discussed. Entrepreneurial entry drives competition and growth of the Micro to Macro model economy through a Schumpeterian type Creative Destruction process, that however also endogenously both raises the rate of exit, changes the population of actors, and lowers (because of the consequent structural change) the reliability of market price signaling as predictors of future prices. Simulation experiments suggest that an optimal growth maximizing rate of firm turnover exits. When MOSES is deprived of its micro based evolutionary features and firms are aggregated to sectors a traditional computable general equilibrium (CGE) sector model is shown to emerge as a special case. The static equilibrium properties of that model, however, are incompatible with the operating domain of the dynamic MOSES model, and a neoclassical capital market equilibrium comes out as an undesirable state to aim policies for. I conclude by demonstrating that the Wicksellian Cumulative Process can be nicely fitted into the Micro to Macro model.
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| 5. |
- Eliasson, Gunnar, et al.
(författare)
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Entrepreneurial Catch Up and New Industrial Competence Bloc Formation in the Baltic Sea Region
- 2015
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Ingår i: Economic Complexity and Evolution. - Cham : Springer Nature. ; , s. 341-372
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Bokkapitel (refereegranskat)abstract
- 1990 saw the break up of the Soviet political system. The liberated, but poor formerly planned economies were left on their own to restore their institutions to that of an open market organization. Even though roughly on par with the Nordic countries before being annexed, 50 years of Soviet isolation had left the formerly planned Baltic Sea Region (BSR) economies in an industrially backward state. Critical market institutions did not exist, and corruption made normal business life impossible. Catch up with Western industrial economies therefore became a policy priority. During the 1970s also the industrialized BSR economies had introduced elements of centralized planning that restricted free entrepreneurial activities. By the Soviet collapse stagnation had therefore also brought the need for entrepreneurship onto the policy agenda of Western BSR nations. Institutional obstacles to economic progress were gradually being dismantled. Historic developments in the BSR have therefore accidentally staged a unique economic policy experiment. Using a competence bloc based method of identifying the role of the entrepreneur in observed macroeconomic catch-up, we can distinguish between the relative roles in economic progress among the BSR economies of improvements in local entrepreneurial environments, and of individual entrepreneurial action. We found that successful catch-up among the formerly planned BSR economies still has a long way to go, and that policy focus should be set on improving the local entrepreneurial environments to support both new firm formation for long run development, and to encourage immediate FDI for short term effects. Significant obstacles to trade and ownership transactions, however, remain across the BSR. Hence, success in catch-up should be expected to differ significantly among the BSR countries. We propose a policy competition among the transition countries in improving their entrepreneurial environments to beat each other in long run catch-up performance, that will benefit both catch-up of individual economies, and growth of the entire BSR economy.
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| 6. |
- Eliasson, Gunnar
(författare)
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The incomplete Schumpeter Stockholm School connection
- 2015
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Ingår i: Journal of evolutionary economics. - : Springer Science and Business Media LLC. - 0936-9937 .- 1432-1386. ; 25:1, s. 45-56
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Tidskriftsartikel (refereegranskat)abstract
- During the early post WWII years Walrasian minded static equilibrium economists managed to disconnect a promising merge of Schumpeterian and Swedish School economics, and for decades more or less block the development of evolutionary dynamics. This paper is a fresh start of what should then have been done. I link my discussion to Loasby's (1998) two forms of coordination failure of; (1) failure of economists to model the coordination of an economy "out of equilibrium" and (2) failure of economists of competing schools to understand and benefit from each other. I find that 2 may explain 1.
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| 7. |
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| 8. |
- Eliasson, Gunnar
(författare)
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The internet as a global production reorganizer : The old industry in the new economy
- 2013
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Ingår i: Long Term Economic Development. - Berlin, Heidelberg : Springer Berlin/Heidelberg. - 9783642351259 - 9783642351242 ; , s. 243-271
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Bokkapitel (refereegranskat)abstract
- Globalization of production is breaking up the 200 year industrial knowledge monopoly and backbone of the wealthy Western economies; their engineering industries. Development is moved by a distributed manufacturing technology made possible by the integration of computing and communications (C&C). Previously internal value chains, now distributed over global markets of specialized subcontractors, have made smaller scale production relatively more profitable. As engineering firms are embracing the new technologies to take them into the New Economy, they are destroying the business platforms for laggard incumbent firms. As volume based strategies of the old actors clash in markets with new innovative producers, the dynamic and complex decision environment that characterizes an Experimentally Organized Economy (EOE) raises the business failure rate. The complexity of the situation makes the capturing of the new opportunities genuinely experimental and dependent on entrepreneurial capacities that are not universally available among the industrial economies. While some developing economies are successfully adopting the new technologies, entering onto faster growth paths, mature industrial economies experience difficulties of reorganizing for the same task. Some suffer more from the new competition than they benefit from the new opportunities. For the foreseeable future, however, engineering will continue to serve as the backbone of the rich industrial economies.
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| 9. |
- Eliasson, Gunnar
(författare)
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Advanced purchasing, spillovers and innovative discovery
- 2011
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Ingår i: Journal of evolutionary economics. - : Springer Science and Business Media LLC. - 0936-9937 .- 1432-1386. ; 21:1, s. 121-139
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Tidskriftsartikel (refereegranskat)abstract
- Advanced product development distinguishes itself by being surrounded by a "cloud of technology spillovers" available to external users in proportion to their competence to commercialize them. The local capacity to commercialize spillovers is experience based and hence more narrow than the range of innovations. The cloud will therefore be incompletely explored. While the value of the cloud to society may be greater than the development investment, the value captured by the producer is often not sufficient to make the product development privately profitable. The producer faces the property rights problem of how to charge for the dual product it develops, the product itself and as much as possible for the technology cloud. The public and private customers, however, appreciate the situation differently. While the former appears in the double customer role of being interested in both the product procured and the spillover benefits to society, the latter is not interested in paying for spillovers that only benefit society. Marketing the product, therefore, involves the ability to present a credible case for the economic value to society of the spillovers. To do that, a theory is needed that demonstrates both the user value to the customer, and the entrepreneurial capacity of the economy to commercialize the spillovers. The theoretical argument is illustrated with the case of downstream industrial business formation around Swedish military aircraft industry.
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| 10. |
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