1. Economic Simulation
Theo Gutman-Solo

2. The aim of this study is to create an econometric model to simulate global wealth flows

3. How to achieve this? Integrate current economic theories
Elementary Macroeconomics
Paul Krugman’s New Trade Theory
Joseph Stiglitz’s theories on asymmetric information
Agent-based modeling display on rectangular cartograms

4. Economic Assumptions Assumptions made in model Sum game
Productivity and wealth is relative resulting in a sum game and “wealth” cannot be created
Bias towards supply & demand
Efficient Market
Inaccurate assumption but required for complexity issues
Minimal Transportation and procedural costs

5. Methodology Generate random world Evolve world Each Timestep Business
Choose stations of production and marketing
Take money from marketing country and give money to country of production
Difference (profit) is given to country of incorporation.
Countries
Reevaluate status (GDP, CPI)

6. Methodology - Modeling
Agents
Represent
Business
Contain countries of
Production
Incorporation
Marketing
Countries
Contain
CPI
GDP
Languages
Java
C++

7. Heuristic Incorporation Production & marketing
How countries choose locales of production, incorporation, and marketing
Incorporation
Random, assigned at creation of world
Production & marketing
Each timestep weights countries by potential profit and chooses best combination

8. Methodology - Display The issue
The code generates immense amount of data.
Resolution show real time evolution of country wealth using cartograms

9. Cartograms
Cartograms are maps in which country size is dependent on a particular variable. They are used as an efficient method to communicate information on relative country data
In this project a rectangular cartogram scaled to GDP will be used.

10. 2nD Quarter Developments
Problems
Random Skews in nation wealth
Error in evaluation process
Bias towards supply and Demand
Model lacks stable country development
Causes inordinate fluctuations
Solutions
Integrate new trade theory
Dynamic business agents
Scenario
I began accumulation of data to be able to make model based on real world statistics rather than randomly generated world

11. Possible Future Developments
Economic
Incorporation could be skewed to wealthier nations
Include liquidity bias scalar
Movement of production of marketing should not be instant
Include mergers, acquisitions and conglomerates in agent action.
Programming
Agent setup is quite wasteful, changing information storing procedure could allow for more accurate simulation

12. Sample Wealth Flow Business Country of Marketing Country of Production
Country of incorporation
Country for investment