Journal Article
No. 2019-40 | October 08, 2019
Escape from model-land


Both mathematical modelling and simulation methods in general have contributed greatly to understanding, insight and forecasting in many fields including macroeconomics. Nevertheless, we must remain careful to distinguish model-land and model-land quantities from the real world. Decisions taken in the real world are more robust when informed by estimation of real-world quantities with transparent uncertainty quantification, than when based on “optimal” model-land quantities obtained from simulations of imperfect models optimized, perhaps optimal, in model-land. The authors present a short guide to some of the temptations and pitfalls of model-land, some directions towards the exit, and two ways to escape. Their aim is to improve decision support by providing relevant, adequate information regarding the real-world target of interest, or making it clear why today’s model models are not up to that task for the particular target of interest.

JEL Classification:

C52, C53, C6, D8, D81


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Cite As

Erica L. Thompson and Leonard A. Smith (2019). Escape from model-land. Economics: The Open-Access, Open-Assessment E-Journal, 13 (2019-40): 1–15.

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