•A generalized version of Moore's law for unit costs is modelled as a correlated geometric random walk with drift.•We study 53 technologies from different sectors.•We model forecast errors and ...empirically test hypotheses about predictability.•We apply our method to make forecasts for the price of photovoltaic modules.
Recently it has become clear that many technologies follow a generalized version of Moore's law, i.e. costs tend to drop exponentially, at different rates that depend on the technology. Here we formulate Moore's law as a correlated geometric random walk with drift, and apply it to historical data on 53 technologies. We derive a closed form expression approximating the distribution of forecast errors as a function of time. Based on hind-casting experiments we show that this works well, making it possible to collapse the forecast errors for many different technologies at different time horizons onto the same universal distribution. This is valuable because it allows us to make forecasts for any given technology with a clear understanding of the quality of the forecasts. As a practical demonstration we make distributional forecasts at different time horizons for solar photovoltaic modules, and show how our method can be used to estimate the probability that a given technology will outperform another technology at a given point in the future.
Why is this type of modelling not welldeveloped in economics? Because of historical choices made to address the complexity of the economy and the importance of human reasoning and adaptability. A ...thorough attempt to understand the whole economy through agent-based modelling will require integrating models of financial interactions with those of industrial production, real estate, government spending, taxes, business investment, foreign trade and investment, and with consumer behaviour.
Common asset holdings are widely believed to have been the primary vector of contagion in the recent financial crisis. We develop a network approach to the amplification of financial contagion due to ...the combination of overlapping portfolios and leverage, and we show how it can be understood in terms of a generalized branching process. This can be used to compute the stability for any particular configuration of portfolios. By studying a stylized model we estimate the circumstances under which systemic instabilities are likely to occur as a function of parameters such as leverage, market crowding, diversification, and market impact. Although diversification may be good for individual institutions, it can create dangerous systemic effects, and as a result financial contagion gets worse with too much diversification. There is a critical threshold for leverage; below it financial networks are always stable, and above it the unstable region grows as leverage increases. Note that our model assumes passive portfolio management during a crisis; however, we show that dynamic deleveraging during a crisis can amplify instabilities. The financial system exhibits “robust yet fragile” behavior, with regions of the parameter space where contagion is rare but catastrophic whenever it occurs. Our model and methods of analysis can be calibrated to real data and provide simple yet powerful tools for macroprudential stress testing.
Abstract
We provide quantitative predictions of first-order supply and demand shocks for the US economy associated with the COVID-19 pandemic at the level of individual occupations and industries. To ...analyse the supply shock, we classify industries as essential or non-essential and construct a Remote Labour Index, which measures the ability of different occupations to work from home. Demand shocks are based on a study of the likely effect of a severe influenza epidemic developed by the US Congressional Budget Office. Compared to the pre-COVID period, these shocks would threaten around 20 per cent of the US economy’s GDP, jeopardize 23 per cent of jobs, and reduce total wage income by 16 per cent. At the industry level, sectors such as transport are likely to be output-constrained by demand shocks, while sectors relating to manufacturing, mining, and services are more likely to be constrained by supply shocks. Entertainment, restaurants, and tourism face large supply and demand shocks. At the occupation level, we show that high-wage occupations are relatively immune from adverse supply- and demand-side shocks, while low-wage occupations are much more vulnerable. We should emphasize that our results are only first-order shocks—we expect them to be substantially amplified by feedback effects in the production network.
Telemedicine (TM) is the use of telecommunication systems to deliver health care at a distance. It has the potential to improve patient health outcomes, access to health care and reduce healthcare ...costs. As TM applications continue to evolve it is important to understand the impact TM might have on patients, healthcare professionals and the organisation of care.
To assess the effectiveness, acceptability and costs of interactive TM as an alternative to, or in addition to, usual care (i.e. face-to-face care, or telephone consultation).
We searched the Effective Practice and Organisation of Care (EPOC) Group's specialised register, CENTRAL, MEDLINE, EMBASE, five other databases and two trials registers to June 2013, together with reference checking, citation searching, handsearching and contact with study authors to identify additional studies.
We considered randomised controlled trials of interactive TM that involved direct patient-provider interaction and was delivered in addition to, or substituting for, usual care compared with usual care alone, to participants with any clinical condition. We excluded telephone only interventions and wholly automatic self-management TM interventions.
For each condition, we pooled outcome data that were sufficiently homogenous using fixed effect meta-analysis. We reported risk ratios (RR) and 95% confidence intervals (CI) for dichotomous outcomes, and mean differences (MD) for continuous outcomes.
We included 93 eligible trials (N = 22,047 participants), which evaluated the effectiveness of interactive TM delivered in addition to (32% of studies), as an alternative to (57% of studies), or partly substituted for usual care (11%) as compared to usual care alone.The included studies recruited patients with the following clinical conditions: cardiovascular disease (36), diabetes (21), respiratory conditions (9), mental health or substance abuse conditions (7), conditions requiring a specialist consultation (6), co morbidities (3), urogenital conditions (3), neurological injuries and conditions (2), gastrointestinal conditions (2), neonatal conditions requiring specialist care (2), solid organ transplantation (1), and cancer (1).Telemedicine provided remote monitoring (55 studies), or real-time video-conferencing (38 studies), which was used either alone or in combination. The main TM function varied depending on clinical condition, but fell typically into one of the following six categories, with some overlap: i) monitoring of a chronic condition to detect early signs of deterioration and prompt treatment and advice, (41); ii) provision of treatment or rehabilitation (12), for example the delivery of cognitive behavioural therapy, or incontinence training; iii) education and advice for self-management (23), for example nurses delivering education to patients with diabetes or providing support to parents of very low birth weight infants or to patients with home parenteral nutrition; iv) specialist consultations for diagnosis and treatment decisions (8), v) real-time assessment of clinical status, for example post-operative assessment after minor operation or follow-up after solid organ transplantation (8) vi), screening, for angina (1).The type of data transmitted by the patient, the frequency of data transfer, (e.g. telephone, e-mail, SMS) and frequency of interactions between patient and healthcare provider varied across studies, as did the type of healthcare provider/s and healthcare system involved in delivering the intervention.We found no difference between groups for all-cause mortality for patients with heart failure (16 studies; N = 5239; RR:0.89, 95% CI 0.76 to 1.03, P = 0.12; I(2) = 44%) (moderate to high certainty of evidence) at a median of six months follow-up. Admissions to hospital (11 studies; N = 4529) ranged from a decrease of 64% to an increase of 60% at median eight months follow-up (moderate certainty of evidence). We found some evidence of improved quality of life (five studies; N = 482; MD:-4.39, 95% CI -7.94 to -0.83; P < 0.02; I(2) = 0%) (moderate certainty of evidence) for those allocated to TM as compared with usual care at a median three months follow-up. In studies recruiting participants with diabetes (16 studies; N = 2768) we found lower glycated haemoglobin (HbA1c %) levels in those allocated to TM than in controls (MD -0.31, 95% CI -0.37 to -0.24; P < 0.00001; I(2)= 42%, P = 0.04) (high certainty of evidence) at a median of nine months follow-up. We found some evidence for a decrease in LDL (four studies, N = 1692; MD -12.45, 95% CI -14.23 to -10.68; P < 0.00001; I(2 =) 0%) (moderate certainty of evidence), and blood pressure (four studies, N = 1770: MD: SBP:-4.33, 95% CI -5.30 to -3.35, P < 0.00001; I(2) = 17%; DBP: -2.75 95% CI -3.28 to -2.22, P < 0.00001; I(2) = 45% (moderate certainty evidence), in TM as compared with usual care.Seven studies that recruited participants with different mental health and substance abuse problems, reported no differences in the effect of therapy delivered over video-conferencing, as compared to face-to-face delivery. Findings from the other studies were inconsistent; there was some evidence that monitoring via TM improved blood pressure control in participants with hypertension, and a few studies reported improved symptom scores for those with a respiratory condition. Studies recruiting participants requiring mental health services and those requiring specialist consultation for a dermatological condition reported no differences between groups.
The findings in our review indicate that the use of TM in the management of heart failure appears to lead to similar health outcomes as face-to-face or telephone delivery of care; there is evidence that TM can improve the control of blood glucose in those with diabetes. The cost to a health service, and acceptability by patients and healthcare professionals, is not clear due to limited data reported for these outcomes. The effectiveness of TM may depend on a number of different factors, including those related to the study population e.g. the severity of the condition and the disease trajectory of the participants, the function of the intervention e.g., if it is used for monitoring a chronic condition, or to provide access to diagnostic services, as well as the healthcare provider and healthcare system involved in delivering the intervention.
Since the beginning of the 2008 financial crisis almost half a trillion euros have been spent to financially assist EU member states in taxpayer-funded bail-outs. These crisis resolutions are often ...accompanied by austerity programs causing political and social friction on both domestic and international levels. The question of how to resolve failing financial institutions, and how this depends on economic preconditions, is therefore a pressing and controversial issue of vast political importance. In this work we employ an agent-based model to study the economic and financial ramifications of three highly relevant crisis resolution mechanisms. To establish the validity of the model we show that it reproduces a series of key stylized facts of the financial and real economy. The distressed institution can either be closed via a purchase & assumption transaction, it can be bailed-out using taxpayer money, or it may be bailed-in in a debt-to-equity conversion. We find that for an economy characterized by low unemployment and high productivity the optimal crisis resolution with respect to financial stability and economic productivity is to close the distressed institution. For economies in recession with high unemployment the bail-in tool provides the most efficient crisis resolution mechanism. Under no circumstances do taxpayer-funded bail-out schemes outperform bail-ins with private sector involvement.
How production networks amplify economic growth McNerney, James; Savoie, Charles; Caravelli, Francesco ...
Proceedings of the National Academy of Sciences - PNAS,
01/2022, Letnik:
119, Številka:
1
Journal Article
Recenzirano
Odprti dostop
Technological improvement is the most important cause of long-term economic growth. In standard growth models, technology is treated in the aggregate, but an economy can also be viewed as a network ...in which producers buy goods, convert them to new goods, and sell the production to households or other producers. We develop predictions for how this network amplifies the effects of technological improvements as they propagate along chains of production, showing that longer production chains for an industry bias it toward faster price reduction and that longer production chains for a country bias it toward faster growth. These predictions are in good agreement with data from the World Input Output Database and improve with the passage of time. The results show that production chains play a major role in shaping the long-term evolution of prices, output growth, and structural change.
Complex dynamics in learning complicated games Galla, Tobias; Farmer, J. Doyne
Proceedings of the National Academy of Sciences - PNAS,
01/2013, Letnik:
110, Številka:
4
Journal Article
Recenzirano
Odprti dostop
Game theory is the standard tool used to model strategic interactions in evolutionary biology and social science. Traditionally, game theory studies the equilibria of simple games. However, is this ...useful if the game is complicated, and if not, what is? We define a complicated game as one with many possible moves, and therefore many possible payoffs conditional on those moves. We investigate two-person games in which the players learn based on a type of reinforcement learning called experience-weighted attraction (EWA). By generating games at random, we characterize the learning dynamics under EWA and show that there are three clearly separated regimes: (i) convergence to a unique fixed point, (ii) a huge multiplicity of stable fixed points, and (iii) chaotic behavior. In case (iii), the dimension of the chaotic attractors can be very high, implying that the learning dynamics are effectively random. In the chaotic regime, the total payoffs fluctuate intermittently, showing bursts of rapid change punctuated by periods of quiescence, with heavy tails similar to what is observed in fluid turbulence and financial markets. Our results suggest that, at least for some learning algorithms, there is a large parameter regime for which complicated strategic interactions generate inherently unpredictable behavior that is best described in the language of dynamical systems theory.
Third Wave in the Economics of Climate Change Farmer, J. Doyne; Hepburn, Cameron; Mealy, Penny ...
Environmental & resource economics,
10/2015, Letnik:
62, Številka:
2
Journal Article
Recenzirano
Modelling the economics of climate change is daunting. Many existing methodologies from social and physical sciences need to be deployed, and new modelling techniques and ideas still need to be ...developed. Existing bread-and-butter micro- and macroeconomic tools, such as the expected utility framework, market equilibrium concepts and representative agent assumptions, are far from adequate. Four key issues—along with several others—remain inadequately addressed by economic models of climate change, namely: (1) uncertainty, (2) aggregation, heterogeneity and distributional implications (3) technological change, and most of all, (4) realistic damage functions for the economic impact of the physical consequences of climate change. This paper assesses the main shortcomings of two generations of climate-energy-economic models and proposes that a new wave of models need to be developed to tackle these four challenges. This paper then examines two potential candidate approaches—dynamic stochastic general equilibrium (DSGE) models and agent-based models (ABM). The successful use of agent-based models in other areas, such as in modelling the financial system, housing markets and technological progress suggests its potential applicability to better modelling the economics of climate change.
PDF
