Entangled Economy: an ecosystems approach to modeling systemic level dynamics

TL;DR

This paper introduces an ecosystem-inspired model of the economy that captures systemic dynamics and aligns with real-world statistics, offering insights for policy making.

Contribution

It presents a novel evolutionary ecology-inspired framework for modeling systemic economic dynamics and demonstrates its relevance to real-world data.

Findings

Model reproduces USA economic statistics

Shows time dependencies of economic indicators

Highlights policy implications

Abstract

We present a model of an economy inspired by individual based model approaches in evolutionary ecology. We demonstrate that evolutionary dynamics in a space of companies interconnected through a correlated interaction matrix produces time dependencies of the total size of the economy total number of companies, companies age and capital distribution that compares well with statistics for USA. We discuss the relevance of our modeling framework to policy making.