SemesterFall Semester, 2023
DepartmentPhD Program of Economics, First Year PhD Program of Economics, Second Year
Course NameMacroeconomics Analysis
Course TypeRequired
Course Objective
Course Description
Course Schedule

General Specification:

(a) The student is expected to spend 12 hours per week on this course, which means 9-hour preparation and review work plus 3-hour class attendance.

(b) The assignment (the reading and the homework) will be given at the end of each ppt of the lecture.

(c) In this class, there will be a total of 15 lectures, and the remaining time will be reserved for the final exam (Week 18, January 8, 2023).


Weekly Progress

Week One (Lectured on September 11, 2023)

The Overview of the Class

  1. Wherefore Agent-Based Modeling? What are the alternatives to ABM?

  2. Why do we need ABM? Why it is relevant?

  3. Essential Ideas of ABM

  4. Interactions and Big Data


Week Two (Lectured on September 18, 2023)

Canonical Agent-Based Model (I): Cellular Automata, Part 1

(a) Precursor I: John von Neumann (1903-1957) and his work

(b) Precursor II: John Conway (1937-2020) and Game of Life

(c) Precursor III: Stephen Wolfram and Elementary Cellular Automata


Week Three (Lectured on September 25, 2023)

Canonical Agent-Based Model (I): Cellular Automata, Part 2

(a) Thomas Schelling and the Segregation Model

(b) Variants of the Schelling Model

(c) James Sakoda and the Checkerboard Model of Social Interactions

(d) Robert Axelrod and the Model of Cultural Dissemination


Week Four (Lectured on October 2, 2023)

Agent-Based Modeling and Big Data

(a)     Biology, Entomology, and Big Data

(b)    Rule as the Fundamental Unit of ABM

(c)     ABM and Experiments: ABM as a Laboratory

(d)    NetLogo


Week Five (Lectured on October 9, 2023)

National Holidays (no class)


Week Six (Lectured on October 16, 2023)

Models of Social Epidemics (I)

(a) Social Interactions: Social Influences and Social Epidemics

(b) Social Epidemics and Narrative Economics: From Kenneth Boulding to Robert Shiller

(c) Market Sentiment: Model of Social Epidemics

(d) Learning and Adaptation: Kalman Filter Learning and Belief Formation


Week Seven (Lectured on October 23, 2023)

Canonical Agent-Based Model (I): Social Networks, Part 4

(a) Network-Based Agent-Based Models

(b) Spatial Games

(c) The Salient Break (the middle and late 1990s): Causes for Missing Networks

(d) The Second Generation (after the late 1990s)

(e) Small-World Networks and Market Efficiency

(f) Network Topologies and Cooperative Behavior


Week Eight (Lectured on October 30, 2023)

Social Epidemics (II): The Vriend Model of the Effect of Big Data 

(a)     Was Hayek an ACE?

(b)    Rules: Choice-Making, Classifier System and Heuristics

(c)  Wisdom of Crowds and Stupidities of Herds

(d)    Ecology of Rules and Ecological Rationality


Week Nine (Lectured on November 6, 2023)

Reinforcement Learning

(a)     Reinforcement Learning: Origins and Background

(b)    The Multi-Armed Bandit Problem

(c)     Roth-Erev Reinforcement Learning

(d)    Reinforcement Learning in Auction Experiments


Week Ten (Lectured on November 13, 2023)

Agent-Based Idea and Modeling of Market

(a)     A Spatial Agent Model of Prediction Markets

(b)    What could agent-based markets mean?

(c)     Zero-Intelligence Agents (Entropy Maximization)

(d)    Stylized Facts Accounted: Favorite-Longshot Bias

(e)    The Economics and Psychology of Personality Traits


Week Eleven (Lectured on November 20, 2023)

Agentization: From EBM to ABM

(a) Illustration 1: Lotka-Volterra Equations

(b) Illustration 2: Kermack-Mckendrick (SIR) models


Week Twelve (Lectured on November 27 2023)

Autonomous Agents: Agent-Based Lottery Markets

(a)     Why Autonomous Agents?

(b)    Market Design

(c)     Agents

(d)    Autonomous Agents

(e)    Optimal Lottery Tax Rate


Week Thirteen (Lectured on December 4, 2023)

Canonical Agent-Based Model (II): Evolutionary Computation

(a) From Rule Given to Rule Discovery

(b) Three Intellectual Roots of Genetic Algorithms

(c) Representation

(d) GAs as a Model of Social Interactions

(e) Variants of Genetic Algorithms


Week Fourteen (Lectured on December 11, 2023)

Agentization of Macroeconomic Models (I)

  1. Agentizing Cobweb Models

  2. Cobweb Stability

  3. Agentizing Overlapping-Generation Models

  4. Rational Expectations and Multiple Equilibria

  5. Deficits and Inflation Rate Dynamics


Week Fifteen (Lectured on December 18, 2023)

Agentization of Macroeconomic Models (II)

  1. Agentizing The Kareken-Wallace Model

  2. Exchange Rate Dynamics

  3. Currency Substitution, Currency Collapse and the Single Currency Equilibrium


Week Sixteen (Lectured on December 25, 2023)

Agentization of Macroeconomic Models (III)

  1. The Grossman-Stiglitz Model

  2. Agentization and the SFI Model (Santa Fe)

  3. Herding-Based Financial Models

  4. Equationization of ABM: Heterogeneous-Agent Models

  5. Conclusion of the Class: ABM: What and Why?


Week Seventeen (Lectured on January 1, 2024)

National Holidays. No Class.


Week Eighteen (Lectured on January 8, 2024)

Final Exam

Teaching Methods
Teaching Assistant

The course will be taught in English. The course will proceed in lectures. All lectures are prepared in power points, and the students can get these power points before or after the classes. Students are encouraged to use skype to interact with the instructor outside the classes. The students have to read the materials in advance. The lecture will only highlight the ppt. During the class, the students are invited to ask questions based on their readings of the preparatory materials and are also required to answer questions posed to them by the instructor. 40% of the score will be based on the in-class interacting performance of the student. The evaluation of the student performance will be based on the final exam (60%), and in-class interactions (40%).


The final exam will be open-book, and the student will be given two weeks for the final to work on it. So, for example, if the final exam is on January 8, 2023, at 18:00 pm sharp, then the student only needs to submit his/her answer before January 22, 2023,18:00 pm. Late submission will not be accepted.

Textbook & Reference

Aoki M, Yoshikawa H (2006), Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinatorial Stochastic Processes. Cambridge University Press.

Bookstaber, R. (2017). The end of theory: Financial crises, the failure of economics, and the sweep of human interaction. Princeton University Press.

King, J. E. (2012). The microfoundations delusion: metaphor and dogma in the history of macroeconomics. Edward Elgar Publishing.

King, M., & Kay, J. (2020). Radical uncertainty: Decision-making for an unknowable future. Hachette UK.

Mackay, C. (1852/2012). Extraordinary popular delusions and the madness of crowds. Simon and Schuster.

Miller, J. H., & Page, S. E. (2009). Complex adaptive systems: an introduction to computational models of social life. Princeton university press.

Schelling, T. C. (1978). Micromotives and macrobehavior. WW Norton & Company. 

Shiller, R. J. (2019). Narrative economics: How stories go viral and drive major economic events. Princeton University Press.

Wilensky, U., & Rand, W. (2015). An introduction to agent-based modeling: modeling natural, social, and engineered complex systems with NetLogo. MIT Press.

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