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Topic: Macroeconomics

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[Episode #239] – Making Sense of Chaos

Dec 18 2024

Why do most economic models consistently underestimate the speed of energy transition?

Our guest today, Doyne Farmer, believes he knows why.

Doyne is the director of the Complexity Economics program at the Oxford Martin School at Oxford University, the Chief Scientist at Macrocosm, a modeling shop specializing in complexity economics, and the author of the recent book Making Sense of Chaos—A Better Economics for a Better World.

In this conversation, Doyne argues that traditional equilibrium economics falls short at capturing the realities of a rapidly changing world. He explains how a new approach called complexity economics, using agent-based modeling, provides a more accurate picture of how economic actors actually behave that can give policymakers and investors better guidance for navigating an evolving economy. It also indicates that the energy transition and climate action are likely to develop much more quickly than current forecasts suggest.

Guest:

Doyne Farmer is Director of the Complexity Economics programme at the Institute for New Economic Thinking at the Oxford Martin School, Baillie Gifford Professor of Complex Systems Science at the Smith School of Enterprise and the Environment, University of Oxford, External Professor at the Santa Fe Institute, and Chief Scientist at Macrocosm.

His current research is in economics, including agent-based modeling, financial instability and technological progress. He was a founder of Prediction Company, a quantitative automated trading firm that was sold to UBS in 2006. His past research includes complex systems, dynamical systems theory, time series analysis and theoretical biology. His book, Making Sense of Chaos: A Better Economics for a Better World, was published in 2024.

During the 1980s he was an Oppenheimer Fellow and the founder of the Complex Systems Group at Los Alamos National Laboratory. While a graduate student in the 1970s he built the first wearable digital computer, which was successfully used to predict the game of roulette.

On Bluesky: @doynefarmer.bsky.social

On the Web: https://www.doynefarmer.com/

Geek rating: 7

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[Episode #107] – Macro-Energy Systems

Oct 30 2019

Mini Episode

Energy transition is a complex thing, involving technology, the economy, market structures, regulation, a changing climate, politics, and more. So why don’t we teach and study it that way, instead of in siloed disciplines?

In an effort to encourage more informed and collaborative work—across disciplines, and at appropriately large scales—a group of researchers at Stanford University has proposed a new discipline they are calling “macro-energy systems.” Its goal is to grapple with the challenges of studying large-scale energy systems, focusing on phenomena that occur over long time spans, large areas, and large scale energy flows.

In this episode, we speak with one of the professors behind the effort, who explains how bringing together a community of researchers from multiple disciplines to develop a lingua franca and some common frameworks can better equip all researchers to tackle the challenges of climate change and energy transition. She also shares her expertise on the state of carbon capture and storage technologies!

Geek rating: 5

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[Episode #32] – Resources and Economy

Dec 14 2016

Full Episode

The notion of “decoupling” energy consumption from economic growth has become vogue in policy circles, but how much evidence is there that it’s really happening? If the energy intensity of our economy is falling, are we sure that it’s becoming more efficient, or might we just be offshoring energy-intensive industries to somewhere else…along with those emissions? If energy reaches a certain percentage of total spending, does it tip an economy into recession? Is there a necessary relationship between energy consumption and monetary policy? Is there a point at which the simple fact that we live on a finite planet must limit economic growth, or can economic growth continue well beyond our resource consumption? Can the declining EROI of fossil fuels tell us anything about the future of the economy? And can we have economic growth using clean, low-carbon fuels, or might transitioning to an economy that produces zero net new carbon emissions put the economy into recession and debt?

To help us answer these thorny questions, we turn to an expert researcher who has looked at the relationship between energy consumption and the economy over long periods of time and multiple economies, and found some startling results with implications for the Federal Reserve, for economic policymakers, and for all those who are involved in energy transition.

Geek rating: 8

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