On Complex Economic Dynamics: Agent-Based Computational Modeling and Beyond

This chapter provides a selective overview of the recent progress in the study of complex adaptive systems. A large part of the review is attributed to agent-based computational economics (ACE). In this chapter, we review the frontier of ACE in light of three issues that have long been grappled with, namely financial markets, market processes, and macroeconomics. Regarding financial markets, we show how the research focus has shifted from trading strategies to trading institutions, and from human traders to robot traders; as to market processes, we empathetically point out the role of learning, information, and social networks in shaping market (trading) processes; finally, in relation to macroeconomics, we demonstrate how the competition among firms in innovation can affect the growth pattern. A minor part of the review is attributed to the recent econometric computing, and methodology-related developments which are pertinent to the study of complex adaptive systems.