Latest Developments

Back to our roots: E3ME and Michał Kalecki

As Cambridge Econometrics’ macroeconometric model, E3ME, just passed its 25th birthday, Chief Economist Hector Pollitt discusses some roots of the model and the relevance of Michał Kalecki’s work to its theoretical underpinnings.
A theory is a short cut for remembering informat…

Switzerland’s energy system: How E3ME worked with STEM, the Swiss energy system model

Commissioned by the Swiss Federal Office of Energy (SFOE), Cambridge Econometrics worked together with the Swiss Paul Scherrer Institute (PSI) to study the link between energy pricing and the energy consumption of electricity and natural gas in Switzerland. Dora Fazekas explains …

Circular economy modelling in Africa – introducing FRAMES

Cooling towers in Soweto used as a Bunjee jumping centre

Cambridge Econometrics recently coproduced a series of reports on the ‘Circular Economy in the EU-Africa Cooperation’ for the European Commission’s DG Environment. Part of Cambridge Econometrics’ contribution included analysis using FRAMES, a new modelling tool developed …

Green Recovery scenarios in Visegrad Countries

Green lego bricks

Cambridge Econometrics is involved in analysing the potential of Green Recovery in various projects including work for the We Mean Business coalition and the UN Partnership for Action on Green Economy. As a part of this endeavour, we also carried out an analysis of potential of G…

Making assumptions right in climate modelling

A recent paper written by the economist Steve Keen has been causing a storm on Twitter. It is called ‘The appallingly bad neoclassical economics of climate change’ (see also here). The paper takes aim at the small-scale ‘Integrated Assessment Models’ that have in the past…

Coronavirus: initial results from economic modelling

Global GDP: we currently project the COVID-19 pandemic will reduce global GDP by 5% below a no-virus baseline in 2020 and 2021

Private indebtedness: the impacts on private indebtedness suggest that the subsequent recovery will be slow: while pre-crisis growth rates are restored, the lost level of GDP is not made up (a similar profile to what followed the Great Recession)

Government action: to mitigate those impacts further, governments will need to scale up the socialisation of private debt (through direct subsidy) and not merely ensure that liquidity is provided

Complexity and Keynes’ General Theory

In my studies I will be exploring how theories of complexity can be connected to post-Keynesian economics and, ultimately, Cambridge Econometrics’ E3ME model. Like any new student, my first task is a big pile of reading. Near the top of the pile is a return to Keynes’ General Theory.

The General Theory was written a long time before modern theories of complexity were developed. However, there are not really glaring inconsistencies or incompatibilities in the text.

It is true that Keynes does mention equilibrium a lot (something regarded as a lifeless planet by complexity scientists) but usually in the sense of something dynamic that the economy moves towards, rather than attains (p343).