Main Idea of the Book Computational Economics: the Old Style

The attempt to make economics computational is not new, given that economics is by nature both mathematical and quantitative. The use of computational models is so prevalent that one can hardly see the need to disentangle a field called computational economics from other branches of economics, let alone even bother to ask what it is. On their Web site, the Society of Computational Economics provides us with a simple description: " Computational economics explores the intersection of economics and computation. " However, what is this intersection? Which parts do they intersect? Do they change over time, and what is the significance of these changes? These questions are not easy to answer without first making an effort to delineate what computational economics is. For most people most of the time, however, it is nothing more than using computing tools or algorithms to solve economic problems, when they become analytically intractable. This is what we may regard as old-style computational economics. In old-style computational economics, computing resources, be they software or hardware, are basically viewed as ancillary to economic theory. They at best serve merely as a refinement to the already well-established theory, instead of being the core itself. A quick review of the past can help us recall what this old-style computational economics has been up to. In the 1970s, the development of computational general equilibrium models provided numerical algorithms to solve already well-formalized Walrasian general equilibrium structures, pioneered in the 1950s by two Nobel Laure-ates, namely Kenneth Arrow and Gerard Debreu. Computational economics at this stage sought to provide a numerical realization of Brouwer's or Kakutani's fixed point theorem to economic models. In addition, in the 1970s, viewing the whole economy as following a law of motion and having its associated dynamics became somewhat standard in economic theory. With the advent of the era of economic dynamics, computational economics embarked