Complexity and endogeneity in economic modeling
Abstract
Purpose
The concepts of complexity, endogeneity and circular causation – Myrdal's term was cumulative causation – are shown to be interrelated ones in configuring an economic model in the framework of systemic embedding and its empirical application.
Design/methodology/approach
The ensuing framework of economic modeling with complexity provides a controllable and predictable overarching worldview. Anomie in the economic universe and its embedded world‐system are analytically rejected. This consequence is due to the epistemic nature of modeling that combines complexity, endogeneity, and circular causation for attaining predictability and controllability, even in the face of complex systemic perturbations. The epistemology of unity of knowledge contrasted with rationalism is treated as the foundational worldview. An illustrative empirical work is given to convey the conceptual model and its applied viability.
Findings
Both the theoretical and empirical results point out how the induced effects of knowledge flows in reference to the epistemology of unity of knowledge continuously improves the complementary relationships of the evolutionary learning fields, and rejects marginalism as being logically non‐sequiter in such epistemic systems.
Research limitations/implications
More variables and data would increase the explanation of the continuous simulation in the evolutionary learning world‐system model.
Practical implications
More data would increase the versatility of the empirical exercise.
Social implications
The study is based on the idea of social and economic interface in extending the scope of economic modeling.
Originality/value
The paper is very original in the area of heterodox economics that questions orthodox economic postulates and presents the complex methodology by circular causation method instead.
Keywords
Citation
Alam Choudhury, M. (2013), "Complexity and endogeneity in economic modeling", Kybernetes, Vol. 42 No. 2, pp. 226-240. https://doi.org/10.1108/03684921311310585
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited