Wow, cool! The model is specified as a constrained nonlinear optimization problem for which a solution is found using high-quality proprietary numerical solvers.[a] All partial differential equations specifying the model have a basis in economic theory or in heuristics and approximations shown to be consistent with reality. Parameters come directly from (what I assume is a large amount of) economic data collected by the Danish government.<p>The authors working for the Danish government deserve an A+ for making their code and assumptions public, along with comprehensive high-quality documentation.[b] It was a delightful surprise to click on the link and find... a carefully curated repo.<p>I have only one nitpicking: This looks like the kind of project that should have been -- and in fact <i>probably should be</i> -- implemented in Julia, instead of in a proprietary language. I suspect many heuristics and approximations could be more accurately modeled by ML components, interspersed between equations, as has long been proposed by Julia folks like Chris Rackauckas.<p>--<p>[a] <a href="https://news.ycombinator.com/item?id=30028188" rel="nofollow">https://news.ycombinator.com/item?id=30028188</a><p>[b] <a href="https://media.githubusercontent.com/media/DREAM-DK/MAKRO/main/Documentation/Documentation.pdf" rel="nofollow">https://media.githubusercontent.com/media/DREAM-DK/MAKRO/mai...</a>
Economics is not a science like physics. We can't do controlled experiments, we can't falsify hypothesis. This leads to very muddy waters and what you are left with are two kinds of economists: Those who tell people what they want to hear and those nobody listens to.<p>Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible this is to the tyranny of metrics. Claude-Frédéric Bastiat warned of this over a century ago with his parable of the broken window: Think not only of what you can see (the glazier who is employed to repair the window), but also of what you cannot see (the alternative purchase of a suit) had the window not been broken.
Note that the model is implemented in GAMS[1], a proprietary language focused at constrained optimization problems (think Matlab, but more niche). This makes it a non-starter for most interested outsiders.<p>[1] <a href="https://en.wikipedia.org/wiki/General_Algebraic_Modeling_System" rel="nofollow">https://en.wikipedia.org/wiki/General_Algebraic_Modeling_Sys...</a>
This model is supposed to replace the existing macro model cmoonly used in Denmark - ADAM (Annual Danish Aggregate Model)[1] which has been continuously developed and refined since 1970. You can find the yearly updates back to 1999 here.<p>[1] <a href="https://www.dst.dk/en/Statistik/nyheder-analyser-publ/Publikationer/VisPub?cid=18836" rel="nofollow">https://www.dst.dk/en/Statistik/nyheder-analyser-publ/Publik...</a>
[2] <a href="https://www.dst.dk/da/Statistik/ADAM/Modellen-ADAM/Download" rel="nofollow">https://www.dst.dk/da/Statistik/ADAM/Modellen-ADAM/Download</a>
THIS is the way.<p>It is a step forward in transparency (even though 90% of danes probably don't understand a thing of what was published) which is something no one I know is opposed to.<p>Hope this sets a precedent for other countries to follow!
I read the comment about the unreliability of economics, however I do like to point one thing, most economical model fit well when the economy is doing ok or within a certain range of parameters, until something outside of those safe area happens. Think of 2008, and think of the economical impact of the pandemic. It's impossible to account for in prior models and thoughts as those are nonlinear events almost no one can predict. This is the thing with economy, we can only know a bit about our position and surroundings, but we have no way of knowing if we are in a local optimum, or if we are approaching a tipping point that invalidates all prior models. There are variables that don't matter until they reach a certain mass, there are metrics we simply can't find quantitive method to measure, let alone to predict. Economics is always messy, and with a lot of the classic thoughts proven wrong, we should be wary of any of the assumptions we make.
I'm a skeptic, this could end up as a tyranny of metrics. Even the smartest people are often wrong about what is best for everyone. There's an information problem in that though there are/will be plenty of metrics, not all of the necessary information can always be known. That's ok for a company, but not an economy. Just make the data "open" to everyone, "the model" itself is a misnomer. Denmark already has one of the most free and open economies in the entire world...hopefully this idea doesn't help to kill the golden goose. I frankly think it will have no virtually no influence or impact.
This is amazing! Whether or not every aspect of it is fully open-source, this is a great step forward towards governments being more transparent about how decisions are being made, and citizens being directly able to make positive contributions to that process.
I wonder if this could be used to automatically suggest new policies? Presumably the optimizer will tell you exactly which input variables to tweak to increase the final number/gpd/which ever.<p>As the saying goes "any metric is bad once you optimize for it", so maybe that would lead to terrible politics.<p>That makes me worry if large actors can use the model to make any self-serving policy suggestion "look" like a good idea for the economy, by combining it with precise information on what the national economics model is sensitive to or isn't.
What makes this model specific to Denmark, apart from the supplied baselines?<p>Also, is anyone aware if such large scale automatic optimisation solvers are used in other departments, such as crime regulation, health care, military?
Open sourcing models that are used for significant policy decisions (affecting others) is somehow required to protect and maybe enhance democracy in the digital age. Applies obviously to the public sector but also to private sector when it operates at large scale as a de-facto regulator / controller / planner of society.
Great! Are you familiar with the economic simulation work Threadneedle under Jacky Mallett in Iceland?<p><a href="https://github.com/jackymallett/Threadneedle" rel="nofollow">https://github.com/jackymallett/Threadneedle</a>
I've yet to read a comment about how well such models predict reality. Who is going to weigh in?<p>I studied economics, and I have some doubts about whether this kind of modelling works well enough to be useful. There's statistical issues like whether you have enough data to bring in your error bars, and theoretical issues like whether the thing you're studying moved below you because it's being studied. Neither of which invalidate the model entirely, but both of which make it a heck of a hard task.<p>And in the end, what matters is whether it works or not. The Lagrangian for quantum physics is some huge formula that gets pushed as meme now and again but it works. Likewise f = ma works perfectly well for your high school rolling ball experiment.
Great initiative, but I must ask: is the Greek compound formed from makro and gamy entirely accidental? Because it describes the past twenty years quite accurately.
I wonder if this includes Christiania, the billion Euros of cannabis sold there each year, and the big lift all those drug tourists impart on the local service industry. Beautiful place by the way, would recommend.
I've often wondered whether the first super-intelligent AI that gets created, if it somehow manages to be both under government control and not put to strictly military uses, might be tasked with modelling the economy and deciding on the "correct" set of economic policies.<p>Extending the scope of AI decision-making outside of the realm of economics seems much harder, though, as there's much less training data for questions like how to educate students in a pandemic, or whether to loosen planning rules for building wind turbines.<p>I suspect that before AI becomes capable of providing good answers to those questions, it will already have changed the world beyond recognition, and probably not in a good way. The best we can hope for is mass unemployment and a UBI, which will also make all economic models obsolete too.