Macroeconomic calculations using water

2009-06-07

in Economics, Geek stuff

On the New York Times website, there is a column about a water-based analog computer that was used to model the economy back in the 1950s:

Water flows through a series of clear pipes, mimicking the way that money flows through the economy. It lets you see (literally) what would happen if you lower tax rates or increase the money supply or whatever; just open a valve here or pull a lever there and the machine sloshes away, showing in real time how the water levels rise and fall in various tanks representing the growth in personal savings, tax revenue, and so on.

It’s both clever and amusing. Certainly, operating such a machine would have been less tedious than doing all the calculations with a pencil and paper. There is a video of the machine working on Cambridge University’s website.

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. June 8, 2009 at 12:19 pm

Science reinvents the economy: An economy in a computer
08 June 2009

Can we pack an entire economy, with all its complex human and political interactions, into a computer? Physicist Dirk Helbing of ETH thinks so – as long as we’re bold enough in going about it.

He points out that financial systems aren’t the only monsters we’ve let out of the box. How traffic flows in and around huge cities simply cannot be grasped by mathematical analysis, but computer models let millions of virtual vehicles interact on realistic road patterns – and often discover potential problems before they occur in reality.

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