Yale ECON 561-417 - Computational Methods in Economics: General Points (3 pages)

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Computational Methods in Economics: General Points



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Computational Methods in Economics: General Points

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Yale University
Course:
Econ 561-417 - Computational Methods in Economics
Computational Methods in Economics Documents

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Econ 561a Part I Yale University Fall 2005 Prof Tony Smith Computational Methods in Economics General Points Three modes of science theoretical computational empirical Computational work shares elements of both theoretical and empirical work Two meanings of computational economics computation as a tool for doing standard economic theory vs computation as a model for how economic actors behave Fundamental shortcoming of the first kind of computational economics lack of error bounds How far apart are the computational model and the theoretical model Computation produces data which can be used to generate theoretical conjectures These conjectures could be exact theorems or approximate systematic patterns Use computation to measure quantitative magnitudes e g the relative sizes of opposing effects Hamming s motto The Goal of Computing is Insight Not Numbers 1 Econ 561a Part I Yale University Fall 2005 Prof Tony Smith Rules of Thumb for Doing Good Computational Work in Economics 1 Start with the simplest possible model preferably one with an analytical solution 2 Add features incrementally 3 Never add another feature until you are confident of your current results 4 Use the simplest possible methods 5 Accuracy is more important than speed or elegance 6 Use methods that are as transparent as possible i e methods for which the computer code reflects as closely as possible the economic structure of the problem 7 When you learn or develop a new method test it on the simplest possible problem preferably one with an analytical solution 8 Dan Bernhardt s rule If you have n errors in a piece of code and you remove one you still have n errors Scrutinize your results even if they look right Look for anomalies Assume your code is wrong until proven otherwise 9 Graph graph graph Two dimensional graphs are more informative than three dimensional graphs 2 10 Be able to replicate all of your intermediate and final results instantly Save exact copies of the code used for each run



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