the learning dynamics were overwhelmingly likely to be chaotic. That is, the players never coordinated on an equilibrium; instead, they chased each other around the space of possible strategies in an unpredictable manner.

In the original Solow model the savings rate is constant, but in the RCK model the household can adjust it through time.

We should be very suspicious of models that require implausible ‘as-if’ arguments. Instead, I believe we should follow what I call the principle of verisimilitude: Models should fit the facts and their assumptions should be plausible.

Macroeconomics studies the interactions of aggregate quantities, like GDP, unemployment, inflation and interest rates, within and between nations; microeconomics studies the interactions of balance sheets on a finer scale, but without trying to look at the whole economy.

only 35 per cent of the improvements in a typical industry come from within the industry itself.

The most widely used model of beliefs is called rational expectations,

just as the social-interaction time gets long enough to make the savings rate nearly optimal,

If the real economy is the metabolism of civilization, and the financial system its enteric nervous system (its gut brain), then scientific models are an important component of civilization’s nascent cerebral cortex. Just as the cerebral cortex enables us to make sense of our environment, detect and avoid dangers, plan ahead and reason, scientific

system is complex if it has emergent properties.5 I’ve already mentioned the example of the brain. We humans don’t just think – we are conscious, with a sophisticated model of ourselves, the world around us and how we fit into it.