Heterogeneous agent models were developed in the 1990s, and have been extended since then.5 From the viewpoint of policymakers, the true issue is whether to employ heterogeneous agent models, instead of handier representative agent models, to examine the implications of heterogeneity for macroeconomic fluctuations. This is a classic case in which Occam’s razor with regard to the choice of the appropriate model applies.
But this only underscores the need – no, the necessity – to fully understand the nature of our economies. Know thy economy, ladies and gentlemen! And now I invite you all to share your ideas and experiences with the rest of us. Tell us about the nature of your economies; tell us about your toolkits; and tell us how they have fared with time.