23 24  25  All speeches are available online at www.bankofengland.co.uk/speeches  25  Figure 1 : Single and double pendulum Single pendulum  Double pendulum  Sources: https://codepen.io/anon/pen/XQLNaZ  HANK-type models do a better job of capturing heterogeneity across agents than their RANK cousins. The number of interactions among their internal moving parts is nonetheless heavily constrained. Certainly, they do not come close to capturing the granularity, spatially or sectorally, that exists in real-world economic systems. Are there alternative modelling approaches that capture more of these moving, interacting parts? Agent-Based Models (ABMs) use a larger array of distinct agents and permit a far-larger scale of interaction among them.26 They have been used extensively to model complex systems – natural systems (rainforests and oceans), physical systems (electricity grids and war zones) and social systems (swarms of birds and bees).27 These are systems where it is recognised that an understanding of interactions among the internal moving parts is crucial for capturing behaviour of the system as a whole, in line with Simon’s dictum. For economists used to dealing with highly-aggregated models, the very dimensionality of ABMs is striking. The largest in physics can now simulate interactions of up to 400 billion distinct particles at any one time.28 That is around 50 times as many agents as there are humans on the planet. By way of comparison, the largest-scale macro-models would typically have fewer than 10 distinct agent types.
One of the key channels through which this economic disruption might take place is the inability of lorries to move seamlessly through UK ports. To track this disruption in the event of a disorderly Brexit, the Bank put in place a system for monitoring traffic flow around the UK’s main ports using geospatial data from Google Maps. This allowed close to real-time monitoring of potential port bottlenecks. As an illustration, Chart 18 plots traffic times into and out of Dover during February, March and April this year. The first highlighted mini-spike in traffic times is the Friday evening and Saturday morning before the school holidays. The second is Easter weekend. A disruptive Brexit would potentially have pushed these needles off the Richter scale. There is huge potential for more extensive use of geospatial data such as these to track goods and service flows across the economy, in normal as well as abnormal times.41  40  Haldane (2018a). A geospatial commission has recently been set up, under Sir Andrew Dilnot, to look at precisely these questions. See Geospatial Commission (2019) for a discussion of its work to date and longer-term priorities. 41  30  All speeches are available online at www.bankofengland.co.uk/speeches  30  Chart 18: Traffic times into and out of Dover  Sources: Google Maps API and Bank calculations. A second example concerns the housing market. This, too, is a local market. That is why the most popular house-buying show on TV is called “Location, Location, Location”.