Predicting the economic downturn during the pandemic


Oct 13, 2022

An international team of scientists developed a model in the early days of the pandemic to forecast its economic impact. Their predictions turned out to be highly accurate.

 

As the first wave of the Covid-19 pandemic hit Europe, Anton Pichler and his colleagues created a computer simulation of Britain’s economy to predict its economic impact ahead of time. “It turns out that our model was very successful in forecasting the UK economy,” says Pichler, a researcher at the Complexity Science Hub Vienna (CSH) and the first author of a study recently published in the Journal of Economic Dynamics and Control

 

The new model predicted in May 2020 that the Gross Domestic Product (GDP) in the UK would contract by 21.5% in the second quarter of 2020, compared to the last quarter of 2019. That was remarkably close to the actual contraction of 22.1% estimated by the British Office of National Statistics. “The model was not only useful for predicting GDP,” points out Pichler. “It tracks most relevant economic variables on both levels: the entire economy and individual industries.”

 

A milestone 

 

The model is a milestone in making economic predictions and leaders around the world could use it as a tool during turbulent economic times, points out J. Doyne Farmer, CSH external faculty and one of the co-authors of the paper. As an example, governments could use this agent-based model to quantitatively analyze how the economy will react to different lockdown and re-opening scenarios.

 

An agent-based model is a computerized simulation of a number of decision-makers – or agents – and institutions, according to Farmer. Such a model doesn’t “rely on the assumption that the economy is in equilibrium. Instead, at any given time, each agent acts according to its current situation, the state of the world around it, and the rules governing its behavior,” states Farmer, who’s a professor at the University of Oxford.

 

Therefore, the new computer simulation incorporates the uncertain and changing nature of the real world. “We explored how consumers place their demands in the market, how businesses hire and fire employees, and how they deal with shocks to their inventory,” explains Pichler.

 

Economic forecasting

 

The model allowed the researchers to anticipate changes of several economic key variables. It correctly predicted a stronger reduction in private consumption and investment than in government consumption and inventories. It also forecasted a weaker decline in wages and salaries than in profits, due to job retention schemes promoted by the British government. 

 

The researchers also modeled the dynamics of single industries. “Our research shows that several industries were affected by supply chain disruptions and including these effects has been key to making good forecasts,” says Pichler. Examples of industries being affected by supply chain disruptions range from ‘manufacturing of mineral products’ to ‘other scientific activities’.  

 

The study “Forecasting the propagation of pandemic shocks with a dynamic input-output model,” by Anton Pichler, Marco Pangallo, R. Maria del Rio-Chanona, François Lafond, and J. Doyne Farmer, was published in the Journal of Economic Dynamics and Control (144) (Nov. 2022).


Spotlight

Dec 2, 2022

Avoiding supply chain bottlenecks with Big Data

People

Nov 30, 2022

Bridging the gap between academia and industry

Publication

H. Kong, S. Martin-Gutierrez, F. Karimi

Influence of the first-mover advantage on the gender disparities in physics citations

Communications Physics 5 (243) (2022)

Press

MAMMOth: KI-Tendenz zur Diskriminierung durchbrechen [feat.Fariba Karimi]


Brutkasten, Nov 22, 2022

Event

CSH Talk by Meike Zehlike: "Beyond Incompatibility: Trade-offs between Mutually Exclusive Fairness Criteria in Machine Learning and Law"


Dec 16, 2022 | 15:0015:30

Complexity Science Hub Vienna

Publication

N. Pontika, T. Klebel, A. Correia, H. Metzler, P. Knoth, T. Ross-Hellauer

Indicators of research quality, quantity, openness and responsibility in institutional review, promotion and tenure policies across seven countries

Quantitative Science Studies 1-49

Press

A charada do desequilibrio de genero na ciencia [Portuguese] [feat.Fariba Karimi]


Pesquisa Fapesp, Nov 17, 2022

Event

CSH Talk by Zlata Tabachová: "Supply chain shock propagation and financial systemic risk"


Dec 02, 2022 | 15:0016:00

Complexity Science Hub Vienna

Publication

W. Schueller, J. Wachs, V. D. P. Servedio, S. Thurner, V. Loreto

Evolving collaboration, dependencies, and use in the Rust Open Source Software ecosystem

Scientific Data 9 (2022) 703

Event

CSH Talk by Elma Dervic: "Unravelling cradle-to-grave disease trajectories from multilayer comorbidity networks"


Dec 16, 2022 | 15:3016:00

Complexity Science Hub Vienna

Press

Was crime as bad as it was portrayed [feat.Rafael Prieto-Curiel]


abcNEWS, Nov 18, 2022

Research News

Dec 6, 2022

Complexity Science meets Digital Humanism

Spotlight

Dec 2, 2022

Avoiding supply chain bottlenecks with Big Data

People

Nov 30, 2022

Bridging the gap between academia and industry

Publication

H. Kong, S. Martin-Gutierrez, F. Karimi

Influence of the first-mover advantage on the gender disparities in physics citations

Communications Physics 5 (243) (2022)

Press

MAMMOth: KI-Tendenz zur Diskriminierung durchbrechen [feat.Fariba Karimi]


Brutkasten, Nov 22, 2022

Event

CSH Talk by Meike Zehlike: "Beyond Incompatibility: Trade-offs between Mutually Exclusive Fairness Criteria in Machine Learning and Law"


Dec 16, 2022 | 15:0015:30

Complexity Science Hub Vienna

Publication

N. Pontika, T. Klebel, A. Correia, H. Metzler, P. Knoth, T. Ross-Hellauer

Indicators of research quality, quantity, openness and responsibility in institutional review, promotion and tenure policies across seven countries

Quantitative Science Studies 1-49

Press

A charada do desequilibrio de genero na ciencia [Portuguese] [feat.Fariba Karimi]


Pesquisa Fapesp, Nov 17, 2022

Event

CSH Talk by Zlata Tabachová: "Supply chain shock propagation and financial systemic risk"


Dec 02, 2022 | 15:0016:00

Complexity Science Hub Vienna

Publication

W. Schueller, J. Wachs, V. D. P. Servedio, S. Thurner, V. Loreto

Evolving collaboration, dependencies, and use in the Rust Open Source Software ecosystem

Scientific Data 9 (2022) 703

Event

CSH Talk by Elma Dervic: "Unravelling cradle-to-grave disease trajectories from multilayer comorbidity networks"


Dec 16, 2022 | 15:3016:00

Complexity Science Hub Vienna

Press

Was crime as bad as it was portrayed [feat.Rafael Prieto-Curiel]


abcNEWS, Nov 18, 2022

Research News

Dec 6, 2022

Complexity Science meets Digital Humanism

People

Nov 30, 2022

Bridging the gap between academia and industry

Research News

Dec 6, 2022

Complexity Science meets Digital Humanism

Spotlight

Dec 2, 2022

Avoiding supply chain bottlenecks with Big Data

Research News

Nov 28, 2022

New evidence for possible domino effects in cryptoassets

Spotlight

Nov 28, 2022

BUSTS AFTER BOOMS, BUT WHY?

Research News

Nov 17, 2022

New EU project to reduce discrimination through AI

Research News

Oct 13, 2022

Yes we can -- STEM is also for women

Research News

Oct 13, 2022

Predicting the economic downturn during the pandemic

Press

MAMMOth: KI-Tendenz zur Diskriminierung durchbrechen [feat.Fariba Karimi]


Brutkasten, Nov 22, 2022

Press

Was crime as bad as it was portrayed [feat.Rafael Prieto-Curiel]


abcNEWS, Nov 18, 2022

Press

A charada do desequilibrio de genero na ciencia [Portuguese] [feat.Fariba Karimi]


Pesquisa Fapesp, Nov 17, 2022

Press

COVID : Les animaux peuvent-ils attraper le virus? [French] [feat.Amélie Desvars-Larrive]


News24, Nov 17, 2022

Press

Departure of Tech Workers Weighs on Russian Economy [feat.Johannes Wachs]


The Wall Street Journal, Nov 14, 2022

Press

Männer profitieren stärker vom Pionier-Vorteil als Frauen [feat.Fariba Karimi]


Spektrum Online, Oct 26, 2022

Press

Can your phone tell if a bridge is in good shape?


Scienmag, Nov 3, 2022

Press

Which Animals Catch COVID? This Database Has Dozens of Species and Counting [feat.Amélie Desvars-Larrive]


Scientific American, Oct 19, 2022

Press

Hinweise auf subtile Bevorzugung von Arbeiten von Männern in Physik [feat.Fariba Karimi]


APA Science, Oct 14, 2022

Press

Female representation in physics: Can we fix it?[feat.Fariba Karimi]


Cosmos Magazine , Oct 17, 2022

Press

Hundreds of Russia's top software developers may have left the country [feat.Johannes Wachs]


New Scientist , Oct 19, 2022

Publication

W. Schueller, J. Wachs, V. D. P. Servedio, S. Thurner, V. Loreto

Evolving collaboration, dependencies, and use in the Rust Open Source Software ecosystem

Scientific Data 9 (2022) 703

Publication

N. Pontika, T. Klebel, A. Correia, H. Metzler, P. Knoth, T. Ross-Hellauer

Indicators of research quality, quantity, openness and responsibility in institutional review, promotion and tenure policies across seven countries

Quantitative Science Studies 1-49

Publication

H. Kong, S. Martin-Gutierrez, F. Karimi

Influence of the first-mover advantage on the gender disparities in physics citations

Communications Physics 5 (243) (2022)

Publication

A. Pichler, M. Pangallo, M. del Rio-Chanona, F. Lafond, D. Farmer

Forecasting the propagation of pandemic shocks with a dynamic input-output model

Journal of Economic Dynamics and Control (2022) 104527

Publication

J. Lasser, S. Taofeek Aroyehun, et al.

Social media sharing of low quality news sources by political elites

PNAS Nexus (2022) pgac186

Publication

R. Prieto Curiel, A. Schumann, I. Heo, P. Heinrigs

Detecting cities with high intermediacy in the African urban network

Computers, Environment and Urban Systems 98 (2022) 101869

Publication

T. Reisch, G. Heiler, C. Diem, P. Klimek, S. Thurner

Monitoring supply networks from mobile phone data for estimating the systemic risk of an economy

Scientific Reports 12 (13347) (2022)

Publication

G. De Marzo, F. Pandolfelli, V.D.P. Servedio

Modeling innovation in the cryptocurrency ecosystem

Scientific Reports 12 (12942) (2022)

Publication

A. Nerpel, et al.

SARS-ANI: a global open access dataset of reported SARS-CoV-2 events in animals

Scientific Data 9 (438) (2022)

Publication

M. Kaleta, J. Lasser, E. Dervic, et al.

Stress-testing the resilience of the Austrian healthcare system using agent-based simulation

Nature Communications 13 (4259) (2022)

Publication

F. Amman, et al.

Viral variant-resolved wastewater surveillance of SARS-CoV-2 at national scale

Nature Biotechnology (2022)

Publication

J. V. Camp, A. Desvars-Larrive, N. Nowotny, C. Walzer

Monitoring urban zoonotic virus activity: Are city rats a promising surveillance tool for emerging viruses?

Viruses 14 (7) (2022) 1516

Event

CSH Talk by Zlata Tabachová: "Supply chain shock propagation and financial systemic risk"


Dec 02, 2022 | 15:0016:00

Complexity Science Hub Vienna

Event

CSH Workshop: "Innovation and obsolescence in the space of the possible"


Dec 12, 2022Dec 14, 2022

Complexity Science Hub Vienna

Event

CSH Talk by Meike Zehlike: "Beyond Incompatibility: Trade-offs between Mutually Exclusive Fairness Criteria in Machine Learning and Law"


Dec 16, 2022 | 15:0015:30

Complexity Science Hub Vienna

Event

CSH Talk by Elma Dervic: "Unravelling cradle-to-grave disease trajectories from multilayer comorbidity networks"


Dec 16, 2022 | 15:3016:00

Complexity Science Hub Vienna