Established macro-economic models used for economic policy analysis, but also

for the evaluation of climate policies, often are neoclassical general

equilibrium models. Even though these models are based on comprehensive

empirical databases and allow the linking of economic theory with physical

resources and different types of environmental impacts, equilibrium models underly severe methodological and theoretical restrictions. In the context

of sustainability transitions, particularly three shortcomings were emphasized,

namely: (i) the inability to deal with uncertainty, (ii) the

assumed homogeneity, blindness to distributional aspects and alternative

welfare indicators, (iii) the abstract representation of

technological, socio-economic and behavioral change.

In this paper, I review established resource economic simulation

models, discuss the contributions and shortcomings of these modeling approaches

for the understanding of climate change and mitigation policies.

In the second part, I discuss the need of

alternative approaches when analyzing large-scale socio-economic transition

processes as required to overcome environmental pressure and resource scarcity.

I introduce to evolutionary economics theory and give an overview of alternative modeling

approaches with a focus on agent-based models (ABM). I discuss

how ABMs can contribute to overcome the above mentioned

shortcomings in established models. I show how

these models can be used to analyze policies of sustainable transitions

and how alternative welfare indicators can be incorporated. I conclude by giving

an overview on the remaining challenges and perspectives of agent-based macro-economics.

This media entry was a contribution to the special session „Macro-economic modeling of sustainability transitions“ at the 5th International Degrowth Conference in Budapest in 2016.