Calibration and behaviour
Distinguish observed starting conditions from assumptions about how agents respond. Review how consumption, investment and lending decisions are represented.
Hermetic Engine
Hermetic is VCESR’s economic simulation engine. It powers the economy in Boom and Bust and the economic experiments in Noscere.
How Hermetic models an economy
Hermetic connects decisions with financial accounts and tracks how their effects carry into later quarters.
Agents make decisions
Households, firms and banks respond from their own positions. Spending, production, lending and investment emerge from decisions distributed across the economy.
The accounts reconcile
A stock-flow-consistent ledger records payments and counterparties. Financial assets and liabilities are tracked together, keeping economic changes connected to who holds the resulting claims.
Quarters connect over time
A projection layer connects output, inflation and exchange rates with demand, credit, employment, reserves and debt. A policy change can continue working through later quarters.
Trace the transmission of a policy
Interest rates, lending conditions and public finances operate through institutions and balance sheets.
Choose an instrument
Policy rates, liquidity operations, bond auctions and foreign-exchange intervention change financial conditions.
Follow the responses
Banks, firms and households face different constraints as financing conditions and expectations change.
Inspect the consequences
Compare the resulting production, prices, employment, credit and debt across subsequent quarters.
In Boom and Bust, the player receives published statistics and uncertain forecasts. The underlying state of the economy is distinct from what the ministry can measure. That information problem is part of the decision.
Compare economic decisions from the same starting point
Compare a policy or shock with a baseline over the same quarters. Follow the consequences for production, prices, employment and the financial accounts.
Set the starting conditions
Define the economy’s initial balance sheets and economic conditions. Record which inputs are observed and which are estimated.
Change a policy or shock
Specify what changes and when it starts. Compare a tax change, a different interest-rate path or a disruption to demand.
Trace the consequences
Follow how households, firms and banks respond. Compare immediate effects with changes that carry into later quarters.
A change to lending conditions can affect firms’ investment and production. The resulting changes to income and spending feed back into demand and the next period’s accounts.
Review the economic assumptions
Simulation results depend on the calibration, behavioural rules and scenario. Those choices need to be examined alongside the outcomes.
Where Hermetic is used
About the engine and its models
What does Hermetic stand for?
Heterogeneous, Expectational, Reconciled, Macro-Economic, Temporal Investment Cycle. The name reflects the architecture’s emphasis on different agents, expectations, consistent accounts and change over time.
What does an economic simulation establish?
A simulation result follows from the model, calibration and scenario. Empirical forecasting or policy use requires a defined application, data checks and independent validation. The game demonstration does not establish that validation.
Can we commission a model?
Contact us with your research question, audience and required outputs. We can discuss a tailored modelling engagement, including assumptions, documentation and validation requirements.
Where can I see it in action?
The public Boom and Bust gameplay trailer and the official model briefing show Hermetic’s economic simulation in the game. You can also explore its teaching application in Noscere.
Discuss an economic simulation
Tell us the economic decisions your audience needs to explore and the relationships you want to represent.
Discuss your simulation