Interest rate and macro economics
Posted: Sun Jul 07, 2019 4:29 am
I recently notice that the interest rate in the current version of the game normally goes unrealistically high in the latter game. I've run a couple of simulations of various AI companies and start-up capitals. In all games the rate usually rises above 10% after 2000. This results to a shrinking valuation in the stock market. In the latter game I usually holds a large number shares of AI company and can do nothing but see myself lose billions in stock. This significantly reduce my joy from the game.
I think this is due to the overheating economy as all my simulations having a expansion streak above 6% GDP growth, even for the extreme scenario of 15 AI company and very low start-up capital (This matters because along the way new AI will join, the start-up capital can be viewed as newly printed money). None of them show a typical economic cycle as I clearly experienced before in the previous versions of the game. The only exception is to run with the modern world mod in which the manufacturing is so complicated that nearly no AI company can profit, but even in that game, when the economy is contracting at a -4% GDP growth and 0.3% inflation, the interest rate is still as high as 4%. Also the central bank is very reluctant to cut rate but very sensitive to increase rate. I do feel the GDP calculation and the responsiveness of the rate should be adjusted here.
I think this is due to the overheating economy as all my simulations having a expansion streak above 6% GDP growth, even for the extreme scenario of 15 AI company and very low start-up capital (This matters because along the way new AI will join, the start-up capital can be viewed as newly printed money). None of them show a typical economic cycle as I clearly experienced before in the previous versions of the game. The only exception is to run with the modern world mod in which the manufacturing is so complicated that nearly no AI company can profit, but even in that game, when the economy is contracting at a -4% GDP growth and 0.3% inflation, the interest rate is still as high as 4%. Also the central bank is very reluctant to cut rate but very sensitive to increase rate. I do feel the GDP calculation and the responsiveness of the rate should be adjusted here.