The use of APL as an executable formal language in economics demonstrated by an example

Abstract

Quantitative models in economics have gained a high degree of both mathematical and notational complexity which often hides the underlying fruitful and essential ideas. The use of complex notations delays the rapid spread of new ideas. Using an example, we show that the use of APL in the presentation of the ideas of the model and in the proof of the related theorems leads to directly executable steps in the formal proofs, and hence to a better understanding of the ideas behind them. This not only results in a more thorough understanding of the model, but also in an essentially correct algorithm. We thus avoid the need for a separate formulation of the formal model in an algorithmic language.