Q: Dear Prof. Michaelides, congratulations on the publication of your new book "21 Equations that Shaped the World Economy"! What inspired you to write this book?

A: Thank you! The inspiration for this book came from recognising the widespread lack of understanding about the fundamental mathematical principles that have driven the global Political Economy over the centuries. Some of these equations are the hidden forces behind industry transformation, market shaping, and power structures, yet they remain largely unexplored. Over the course of my academic and professional career, I've witnessed firsthand how seemingly abstract mathematical equations can have profound real-world implications. Therefore, I wanted to write this book as an accessible way to shine a light on these pivotal equations.

Q: What are some of the key equations or models covered in the book?

A: The book explores a diverse range of twenty-one (21) influential equations, such as the Solow model of economic growth, the Nash Equilibrium in Game theory, the CAPM for portfolio management, the Black-Scholes formula for options pricing, and the law of the falling tendency of the Profit Rate. Each chapter very briefly explores the historical context, mathematical modelling, and real-world applications of these seminal works, without neglecting their limitations and critiques.

Q: What are some of the key takeaways that readers can expect to gain from this book?

A:  The main message of the book is the profound influence that mathematical modeling has had on our understanding of economic phenomena. In this context, one takeaway is the interdisciplinary nature of Economics and Finance, and the importance of cross-pollination between fields. By recognising these interdisciplinary connections, readers will be better equipped to navigate the ever-evolving landscape of global economy. Another even more crucial takeaway is the need for critical thinking when it comes to the application of these mathematical models. While these tools can provide valuable frameworks for understanding economic behaviour, they are not infallible. My book encourages readers to think critically about the assumptions underlying these models and to consider the real-world complexities that may not be fully captured by the equations. Last but not least, the book emphasises the importance of historical context in understanding the evolution of economic thought.

Q: How does the book differentiate itself from other works?

A: While there are many excellent books that cover other topics, there is no book on the global market covering the most influential equations in Economics and Finance. In this sense, “21 Equations that Shaped the World Economy" is unique. Rather than providing a broad survey, the book focuses on these pivotal works, as well as their limitations. Furthermore, the book's accessible writing style makes it suitable for a wide range of readers, from first year students and academics to policymakers and the general public. Additionally, each chapter features examples that illustrate how specific equations are used in practice. Finally, a concise appendix is also included to provide readers with the necessary mathematical background.

Q: What are some of your most important research achievements?

A: I am deeply honoured to have contributed to the field of Economic Science, though my work is just a small part of the broader discipline. I explore topics such as instability, global production, sustainable development, technological change, and the effects of natural phenomena on economic and financial systems. Notably, I introduced a globally flexible functional form for production and cost functions using artificial neural networks (ANNs), encompassing all economic theory properties. I also explored the impact of solar weather on economic activity via the energy and telecommunications sectors, a previously unstudied area. In quantitative modelling, I proposed an alternative weighting matrix for the GVAR framework and a method for identifying dominant entities, which could enhance effectiveness. Additionally, my research on the history of economic thought has shed light on the influences behind Joseph Schumpeter's work, enriching our understanding of the evolution of Economic Science. Of course, these contributions constitute just small pieces of a much larger tapestry, and I am grateful for the opportunity to contribute.

Q: How does it feel to have your work recognised and endorsed by a Nobel Laureate in Economic Sciences and other highly esteemed academics?

 A: It is truly a great honour to have my book endorsed by a Nobel Laureate in Economic Sciences and other well-known colleagues. As an author, there is no higher praise than to receive recognition from the most esteemed minds in your field. It is a testament to your hard work, research, and dedication. I am deeply grateful to Nobel Laureate Prof. Vernon L. Smith and the other highly esteemed academics for taking the time to read my work and share their insights. Their endorsements carry immense weight, and I am extremely thankful.

Q: How did you relax during the process of writing the book?

 A: Relaxation is essential, especially when dealing with complex topics. I find my zen in a few different ways: First, a stroll through nature clears my mind and sparks new ideas. Second, whether it’s classical or upbeat tunes, music transports me to a different mindset and inspires my creativity. Third, expressing my thoughts through poetry allows for creative exploration and a refreshing break from technical writing. Fourth, catching up with friends and loved ones over coffee helps me unwind and also provides fresh perspectives that enrich my work. Finally, cooking is a creative outlet for me, and it’s incredibly satisfying. While, I’m a beginner in the kitchen, I love making salads and Italian dishes. By mixing these activities, I stayed balanced, and tackled the challenges in my writing and research.

Q: One last question. Are there any new projects you're working on?

A: Thank you for your question about my future projects. While I don't have any specific new books to announce at the moment, I'm continuing to explore ways to make economic concepts accessible and relevant to a broad audience. My goal is to build on the foundations laid in my previous books by finding new ways to connect economic theory to real-world issues. I'm always looking for opportunities to bridge the gap between academic Economics and Finance, and practical applications that can improve people's lives and inform policy decisions.

Q: Thank you for taking the time to chat with me Prof. Michaelides. I look forward to reading your book!

A: Thanks for the great questions, the pleasure was all mine!

✅ 📚 👉 Read the book here!