Title
Output and price behaviour in a system dynamics model Output and price behaviour in a system dynamics model
Author
Faculty/Department
Faculty of Applied Economics
Publication type
report
Publication
Antwerp :UA, [*]
Subject
Economics
Source (series)
Research paper / University of Antwerp, Faculty of Applied Economics ; 2011:022
Volume/pages
31 p.,
Carrier
E
Target language
English (eng)
Affiliation
University of Antwerp
Abstract
This paper introduces a small-scale experimental model intended as a first stage to developing a fully-fledged system dynamics macroeconomic model of a new generation. The model economy incorporates important real-world features that are missing in the mainstream macroeconomic literature. The agents representing the demand and supply side dispose over a limited information set. Their interactions are not constrained by a priori imposition of equilibrium conditions. The exercise shows that, unlike in gen- eral equilibrium models, booms and busts in output and price endogenously arise due to the stock variable representation of demand and supply and modelling the agents decisions as autonomous. It is also demonstrated that bad times and good times are driven by the same causal mechanisms. The insights are paramount for an appropriate understanding of the true possibilities of macroeconomic policies and provide fruitful material for further exploration.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/45cbbb/617d0562.pdf
Handle