Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy

Economics has long been concerned with the development of tools to help understand and describe the interactions among economic actors including the circular flow of economic resources. This paper expands our available toolkit of models, by describing a novel dynamic equilibrium-seeking model of a c...

Full description

Bibliographic Details
Main Authors: Nicola J. McDonald, Garry W. McDonald
Format: Article
Language:English
Published: MDPI AG 2020-11-01
Series:Systems
Subjects:
Online Access:https://www.mdpi.com/2079-8954/8/4/42
id doaj-3494d517ee80432d933de3316fe61466
record_format Article
spelling doaj-3494d517ee80432d933de3316fe614662020-11-25T04:09:05ZengMDPI AGSystems2079-89542020-11-018424210.3390/systems8040042Towards a Dynamic Equilibrium-Seeking Model of a Closed EconomyNicola J. McDonald0Garry W. McDonald1MEResearch, Level 5, 507 Lake Rd, Takapuna, Auckland 0622, New ZealandMEResearch, Level 5, 507 Lake Rd, Takapuna, Auckland 0622, New ZealandEconomics has long been concerned with the development of tools to help understand and describe the interactions among economic actors including the circular flow of economic resources. This paper expands our available toolkit of models, by describing a novel dynamic equilibrium-seeking model of a closed economy. The model retains many of the key features of state-of-the-art Computable General Equilibrium (CGE) models including economic interdependence, input substitution, nested production functions, and so on. A distinguishing feature of this model is that it adopts price-related balancing feedback loops that simulate the self-regulating behaviour of a dynamic economic system. Our modelling shows not only equilibrium states (as per conventional CGE models), but the transition path toward an often-changing equilibrium. This facilitates the investigation of out-of-equilibrium dynamics and behaviour adaptation typical of largescale disruption events.https://www.mdpi.com/2079-8954/8/4/42feedback economicstransition dynamicseconomic simulation modelling
collection DOAJ
language English
format Article
sources DOAJ
author Nicola J. McDonald
Garry W. McDonald
spellingShingle Nicola J. McDonald
Garry W. McDonald
Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy
Systems
feedback economics
transition dynamics
economic simulation modelling
author_facet Nicola J. McDonald
Garry W. McDonald
author_sort Nicola J. McDonald
title Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy
title_short Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy
title_full Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy
title_fullStr Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy
title_full_unstemmed Towards a Dynamic Equilibrium-Seeking Model of a Closed Economy
title_sort towards a dynamic equilibrium-seeking model of a closed economy
publisher MDPI AG
series Systems
issn 2079-8954
publishDate 2020-11-01
description Economics has long been concerned with the development of tools to help understand and describe the interactions among economic actors including the circular flow of economic resources. This paper expands our available toolkit of models, by describing a novel dynamic equilibrium-seeking model of a closed economy. The model retains many of the key features of state-of-the-art Computable General Equilibrium (CGE) models including economic interdependence, input substitution, nested production functions, and so on. A distinguishing feature of this model is that it adopts price-related balancing feedback loops that simulate the self-regulating behaviour of a dynamic economic system. Our modelling shows not only equilibrium states (as per conventional CGE models), but the transition path toward an often-changing equilibrium. This facilitates the investigation of out-of-equilibrium dynamics and behaviour adaptation typical of largescale disruption events.
topic feedback economics
transition dynamics
economic simulation modelling
url https://www.mdpi.com/2079-8954/8/4/42
work_keys_str_mv AT nicolajmcdonald towardsadynamicequilibriumseekingmodelofaclosedeconomy
AT garrywmcdonald towardsadynamicequilibriumseekingmodelofaclosedeconomy
_version_ 1724423385278054400