Copyright (c) 2013 John L. Jerz

Modeling Dynamic Economic Systems (Ruth, Hannon, 1997)

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This book explores the dynamic processes in economic systems, concentrating on the extraction and use of the natural resources required to meet economic needs. Sections cover methods for dynamic modeling in economics, microeconomic models of firms, modeling optimal use of both nonrenewable and renewable resources, and chaos in economic models. This book does not require a substantial background in mathematics or computer science. STELLA II and MADONNA run-time software and computer files of sample models accompany the book on a CD-ROM. The software is compatible with both Macintosh- and Windows-based systems.

p.3 Models are central to our understanding of the real world because they enable us to represent and manipulate real phenomena, then explore the results.
 
p.3-4 We develop models to better understand the impact of alternative decisions on... performance, resource use... Models are essential tools in generating new knowledge. They help us simplify complex phenomena by eliminating everything we believe is extraneous to what we want to study... With the right models we can explore... dynamic as well as static phenomena. through such knowledge, we can explain the world around us and, possibly, anticipate future happenings.
 
p.4 Real-world phenomena can be difficult to study... Models, as abstractions of reality, force us to consider the results of our structural and dynamic assumptions... After you narrow down the details to those that describe the problem, you must specify the relationships among them. The relevant details (the variables) and their relationships establish your model.
 
p.6 Dynamic models are those that try to reflect changes in real or simulated time and take into account that the model components are constantly evolving as a result of previous actions... The world is not a static or comparative static process, and so the models treating it in that way will become obsolete and perhaps even misleading.
 
p.6 Through computer modeling we can study processes in the real world by sketching simplified versions of the forces assumed to underlie them.
 
p.7 Models study cause and effect; they are causal. The modeler specifies initial conditions and relations among these elements. The model then describes how each condition will change in response to changes in other conditions.
 
p.20 identify what you hope to achieve in modeling the system. Ask yourself if the problem is descriptive or predictive. 2. Define your state variables
 
p.24 The predictive ability of models is further reduced by the possibility of the occurrence of previously unencountered constraints on, and development possibilities for, the systems.

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