A note on the integration of system dynamics and economic models

Research output: Contribution to journalArticle

Author(s)

  • P. Smith
  • A. van Ackere

Department/unit(s)

Publication details

JournalJournal of Economic Dynamics and Control
DatePublished - Jan 2002
Issue number1
Volume26
Number of pages9
Pages (from-to)1-10
Original languageEnglish

Abstract

Equilibrium is probably the principal focus of most areas of economic analysis. However, the policy maker is often interested not only in the equilibrium predictions arising from an economic model, but also in the path taken by policy variables as they move towards that equilibrium. It is therefore likely that integration into a dynamic framework will frequently enhance the usefulness of an economic model. Recent developments in computer software mean that system dynamics offers a readily accessible methodology for making this principle operational. The approach is illustrated using an example from the British National Health Service, in which a traditional economic model of supply and demand is deployed within a system dynamics model.

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