Modeling Dynamic Economic Systems

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.

This book at once introduces the entire area of adaptive modeling and precisely defines a new decision-making procedure for developing and using models of large, complex socioeconomic systems.

This book approaches economic problems from a systems thinking and feedback perspective. By introducing system dynamics methods (including qualitative and quantitative techniques) and computer simulation models, the respective contributions apply feedback analysis and dynamic simulation modeling to important local, national, and global economics issues and concerns. Topics covered include: an introduction to macro modeling using a system dynamics framework; a system dynamics translation of the Phillips machine; a re-examination of classical economic theories from a feedback perspective; analyses of important social, ecological, and resource issues; the development of a biophysical economics module for global modelling; contributions to monetary and financial economics; analyses of macroeconomic growth, income distribution and alternative theories of well-being; and a re-examination of scenario macro modeling. The contributions also examine the philosophical differences between the economics and system dynamics communities in an effort to bridge existing gaps and compare methods. Many models and other supporting information are provided as online supplementary files. Consequently, the book appeals to students and scholars in economics, as well as to practitioners and policy analysts interested in using systems thinking and system dynamics modeling to understand and improve economic systems around the world. "Clearly, there is much space for more collaboration between the advocates of post-Keynesian economics and system dynamics! More generally, I would like to recommend this book to all scholars and practitioners interested in exploring the interface and synergies between economics, system dynamics, and feedback thinking." Comments in the Foreword by Marc Lavoie, Emeritus Professor, University of Ottawa and University of Sorbonne Paris Nord

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.

'Buz Brock's contribution to economic theory in general and economic dynamics in particular are characterized by an unmatched richness of ideas and by deep theoretical, empirical as well as computational analysis. Brock's contribution to economic dynamics range from one extreme of the field, global stability of stochastic optimal growth models, to another extreme, market instability and nonlinearity in economic and financial modelling and data analysis. But his work also includes environmental and economic policy issues and, more recently, the modelling of markets as complex adaptive systems. This collection of essays reflects Brock's richness of ideas that have motivated economists for more than three decades already and will continue to influence many economists for the next decades to come.' - Cars H. Hommes, University of Amsterdam, The Netherlands 'Buz Brock has been, from the beginning of his career, one of the most original thinkers in dynamic economics. His early work showed that growth with random elements could be studied effectively and above all posed exactly the right questions. His more recent work has brought complexity theory to the fore and shown its implications for financial and other markets. In the process, he has both introduced and used econometric tools to show the relevance of his work to empirically observed phenomena. It is very useful to have his work in collected form.' - Kenneth J. Arrow, Stanford University, US This outstanding collection of William Brock's essays illustrates the power of dynamic modelling to shed light on the forces for stability and instability in economic systems. The articles selected reflect his best work and are indicative both of the type of policy problem that he finds challenging and the complex methodology that he uses to solve them. Also included is an introduction by Brock to his own work, which helps tie together the main aspects of his research to date.