Economic Model

An Economic Model is a conceptual framework that helps create economic understandings (that support economic analysis and prediction tasks).

• Context:
  • It can typically represent Economic System through variable relationships.
  • It can typically predict Economic Outcome through mathematical analysis.
  • It can typically guide Policy Decision through scenario simulation.
  • ...
  • It can often analyze Market Behavior through agent interactions.
  • It can often evaluate Economic Policy through impact assessment.
  • ...
  • It can range from being a Simple Model to being a Complex Model, depending on its scope complexity.
  • It can range from being a Capitalistic Model to being a Socialistic Model, depending on its economic philosophy.
  • It can range from being a Theoretical Model to being an Empirical Model, depending on its validation approach.
  • It can be an Agent-based Economic Model[1].
  • ...
• Examples:
  • Macroeconomic Models, such as:
    • Growth Models, such as:
      • Solow Growth Model for economic growth analysis.
      • Kuznets Curve for inequality analysis.
    • Business Cycle Models, such as:
      • Real Business Cycle Model for economic fluctuations.
  • Microeconomic Models, such as:
    • Market Models, such as:
      • Supply Demand Model for price determination.
    • Agent-based Models, such as:
      • Agent-based Economic Model for emergent behavior.
  • ...
• Counter-Example(s):
  • a Political Model.
  • a Brain Model.
  • a Climate Model.
• See: Economics, Economic Theory, Mathematical Model, Computational Model.

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References

2016

• (Sanders, 2016a) ⇒ Bernie Sanders. (2016). “Democrats Need to Wake Up.” In: The New York Times, JUNE 28, 2016.
  • QUOTE: … Let’s be clear. The global economy is not working for the majority of people in our country and the world. This is an economic model developed by the economic elite to benefit the economic elite. We need real change. …

2015

• http://breakthroughs.csmonitor.com/the-economy
  • QUOTE: Typical research in economics works with modest amounts of data, using laptop computers to solve ‘toy’ models of economies – simple models that are so abstract they bear little resemblance to reality. These models are nothing like those used to predict global climate, to study galaxies, or to simulate brain activity …

2013

• (Wikipedia, 2013) ⇒ http://en.wikipedia.org/wiki/economic_model Retrieved:2013-12-26.
  • In economics, a model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified framework designed to illustrate complex processes, often but not always using mathematical techniques. Frequently, economic models posit structural parameters. Structural parameters are underlying parameters in a model or class of models. A model may have various parameters and those parameters may change to create various properties. Methodological uses of models include investigation, theorizing, fitting theories to the world.

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