Economic Dynamics
Posted: Thu Apr 18, 2002 2:54 pm
Hello again:
What a nice welcome! I am feeling so appreciated that
I shall indeed continue to solicit your expertise.
First, to answer your questions: My official
introduction to SD began at this URL:
http://www.albany.edu/cpr/sds/DL-IntroSysDyn/index.html;
and I found nothing here at odds with what I learned
from the Electrical Engineers. I would rather not be
traced to my alma mater because of a recent political
dust-up: I have been able to convince a few younger
professors of Economics hereabouts (apparently to
their peril) that Economic Science has yet to consider
its proper paradigm; and public advertisements of our
debates might damage the career prospects of some
people I like.
Based on all my authority as a Bachelorette of
Science, I am convinced that nothing short full-on,
Newtonian dynamics can possibly support anything that
might reasonably be called a science of Economics. I
say this on behalf of a perfectly serviceable, control
theory approach that accomplishes things only
indicated by general equilibrium theory, supply/demand
analysis, game theory, econometrics, Keynesian
Macro-analysis, et al.
The model I am working with computes the quantity Q of
Good J held by Sector I in Economy K at time T for all
Qijk|@t. It seems to me that this model has analogies
to SD’s logistical models regarding what happens when
a market stock becomes completely depleted. The
economic model has no need to maintain a backlog
because (being an economic model) shortages or
excesses of goods are adequately expressed in a
commodity’s value. But the model does need to
conserve mass: it cannot use anything to produce
another good until the input itself has been produced.
This means that an allocation regime must kick-in
whenever output exceeds demand while nothing is on the
market.
I believe you all had a lengthy discussion a few weeks
back about how such a programming change might be
triggered, while avoiding formal references to
rates-of-change as if they were state variables. I
would be grateful for your critique of the economic
model’s method for addressing this problem. They
model goods-on-the-market as the integrated difference
between output rates and the rates at which expressed
demands are fulfilled. Their trigger for the
allocation regime is simply a negative value in the
market state variable itself. Markets are allowed to
go a tad negative, where “a tad” means “as far
negative as you can get, beginning from a positive
value, during one dt”.
This simple strategy is okay with me because, if the
dt is vanishing small from the standpoint of our
analysis, then so is “the tad”. I am not disturbed by
the possibility of small, one-sided violations of
mass-conservation adding up to instability because
“the tad” has to be made up by an excess of supply
over demand before the market state can achieve
positive values that turn off the allocation regime.
Seeing no violation of physical principles or modeling
principles, and noting that the overall model performs
smoothly and with stability, I am satisfied. Should I
be?
For a second question, please consider the common
Economic premise of a perfect market wherein prices
can be anticipated such that markets remain perfectly
clear, and disequilibria are expressed only in that
different economic agents value the same good
differently. Is such a formulation realizable within
the context of a truly dynamic analysis?
Vty,
Mabel Fong
may_belle_66@yahoo.com
What a nice welcome! I am feeling so appreciated that
I shall indeed continue to solicit your expertise.
First, to answer your questions: My official
introduction to SD began at this URL:
http://www.albany.edu/cpr/sds/DL-IntroSysDyn/index.html;
and I found nothing here at odds with what I learned
from the Electrical Engineers. I would rather not be
traced to my alma mater because of a recent political
dust-up: I have been able to convince a few younger
professors of Economics hereabouts (apparently to
their peril) that Economic Science has yet to consider
its proper paradigm; and public advertisements of our
debates might damage the career prospects of some
people I like.
Based on all my authority as a Bachelorette of
Science, I am convinced that nothing short full-on,
Newtonian dynamics can possibly support anything that
might reasonably be called a science of Economics. I
say this on behalf of a perfectly serviceable, control
theory approach that accomplishes things only
indicated by general equilibrium theory, supply/demand
analysis, game theory, econometrics, Keynesian
Macro-analysis, et al.
The model I am working with computes the quantity Q of
Good J held by Sector I in Economy K at time T for all
Qijk|@t. It seems to me that this model has analogies
to SD’s logistical models regarding what happens when
a market stock becomes completely depleted. The
economic model has no need to maintain a backlog
because (being an economic model) shortages or
excesses of goods are adequately expressed in a
commodity’s value. But the model does need to
conserve mass: it cannot use anything to produce
another good until the input itself has been produced.
This means that an allocation regime must kick-in
whenever output exceeds demand while nothing is on the
market.
I believe you all had a lengthy discussion a few weeks
back about how such a programming change might be
triggered, while avoiding formal references to
rates-of-change as if they were state variables. I
would be grateful for your critique of the economic
model’s method for addressing this problem. They
model goods-on-the-market as the integrated difference
between output rates and the rates at which expressed
demands are fulfilled. Their trigger for the
allocation regime is simply a negative value in the
market state variable itself. Markets are allowed to
go a tad negative, where “a tad” means “as far
negative as you can get, beginning from a positive
value, during one dt”.
This simple strategy is okay with me because, if the
dt is vanishing small from the standpoint of our
analysis, then so is “the tad”. I am not disturbed by
the possibility of small, one-sided violations of
mass-conservation adding up to instability because
“the tad” has to be made up by an excess of supply
over demand before the market state can achieve
positive values that turn off the allocation regime.
Seeing no violation of physical principles or modeling
principles, and noting that the overall model performs
smoothly and with stability, I am satisfied. Should I
be?
For a second question, please consider the common
Economic premise of a perfect market wherein prices
can be anticipated such that markets remain perfectly
clear, and disequilibria are expressed only in that
different economic agents value the same good
differently. Is such a formulation realizable within
the context of a truly dynamic analysis?
Vty,
Mabel Fong
may_belle_66@yahoo.com