Modeling and Simulation of Macroeconomic Feedback Processes

Considering a cybernetic system for national economies starts from observing complexity, interdependence, co-evolution, far from equilibrium functioning, feedback, auto-organization - properties which are acting together for creating a new order and coherence in time. Governments look at the economy, take action as policies, observe the results - evaluate and implement other policies in the hope for better results again observed and evaluated which will determine more action. This process is in its nature a feedback process. Corrective measures are less dependent of time but more related to the conditions displayed within the system. Macroeconomic issues are thus harder as it implies that any attempt of policy implementation will trigger the system to naturally compensate for the changes that occur. Circular causality and feedback are more often delayed, subtle and misleading. Intuition is not enough and the most important is to determine the sources within the system that dictate its behavior. The system dynamic models presented in the book find their use in policy building, testing and assessing macroeconomic policies, areas for development and continuous tracking of macro KPIs.