Since the time of Adam Smith, economists have studied the dynamics of economic systems. From a system dynamics perspective, the change in any system over time occurs when flows accumulate in stocks - i.e., by the process of integration. Of course, economists have long been familiar with, and...

In this chapter, we demonstrate a way to get started with system dynamics modeling of a national economy, using a modular software framework called the MacroLab Template. The Template can be customized to reflect a modeler’s hypotheses about how an economy works. To illustrate the modeling...

Money stock, defined as the sum of coins, notes, demand and time deposits, decisively affects macroeconomic variables such as GDP and price. Yet its true nature has been obscured in economics. Where does it come from? How are they created, and how much? Concerning money creation under the...

In 1949, A. W. H. (Bill) Phillips and Walter Newlyn designed and built an electro-hydraulic dynamic model of the macroeconomy of a country. It was the first analog computer to solve the nonlinear coupled differential equations of mid-twentieth century economic theory and led to the use of...

This chapter documents a multi-disciplinary collaboration among a mathematical economist, an ecological economist, and a systems scientist to demonstrate the contributions of system dynamics (SD) to the advancement of dynamic modeling in ecological economics. Ecological economics is a...

In this contribution, we aim at describing the problem of debt and currency crisis by means of system dynamics modeling. We use the historical evidence from the Russian default in 1998 as an example. First, we apply the system dynamics approach to quantitatively assess the Russian economic...

This chapter revisits the macroeconomic modelling and medium-term scenarios undertaken at the New Zealand (NZ) Planning Council (now disbanded) in the mid 1980s. A system dynamics macroeconomic model (SDMACRO) was developed using the DYNAMO simulation package, to create macroeconomic scenarios...

Many important regularities observed in the economy are feedback processes, including stability, fluctuations, crises, lock-in/network effects and growth. Each type has its endogenous causal structure, driven by its specific incentive structure and agents' behavioural responses. The price...

Organized crime satisfies the demand for protection and enforcement of property rights in the absence of effective government institutions. However, weak law enforcement alone cannot explain the cross-regional differences in mafia activity. This chapter develops a feedback model of economic...

This chapter explores a feedback theory of redistribution presented in one of the most influential papers in the history of social policy: Korpi and Palme's "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality, and Poverty in the Western Countries"...