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To maintain economic wealth (roads, hospitals, power lines, etc.) power needs to be consumed. The same applies to economic activity, since any activity requires the consumption of energy. According to the Environmental Protection Agency, the burning of fossil fuels was responsible for 79 percent of U.S. greenhouse gas emissions in 2010. So whilst economic activity takes place fossil fuels will be burned and CO2 emissions are unavoidable - unless we use exclusively renewable energy resources, which is not likely to occur very soon. However, the increasing CO2 concentrations in the atmosphere will have negative consequences, such droughts, floods, crop failures, etc. These effects represent limits to economic growth. The CLD illustrates some of the more prominent negative feedback loops that act as a break on economic growth and wealth.  As the negative feedback loops (B1-B4) get stronger, an interesting question is, 'will a sharp reduction in economic wealth and unavoidable recession lead to wide-spread food riots and disturbances?'

LIMITS TO ECONOMIC GROWTH AND PROMINENT NEGATIVE FEEDBACK LOOPS
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Goodwin business cycle model, modified from Keen and Blatt

Goodwin Business Cycle
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WIP of several books of Karl Polanyi's thoughts and papers around social science economic history and capitalism. . See also Summary of the Great Transformation IM-10640
Karl Polanyi Holistic thinking
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Deforestation and Economic Development Thitikarn
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A simple model of economic growth where a government taxes the economy, and spends it on capital and revenue goods.
Simple Economic Growth Model
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Butterfly Effect
Sensitivity To Initial Conditions
(sensitive dependence on initial conditions)
Navier Stokes Equations
Lorenz Attractor
Chaos Theory, Disorder and Entropy

Although the butterfly effect may appear to be an esoteric and unlikely behavior, it is exhibited by very simple systems: for example, a ball placed at the crest of a hill may roll into any of several valleys depending on, among other things, slight differences in initial position. Similarly the direction a pencil falls when held on its tip, or an universe during its initial stages.
These attractors apply to social systems and economics showing jumps between potential wells, and showing the strategic scaling behavior of rotating and cyclic systems whether they be social, economic, or complex spin or rotation of planets affecting weather and climate or spin of galaxies or elementary particles, or even a rock on the end of a piece of string.

What Playing with numbers is all about :)

If M is the state space for the map , then  displays sensitive dependence to initial conditions if for any x in M and any δ > 0, there are y in M, with  such that
THE BUTTERFLY EFFECT
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Summary of Ch1 of Mitchell Wray and Watts Textbook see IM-164967 for overview
Macroeconomics Introduction
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The statement that there can be no economic activity without  energy and that fossil fuels are finite contrasts with the fact that money is not finite and can be created by governments via their central banks at zero marginal cost whenever needed.

An important fact about COAL, GAS and OIL (especially when produced via fracking) is that their net energy ratios are falling rapidly. In other words the energy needed to extract a given quantity of fossil fuels is constantly increasing. The falling ratio 'EROI' (Energy Return on Energy Invested ) provides yet another warning that we can no longer rely on fossil fuels to power our economies. In 1940 it took the energy of only one barrel of oil to extract 100. Today the energy of 1 barrel of oil will yield only 15. We cannot wait until the ratio falls to 1/1 before we invest seriously in alternative sources of energy, because by then industrial society as we know it doday will have ceased to exist. An EROI of 1:1 means that it takes the energy of one barrel of oil to extract one barrel of oil - oil production would simply stop! 


Energy and Economic Activity
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Simple model of the global economy, the global carbon cycle, and planetary energy balance.

The planetary energy balance model is a two-box model, with shallow and deep ocean heat reservoirs. The carbon cycle model is a 4-box model, with the atmosphere, shallow ocean, deep ocean, and terrestrial carbon. 

The economic model is based on the Kaya identity, which decomposes CO2 emissions into population, GDP/capita, energy intensity of GDP, and carbon intensity of energy. It allows for temperature-related climate damages to both GDP and the growth rate of GDP.

This model was originally created by Bob Kopp - https://insightmaker.com/user/16029 (Rutgers University) in support of the SESYNC Climate Learning Project.

Steve Conrad (Simon Fraser University) modified the model to include emission/development/and carbon targets for the use by ENV 221.
REM 221 Simple Climate-Carbon-Economic Model with Targets
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Like previous models, this model shows the operation of a simple economy, the influence of changes in the consumption rate, and the effect of government intervention. In addition, this model shows changes in the hypothetical general price level. It gives an idea of changes in price trends based on changes in the quantity of money. NOTE: No general price level exists. Prices provide information for the exchange of individual economic goods.
Simple Economy: Model 9
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How Pioneer Corn is Changing Farming in Ghana
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The World3 model is a detailed simulation of human population growth from 1900 into the future. It includes many environmental and demographic factors.

Use the sliders to experiment with the initial amount of non-renewable resources to see how these affect the simulation. Does increasing the amount of non-renewable resources (which could occur through the development of better exploration technologies) improve our future? Also, experiment with the start date of a more environmentally focused policy.

The World3 Model: Classic World Simulation
824 9 months ago
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The housing market is heavily dependent on two main factors; supply and demand. Both play a major role in determining an equilibrium price for both sellers and buyers in the real estate market. 

Residents, or the general population of individuals, place significant reliance on financial institutions to provide sources of capital i.e mortgages, to fund their purchases of homes. The rate of interest charged by these organisations in turn gives buyers (consumers) purchasing power, creating demand. 

Supply is made up of the number of houses in the market, and consequently, of these, the number of houses which are up for sale. As the prices of houses for sale increases, the demand for purchase of these properties decreases. Conversely, the lower price, the higher the demand. Once the market reaches an equilibrium point, to which buyers and sellers form an agreement, houses are sold accordingly. An underlying factor to consider is the cost of construction, which impacts producers, or suppliers in this instance, and thus the number of homes for sale, and the expected profit sellers hope to achieve. 

The simulated graph highlights the common scenario within the housing market, to which we see that as price increases, the total number for houses for sale decreases, generating an opposite slope to the price. As the price for houses increases, the demand for the houses decreases and vice versa. The equilibrium is evident at time 14 whereby the price of houses and the number of houses for sale overlaps which in turn creates a market to which both buyers and sellers are happy.
The effect of Supply and Demand on the Housing Market Assignment 3 (43323871)
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Format: Given pre-conditions when independent variables(s) then dependent variable

Given Earnings Decline (0.25), Spending Variance (55), Initial Investment (500) and Rate of Return (RandNormal(0.06, 0.12)) when one of these independent variables change then how sensitive is Investment (22) over a 30 year time period (-1,000)

H1: if you Earn more then Investment will last much longer => rejected

H2: if you Spend less then Investment will last much longer => accepted

H3: if your Initial Investment is higher then Investment will last much longer => accepted

H4: if you reduce your Spend when Investments are declining then Investment will last much longer => accepted

Given Earnings Decline (0.25), Spending Variance (55), Initial Investment (500) and Rate of Return (RandNormal(0.06, 0.12)) when one of these independent variables are optimised then Investment will last exactly 30 years by minimising the absolute investment gap

H1: if you set an appropriate Spending Base then remaining Investment is 0 => rejected

H2: if you set an appropriate Spending Reduction then remaining Investment is 0 => rejected

Source for investment returns: https://seekingalpha.com/article/3896226-90-year-history-of-capital-market-returns-and-risks
Wealth Management when Retiring
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Economic capital growth model, Figure 27 from Thinking in Systems by Donella H. Meadows
REM 221 – Figure 27 - Economic Capital Growth
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Economic capital growth in a system constrained by a non-renewable resource, Figure 37 from Thinking in Systems by Donella H. Meadows

REM 221 Figure 37. Economic capital
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Circular equations WIP for Runy.

Added several versions of the model. Added a flow to make C increase. Added a factor to be able to change the value 0.5. Older version cloned at IM-46280
Circularity in Economic models including Exports and Imports
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Model description: 

This model is designed to simulate the Covid-19 outbreak in Burnie, Tasmania by estimating several factors such as exposed population, infection rate, testing rate, recovery rate, death rate and immunity loss. The model also simulates the measures implemented by the government which will impact on the local infection and economy. 

 

Assumption:

Government policies will reduce the mobility of the population as well as the infection. In addition, economic activities in the tourism and hospitality industry will suffer negative influences from the government measures. However, essential businesses like supermarkets will benefit from the health policies on the contrary.

 

Variables:

Infection rate, recovery rate, death rate, testing rate are the variables to the cases of Covid-19. On the other hand, the number of cases is also a variable to the government policies, which directly influences the number of exposed. 

 

The GDP is dependent on the variables of economic activities. Nonetheless, the government’s lockdown measure has also become the variable to the economic activities. 

 

Interesting insights:

Government policies are effective to curb infection by reducing the number of exposed when the case number is greater than 10. The economy becomes stagnant when the case spikes up but it climbs up again when the number of cases is under control. 

Sample Model of COVID-19 outbreak in Burnie Tasmania by Yim Fong Ng (544885)
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This model is an attempt to simulate what is commonly referred to as the “pesticide treadmill” in agriculture and how it played out in the cotton industry in Central America after the Second World War until around the 1990s.

The cotton industry expanded dramatically in Central America after WW2, increasing from 20,000 hectares to 463,000 in the late 1970s. This expansion was accompanied by a huge increase in industrial pesticide application which would eventually become the downfall of the industry.

The primary pest for cotton production, bol weevil, became increasingly resistant to chemical pesticides as they were applied each year. The application of pesticides also caused new pests to appear, such as leafworms, cotton aphids and whitefly, which in turn further fuelled increased application of pesticides.

The treadmill resulted in massive increases in pesticide applications: in the early years they were only applied a few times per season, but this application rose to up to 40 applications per season by the 1970s; accounting for over 50% of the costs of production in some regions.

The skyrocketing costs associated with increasing pesticide use were one of the key factors that led to the dramatic decline of the cotton industry in Central America: decreasing from its peak in the 1970s to less than 100,000 hectares in the 1990s. “In its wake, economic ruin and environmental devastation were left” as once thriving towns became ghost towns, and once fertile soils were wasted, eroded and abandoned (Lappe, 1998).

Sources: Douglas L. Murray (1994), Cultivating Crisis: The Human Cost of Pesticides in Latin America, pp35-41; Francis Moore Lappe et al (1998), World Hunger: 12 Myths, 2nd Edition, pp54-55.

Pesticide Use in Central America Model
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Simpler view IM-70351 combined with Economic ViewIM-69774 in preparation for integrating with Prevention Investment Framework (private) IM
Reworked at Multiscale simpler view IM
Integrating Simple and Economic Views of Prevention
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Method with the feedback loops
Dynamic_Model_System dynamics approach to Isernia CBA
8 12 months ago
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ECONOMIC GROWTH feeds on itself, provided the growth engine is fed with materials and finance. In this highly simplified representation  some of the factors that influence economic growth are show in the incircled green fields. Governments can influence economic growth positively via investments  and payouts. The most obvious tool which governments can use to slow an overheated economy is taxation.

Economic Growth Engine
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IM-168155 Summary of Ch 27 of Mitchell Wray and Watts Textbook see IM-164967 for book overview with simplified Mike Radzicki's 2003 Evolutionary Economics history article added
History of Economic Thought 2