The upper
diagram shows the principal factors that have an influence on the budget
deficit and indicates what needs to be done to correct it. But this is not the
full story. The diagram below shows that
cutting public expenditure reduces aggregate demand and increases unemployment. The reduction of
aggregate demand reduces economic activity which has the effect of reducing
tax revenue. In addition, the state has to pay out funds
as there is a need for more unemployment benefit payments. The result of these austerity measures is often the opposite of their intended
purpose: they can increase rather than decrease the budget deficit.
There is
plenty of empiric evidence to show that this has happened time and time again.
For instance, a report from UNCTAD (United Nations Conference on Trade and
Development) found that between 1990 and 2000 in all the cases examined where cutbacks in public
spending and tax increases were used, the fiscal situation did not only not
improve but worsened. Despite such repeated evidence, unfortunately calls for austerity measures continue to be heard.
This
paper aims at describing a case where system dynamics modeling was used to evaluate
the effects of information and material supply lead-time variation on sales
contributions margins and operating cash conversion cycle of a commodity export
business. An empirical dynamic model,
loaded with econometric theory of price effect on competitive demand, was used
to describe the input data. The model simulation
outputs proved themselves relevant in analyzing the complex interconnections of
multiple variables affecting the
profitability in a commercial routine, supporting the decision process among
sales managers.
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.
A clone of the Goodwin cycle IM-2010 with debt and taxes added, modified from Steve Keen's illustration of Hyman Minsky's Financial Instability Hypothesis "stability begets instability". This can be extended by adding the Ponzi effect of borrowing for speculative investment: http://www.jstor.org/stable/10.2307/4538470.
This model requires development and testing. Please contact the author if you are able to help.
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
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.
The World3 model is a detailed simulation of human population growth from 1900 into the future. It includes many environmental and demographic factors.
THIS MODEL BY GUY LAKEMAN, FROM METRICS OBTAINED USING A MORE COMPREHENSIVE VENSIM SOFTWARE MODEL, SHOWS CURRENT CONDITIONS CREATED BY THE LATEST WEATHER EXTREMES AND LOSS OF ARABLE LAND BY THE ALBEDO EFECT MELTING THE POLAR CAPS TOGETHER WITH NORTHERN JETSTREAM SHIFT NORTHWARDS, AND A NECESSITY TO ACT BEFORE THERE IS HUGE SUFFERING.
BY SETTING THE NEW ECOLOGICAL POLICIES TO 2015 WE CAN SEE THAT SOME POPULATIONS CAN BE SAVED BUT CITIES WILL SUFFER MOST.
CURRENT MARKET SATURATION PLATEAU OF SOLID PRODUCTS AND BEHAVIORAL SINK FACTORS ARE ALSO ADDED
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 low birth-rate, environmentally focused policy.
2014 Weather & Climate Extreme Loss of Arable Land and Ocean Fertility - The World3+ Model: Forecaster
A Tragedy of the Commons situation exists whenever two or more activities, each, which in order to produce results, rely on a shared limited resource. Results for these activities continue to develop as long as their use of the limited resource doesn't exceed the resource limit. Once this limit is reached the results produced by each activity are limited to the level at which the resource is replenished. As an example, consider multiple departments with an organization using IT resources, until they've exhausted IT capacity.
Environmental economics Niger Delta oil polluted case study
In a recent report, the World Economic Forum
considered that the use of robots in economic activity will cause far more job
losses in the near future than there will be new ones created. Every economic
sector will be affected. The CLD tries to illustrate the dynamic effects of
replacing human workers with robots. This dynamic indicates that if there is no replacement of
the income forgone by the laid off
workers, then the economy will soon grind to a halt. To avoid disaster, there
must be enough money in circulation, not parked in off-shore investments, to
permit the purchase of all the goods and services produced by robots. The
challenge for the government is to make sure that this is case.
