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. 

Overview: 

Scratch build of a stock-flow consistent model of a closed economy, based on a current transactions matrix

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover

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?'

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover

This model simulates the competition between logging versus adventure tourism(mountain bike riding) in Derby Tasmania. The purpose of this model is that focus on the relationship between the timber industry and mountain bike tourism in adventure. It also reflects how well these two industries co-exist. 

This is a simulation of monetary flows for a business that uses Circular Money.

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover

Could repeat expositions of the truth about money creation undermine the wide-spread erroneous belief that governments cannot spend more money than they collect in taxes unless they borrow? Governments, via their central banks, can create as much of their currency as they wish. They can never be forced into default on debt obligations issued in their own currency. In fact, they do not even need to issue debt, as the false dogma tries to make us believe - why should a government have to borrow its own currency when it can create it? Could the dynamic indicated by the CLD be used to spread the long-overdue acceptance of monetary reality? 

A model situmalte the relationship between moutain bikes and logging industry in Derby, Tasmania, It explains more when the number of visitors increases or decreses. 

Update 24 Feburary 2016 (v3.1): This version has biomass, hydro and nuclear continuing at pre-transition maxima, rather than increasing. The combined emplacement rate cap for wind and PV is set at a default value of 5000 GW/year.

Major update 12 December 2015 (v3.0): This new version of the model overhauls the way that incumbent energy source (fossil sources plus biomass, hydro electricity and nuclear electricity) supply capacity is implemented. This is now based on direct (exogenous) input of historical data, with the future supply curve also set directly (but using a separate input array to the historical data). For coal and natural gas fired electricity, this also requires that the simple, direct-input EROI method be used (i.e. same as for coal and NG heating, and petroleum transport fuels).

Note that this new version of the model no longer provides a historical view of the emplacement rates for energy supply sources other than wind and PV, and therefore no longer allows comparison of required emplacement rates for wind and PV with incumbent energy sources. Output data relating to this is available in model version v2.5 (see link below), for the specific transition duration built into that version of the model.

The previous version of the model (version 2.5) is available here.

The original "standard run" version of the model (v1.0) is available here.

Haaglanden Social housing Fig 18 SD Model feedback structure from Eskanasi 2014  thesis Other models in the thesis include middle income households and mortgage debt

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover

This is a model that simulates the competition between logging versus adventure tourism (mountain bike riding) in Derby Tasmania. The simulation is borrowed from the Easter island simulation

A model which simulates the competition between logging versus adventure tourism (mountain bike ridding) in Derby Tasmania.  Simulation borrowed from the Easter Island simulation.

Overview
This model is a working simulation of the competition between the mountain biking tourism industry versus the forestry logging within Derby Tasmania.

A model to gain understanding of the causes and effects of a population's interest in engineering.

A sample model for class discussion modeling COVID-19 outbreaks and responses from government with the effect on the local economy.  Govt policy is dependent on reported COVID-19 cases, which in turn depend on testing rates less those who recover