Utilizing System Dynamics Models in Analyzing Macroeconomic Variables of Yemen
The purpose of the System Dynamics method is to study the relationship between structure and behavior in non-linear, dynamic systems. In such systems, the significance of various structural components to the behavior pattern exhibited, changes as the behavior unfolds. Changes in structural significance modify that behavior pattern which, in turn, feeds back to change the relative significance of structural components. We develop a macroeconomic model through which we can study the characteristics of the feedback between structure and behavior. This model is based on multiplier-accelerator model, and inventory – adjustment model. This work is an extension of the work by Nathan Forrester on the use of basic macroeconomic theory to stabilize policy analysis. The design of a System Dynamics model begins with a problem and a time frame that contribute to the problem. They are listed and their structural relationships sketched the factors with particular attention to characterizing them as levels (or stocks) and rates (or flows) that feed or drain them. Levels and rates must alternate in the model; no level can control another without an intervening rate or any rate influence another without an intervening level.
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- Jesús Fernández-Villaverde & Juan F. Rubio-Ramírez, 2007.
"Estimating Macroeconomic Models: A Likelihood Approach,"
Review of Economic Studies,
Oxford University Press, vol. 74(4), pages 1059-1087.
- Fernández-Villaverde, Jesús & Rubio-Ramírez, Juan Francisco, 2006. "Estimating Macroeconomic Models: A Likelihood Approach," CEPR Discussion Papers 5513, C.E.P.R. Discussion Papers.
- Jesús Fernández-Villaverde & Juan F. Rubio-Ramirez, 2006. "Estimating Macroeconomic Models: A Likelihood Approach," Levine's Bibliography 122247000000000849, UCLA Department of Economics.
- Jesus Fernandez-Villaverde & Juan F. Rubio-Ramirez, 2006. "Estimating Macroeconomic Models: A Likelihood Approach," NBER Technical Working Papers 0321, National Bureau of Economic Research, Inc.
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