Mixed Structural and Behavioral Models for Predicting the
Future Behavior of Some Aspects of the Macroeconomy
Abstract
A new methodology for predicting the behavior of macro-economic
variables is described. The approach is based on System Dynamics and Fuzzy
Inductive Reasoning. A four-layer pseudo-hierarchical model is
proposed. The bottom layer makes predictions about population dynamics, age
distributions among the populace, as well as demographics. The second
layer makes predictions about the general state of the economy,
including such variables as inflation and unemployment. The third layer makes
predictions about the demand for certain goods or services, such as milk
products, used cars, mobile telephones, or internet services. The
fourth and top layer makes predictions about the supply of such goods and
services, both in terms of their volume and their prices. Each layer can be
influenced by control variables, the values of which are only determined at
higher levels. In this sense, the model is not strictly hierarchical. For
example, the demand for goods at level three depends on the prices of these
goods, which are only determined at level four. Yet, the prices are themselves
influenced by the expected demand. The methodology is exemplified by means of
a macroeconomic model that makes predictions about U.S. food demand during the
20th century.
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Last modified: July 12, 2005 -- © François Cellier