Abstract
So far it has been paid a great deal of efforts to develop national models using System Dynamics. We would like to join these efforts with a new approach. Our approach is characterized by the following two points: (1) To be based on the SNA (System of National Accounts) as a framework to grasp a national economy comprehensively. (2) To be supported by the structured matrix as a basic core technology.
Our effort to develop SD national model is expected
to be enhanced further by fusing above both points. A new approach
to SD national model will be shown with the collaborated discussions.
Introduction
The SNA (System of National Accounts) is a consistent, coherent and integrated set of macroeconomic accounts based on institutional sectors. In fact the SNA statistics have played an important role in policy making of governmental agencies. But the SNA is still in the stage of a static framework as ex post statistics of national economy. System Dynamics approach will make the SNA more operational and powerful for the prediction and policy making of the national economy.
We will discuss how to build SD National model based
on the revised SNA (1993) and how to simulate the model.
The SNA As a National Model
The SNA is a coherent, consistent and integrated set of macro-economic accounts of a country. It is internationally established, comprehensive framework of national economy and has been implemented over a quarter of century in many countries including OECD affiliates. Indeed the SNA represents substantially an unquestionably evident national model. It can be said that the SNA is the most accessible and institutionally ongoing national model. Furthermore there are many affinities between the SNA and SD model as follows.
Closed Boundary The economic territory of a country is defined as the geographic territory administered by a government within which persons, goods, and capital circulate freely. Within this territory, the SNA records all the transactions between the different economic agents, and groups of agents, taking place on market or elsewhere. In these context, the SNA has a closed boundary as the national model.
In the SNA, all the transactions are recorded in account form and there is a sequence of accounts which builds a feedback loop structure within a closed boundary of the model. Accounts consist of flow accounts and stock accounts. Stock accounts construct balance sheet and represent level variables. Flow accounts relate to a particular kind of activity such as production, or generation, distribution and use of income and imply rate variables.
Nested Account Structure Closed boundary, feedback loop structure of sequence of accounts, and level and rate substructure of stock and flow accounts, all these satisfy the requirements of SD model structure. But depending upon analytical purposes, the SNA has to be implemented at different level of aggregation: at the level of total economy of a country, for groups of institutional units, individual institutional units, or economic agents. In turn, it follows that each accounts has its sub-accounts and each sub-accounts has its sub-sub-accounts and so on.
Therefore, there must exist a nested accounts structure in the SNA. And a tool must be available which can describe such a hierarchical structure of accounts. We introduced a new technology of structured matrix which deal with such a structure of accounts.
Micro-macro Links Micro-macro links is one of the most critical issues of the national model. As mentioned above, the sequence of accounts has to be compiled at any level of aggregation in the model. So there must be micro-database that is fully compatible with corresponding macro-economic accounts for the total economy and it is also necessary to breakdown macro-accounts into micro-accounts at any level in order to meet the specific analytical purpose. These process can be conducted easily by structured matrix.
In addition to aggregation and disaggregation problem
of data, a variety of analytical purposes of the national economy
also necessitates the special type of information for solving
the specific problem which derive from cross-sectional relevant
database. To solve most environmental issues, for example, relevant
data have to be assembled from various kinds of accounts which
are belonged to different classifications. The account which relevant
data are assembled is called "satellite account" in
the revised SNA. It is also easier tobuild and operate the satellite
accounts through the matching technique of structured matrix.
The Model Structure and Institutional Sectors
The SNA is designed to provide information for economic analysis, policy-making and decision-taking through monitoring the behavior of the national economy. Our purposes of modeling and simulation of the national model are in the same context of those of the SNA. As Forrester said, macroeconomic behavior derives from microstructure (Forester, 1989). In fact most policy-making and decision-taking are undertaking by individual micro institutional units.
The institutional sectors The SNA defines the total economy in terms of institutional units. Here, the institutional units are defined as economic entities which are capable of owing assets and incurring liabilities on their own behalf and can engage in the full range of transactions.
In the revised SNA, the institutional units are grouped together to form institutional sectors, on the basis of their principal functions, behavior, and objectives. They are as follows;
(4) Households, (5) Non-profit institutions serving households.
It should be emphasized that in our SD national model, sectors are entirely identical with the institutional sectors in the SNA. This mechanism will provide the simulation results of our model with a strong qualification as supporter to institutional policy making.
The balance sheets record assets, liabilities and net worth. The closing balance sheets are fully determined by the opening balance sheets and transaction flow in the sequence of accounts.
The structure of our model, as well as the SNA, is
built around the sequence of interconnected accounts.
A Technology for Model Operations: Structured Matrix
Figure 2. Principle of Structured Matrix II
This technology is bringing following capabilities. 1) Macro and Microscopic Views for complex modeling, 2) Common communication tools through models for collaborators. 3) Modeling of Value Chains of multiple items, their mutual relations with different dimensions like monetary and non-monetary values. This is common problems of modeling in the Satellite Accounting of the revised SNA. 4) Large scale modeling with visibility avoiding million formulas, if approached by scalar oriented simulation languages.
Chaining Structure Transparency and visibility with bird's eye-view are essential for collaboration in chaining models. Easy combination and recombination of models are possible with chaining mechanism of hierarchically nested tables as in Figure 4. Turning of Inside-Out concomitant factors are usually left behind deeply in the bottom of hierarchical organizations. Such problems like budgeting models for common factors and influential analysis of environmental influences, can be processed on this chaining structure by synchronizing the use of Matching in individual models.
Conclusion
The System Dynamics national Model should have the capacity to provide institutionally feasible support to policy making. For this reason, our approach was built on the basis of the SNA. We introduced in our approach the structured matrix with matching technique. The structured matrix will make possible our approach a variety of sourcing beyond the SNA.
In our study, the following points were confirmed:
1) The model structure reflects real institutional aspects of national economy.
2) The model has hierarchical and recursive structure while keeping holonic causal relations from macroscopic and microscopic view points.
3) The model keeps transparency of nested account structures.
4) The structured matrix as a basic core technology
is supporting our modeling and simulation.
References
ISDC '97 CD Sponsor 