Abstract for:The causal structure of the MODCAP model of a modern capitalist economy
We have spent two years building a system dynamics model (MODCAP) which is able to recreate the broad trends of the development of the US economy from 1980 to 2015. The task is difficult, because our ambition is to a) make the model simple (less than 40 significant levels), and b) use few exogenous time-dependent drivers (ideally only 1) - and still get a reasonable fit to history and modern macro theory. There is no such model in the literature: Existing macro models are either very big or driven by exogenous time-series. Our ambition is to make a model that can help users understand the internal workings of a modern capitalist economy, by endogenously recreating the main dynamics observed since 1980 - both the real and the financial economy, plus the impact of the economy on the environment, and on social stability (distribution and participation). The current causal structure of MODCAP model consists of 14 processes ("basic mechanisms"), and is capable of reproducing 18 time-series for the US economy from 1980 to 2015. One of these processes is a special form of deficit spending, which we discuss in the four slides attached for a Work In Progress session.