Abstract for: The relatively simple MODCAP model of US economic development 1980-2020.
We are in the process of building a relatively simple model ("MODCAP") of the time development of a modern capitalist economy with an active government, operating in a finite environment. Our ambition is to create the simplest (while still plausible) model that can recreate ca 20 central time series for the US economy from 1980 to 2020 – without the use of exogenous time-dependent drivers (except to capture the underlying technological advance). Our ambition is to create a model that can serve as a modern and dynamic “macroeconomic theory” capable of guiding the scientific and public debate on macroeconomics. In this interim report we present the core of our new macroeconomic theory. It consist of four “reference modes” - observed patterns in the US economy from 1980 to 2020 – and our current hypotheses concerning the underlying “basic mechanisms”. The four reference modes are presented as time graphs (in the presentation slides) and the four basic mechanisms as causal diagrams (in the extended abstract).