Abstract for: The Randers Macro Model of a modern capitalist economy with an active state. Main causal structure and base run.
For some years I have been building a relatively simple model of the time development of a modern capitalist economy with an active government, operating in a finite environment. I am seeking the simplest (while still plausible) model that can recreate the broad trends in (Western) national economies from 1980 to 2020 – with as few exogenous time-dependent drivers as possible. My ambition is to create a model that can serve as a causal and dynamic replacement of “neoclassical macro” as the preferred conceptual basis for the scientific and public debate on macroeconomic policy. In this (third) interim report to ISDC 2021, I present the first working version of the Randers Macro Model. I show that the model can recreate four priority “reference modes” – observed patterns in the historical economic development of the US economy from 1980 to 2020 – that were the focus of my report to ISDC 2020. I present an aggregate causal loop diagram of the full model and highlight the causal loops (the four “basic mechanisms”) that generate the four reference modes, to help users understand the model and assess its relevance for observed developments in modern economies.The next step (ongoing) is to adapt the Randers Macro Model to the US economy from 1980 to 2020.