Modelling National Economic System: A Case of Transition Economy

In this study we evaluate a national economic model using a system dynamics approach. We use a set of macroeconomic data for a transition economy to validate the model behavior in the past, and then simulate the future paths of key macroeconomic variables. Instead of studying only a fraction of the economy, or using simple and abstract models, we build a large-scale national economic model. As the study is based on system dynamics information feedback, it provides additional insights about the macroeconomic effects of the economic policy, making it a valuable tool for economic policy analysis. Such insights are instrumental for understanding the total effects of economic policies and their full economic consequences. To demonstrate this, we have simulated one interesting economic policy intervention.