Abstarct
Economic matters are often entangled with interventions. Aid agencies need to understand where they can have the highest leverage, and where aid may cause harmful economic distortions. Humanitarian interventions in crises will be more effective if the economic and social root causes of the crisis are addressed as well. The root causes of insurgencies often include economic issues, particularly economic discrimination. Planners for military operations in a country need to know the economic side effects of military activities, including the effects of withdrawal. Government agencies trying to bring developed-nation investors into a developing country must understand, along with the potential investors, what the economic prospects of the economy are, and how safe an investment is (or is not). Economic modeling and analysis can assist in each of these cases.
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The modelers were from PA Consulting Group, which also employed the author. Text and figures adapted from various materials copyright © PA Consulting Group, Inc., and are used with permission.
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This example is adapted from “Economic Model Capability Description Document” by PA Consulting, March 31, 2008, copyright © PA Consulting Group, Inc. 2008, used with permission.
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Resources
Resources
1.1 Economic Behaviors and Data
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1.
“Near-economic” behavior modes
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Theories of political power: (Bueno de Mesquita et al. 2002, 2004)
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Statistics:
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United Nations Universal Human Rights Index http://www.universalhumanrightsindex.org/
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World Bank Governance Indicators http://info.worldbank.org/governance/wgi/sc_country.asp
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Internet Center for Corruption Research http://www.icgg.org/corruption.html
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Transparency International http://www.transparency.org/
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Economist Intelligence Unit Country Reports. London: The Economist Group
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Freedom House http://www.freedomhouse.org
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Human Rights Watch http://www.hrw.org/
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Amnesty International http://www.hrw.org/
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Gallup Country Stability Index (Gallup Corporation 2009)
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2.
Secular industrialization, demographic transition
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Statistics:
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United Nations Economic and Social Development theme http://www.un.org/esa/
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UN Development Programme, Human Development Report and Human Development Indices http://hdr.undp.org/en/humandev/hdi/
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(IMD various years)
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3.
General macroeconomics
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General economic theory: (Samuelson and Nordhaus 2004)
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International economic theory: (Curry 2000; Krugman and Obstfeld 2008; Gandolfo 2002)
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Statistics:
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Fedstats (aggregation of US government data) http://www.fedstats.gov/
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International Monetary Fund, Washington, DC http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/index.aspx
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United Nations
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World Bank, Washington, DC http://www.worldbank.org/
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Federal Reserve System, Flow of Funds Accounts of the United States http://www.federalreserve.gov/releases/z1/
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4.
Business cycles
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Theory: (Mass 1975; Forrester 1982; Forrester 1989; Sterman 2000)
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Statistics:
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US: National Bureau of Economic Research, Cambridge, Massachusetts. http://www.nber.org/
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World: Economic Cycle Research Institute, New York and London. http://www.businesscycle.com/
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5.
Trade balancing through the exchange rates
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(Curry 2000; Gandolfo 2002)
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6.
Currency exchange mercantilism
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(Burgess et al. 2009; Das 2009)
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7.
Import dependence and stagflation
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Models: (Bernanke and Blinder 1988; Godley and Lavoie 2006)
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8.
Capital flight
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(Shibuya 2001)
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9.
Debt-deflation spiral
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10.
Deficit-lead hyperinflation
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Models: (Taylor 1991)
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Description: (Krugman and Obstfeld 2008)
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11.
Currency crisis/investment boom and bust, currency exchange defense
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Models: (Krugman 1999)
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Descriptive analysis: (Krugman 2009)
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1.2 Analytical Methods
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1.
Economic models generally
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Journal of Economic Literature, which publishes only review articles on economic topics, will intermittently include macroeconomic models.
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2.
Quantitative systems thinking
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3.
Analytical models
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4.
General equilibrium
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Large numerical GE: (Inforum 2009; Kubler 2008)
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Small analytical GE:
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ISLM analysis in any macroeconomics textbook, e.g., (Samuelson and Nordhaus 2004)
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More modern small GE models are actually market equilibrium and steady-state growth (Solow 1956, 1957; Foley and Sidrauski 1971; Romer 1990)
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5.
Single-equation regression and stochastic models
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Discussion of strengths and weaknesses: (Sterman 1988)
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6.
System dynamics
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7.
Game theory
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8.
Agent-based
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Graham, A.K. (2010). Economics and Markets. In: Kott, A., Citrenbaum, G. (eds) Estimating Impact. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-6235-5_4
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