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Estimating Impact pp 91–134Cite as

Economics and Markets

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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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Notes

  1. 1.

    Chart of economic behavior modes adapted from Graham et al. (2008a, b), © PA Consulting Group, Inc. Used with permission.

  2. 2.

    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.

  3. 3.

    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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Author information

Authors and Affiliations

  1. Massachusetts Institute of Technology, Cambridge, MA, USA

    Alan K. Graham

Authors
  1. Alan K. Graham
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Corresponding author

Correspondence to Alan K. Graham .

Editor information

Editors and Affiliations

  1. Army Research Laboratory, Powder Mill Road 2800, Adelphi, 20783-1197, Maryland, USA

    Alexander Kott

  2. SoSA Corporation, Fairfax Ridge Rd. 3877, Fairfax, 20030, Virginia, USA

    Gary Citrenbaum

Resources

Resources

1.1 Economic Behaviors and Data

  1. 1.

    “Near-economic” behavior modes

  2. 2.

    Secular industrialization, demographic transition

  3. 3.

    General macroeconomics

  4. 4.

    Business cycles

  5. 5.

    Trade balancing through the exchange rates

    • (Curry 2000; Gandolfo 2002)

  6. 6.

    Currency exchange mercantilism

    • (Burgess et al. 2009; Das 2009)

  7. 7.

    Import dependence and stagflation

    • Models: (Bernanke and Blinder 1988; Godley and Lavoie 2006)

  8. 8.

    Capital flight

  9. 9.

    Debt-deflation spiral

    • Models: (Von Peter 2005; Sterman 1986)

    • Descriptive analysis: (Graham and Senge 1980; Graham 1982; Koo 2008)

  10. 10.

    Deficit-lead hyperinflation

    • Models: (Taylor 1991)

    • Description: (Krugman and Obstfeld 2008)

  11. 11.

    Currency crisis/investment boom and bust, currency exchange defense

    • Models: (Krugman 1999)

    • Descriptive analysis: (Krugman 2009)

1.2 Analytical Methods

  1. 1.

    Economic models generally

    • Journal of Economic Literature, which publishes only review articles on economic topics, will intermittently include macroeconomic models.

  2. 2.

    Quantitative systems thinking

  3. 3.

    Analytical models

  4. 4.

    General equilibrium

    • Large numerical GE: (Inforum 2009; Kubler 2008)

    • Small analytical GE:

    • ISLM analysis in any macroeconomics textbook, e.g., (Samuelson and Nordhaus 2004)

    • More modern small GE models are actually market equilibrium and steady-state growth (Solow 1956, 1957; Foley and Sidrauski 1971; Romer 1990)

  5. 5.

    Single-equation regression and stochastic models

  6. 6.

    System dynamics

    • General:

    • (Forrester 1961; Alfeld and Graham 1976; Sterman 2000)

    • System Dynamics Society http://www.systemdynamics.org/

    • Well-known cases: (Mayo et al. 2001; Lyneis 1999)

    • Methodological cases: (Graham et al. 2002; Graham and Ariza 2003; Lyneis 2000)

    • Mathematical foundations:

    • (Schweppe 1973)

  7. 7.

    Game theory

    • (Dixit and Skeathmore 2004; Williams 2007)

  8. 8.

    Agent-based

    • Social science applications: (Billari et al. 2006)

    • Methodological discussion:

    • (Rahmandad and Sterman 2004)

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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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  • DOI: https://doi.org/10.1007/978-1-4419-6235-5_4

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