Interactive Model of Business Cycles

摘要

This presentation previews a research project for evaluating whether system dynamics businesscycle models, when used as instructional tools in undergraduate macroeconomics courses, can enhancestudent understanding of business fluctuations. First, we will demonstrate a system dynamics model of thestandard economics textbook diagram of the circular flow of national income and national product. Aworking model of the circular flow is useful for revealing patterns of multiplier effects of injections andleakages of spending and income. Yet, even a dynamic circular flow model is still fundamentally anaccounting tool when standing alone. As we progressively add links with behavioral models of businesscycle subsystems, however, the circular flow model behaves more like a real economic system.Conference participants can interact with a microworld version of the model during the postersessions, examine changes as behavioral models are successively linked to the accounting model, and testalternative assumptions and policy scenarios.1 Later, in the experimental design phase of the project, wewill test whether this approach—when compared to traditional comparative statics instruction—canimprove student understanding of fluctuations in economic activity. Suggestions for improving the modelwould be appreciated, as would thoughts on the design of tests to measure its effectiveness as aninstructional tool.