The Problem of Modeling of Economic Dynamics

TL;DR

This paper examines the limitations of Harrods' economic model, proposes an alternative approach using integral equations, and develops a methodology for more accurate economic dynamic modeling and forecasting.

Contribution

It introduces a new methodology based on balance relations and integral equations for modeling economic dynamics, improving upon existing models like Phillips.

Findings

Exponential economic growth models are inadequate.

A generalized approach to macroeconomic modeling is proposed.

The methodology enables solving integral equations for economic forecasts.

Abstract

The correctness of Harrods model in the differential form is studied. The inadequacy of exponential growth of economy is shown; an alternative result is obtained. By example of Phillips model, an approach to correction of macroeconomic models (in terms of initial prerequisites) is generalized. A methodology based on balance relations for modelling of economic dynamics, including obtaining forecast estimates, is developed. The problems thus considered are reduced to the solution of Volterra and Fredholm integral equations of the second kind.