Modelling aspects of macroeconomic behaviour in Kyrgyzstan using system dynamics.
The aim of this thesis is to consider two issues that are of particular
significance for macroeconomic modelling. These are the existence of post-so'riet
transitional economies and the relevance of either Post-Keynesian or Neo-Classical
policy advice in the context of dynamic disorder.
In this work, I use a methodology called System Dynamics. This prm'ides an
alternative, interactive methodology for analysing macro-dynamics. Traditional
macroeconomic tools such as Regression Analysis, Time-Series Analysis,
Simultaneous Equation Models and the like require many years of unbroken data
which does not exist for transitional economies. It is shmt'n that the different
approach of System Dynamics can overcome these difficulties.
Some of my models of the Kyrgyz Economy used quantity-rationed systems
with pulse elements integrated into potential and actual excess demand levels reveal
dynamic equilibria, disequilibria and the potential for chaotic behaviour. The
d(tJiculties facing macroeconomic management in these conditions and the polrver of
the System Dynamics modelling methodology in assisting policy formulation and
evaluation are stressed.
The key inSights delivered by the models discussed indicate that policy
targe/cd at reducing delay lags could be beneficial in alleviating innate tendencies in
this economy towards endemic disequilibria in Aggregate Supply and Demand.
Morco)'er, due to the potential for chaos existing in the non-linear dynamic
economic relationships inherent in the models the relevance (~lpolicy options based
on cither extremc Post-Keyncsian or Nco-Classical thinking are questioned. Indeed
our Post-Keynesian (zrnamic models contain non-linear dynamic tendencies, 'which
parado,Yical(Y yield policy implications consistent with .Yco-Classical thinking.