I had not expected that your model was there; it was more a question to explore some of the reason why the tools are relatively little used.
Real world economic systems are massively complex and non-linear … and worldwide in scope. Let’s take your money flow area. Does encouraging more savings help an economy because then there is more money for business to borrow and invest with (and to multiply the money with)? Or encouraging more spending since that gives the market for the businesses to sell to? The two are mutually exclusive, right? The public has to either spend or save, not both. Or is it how much money flows in from other countries that matters? What level of analysis do you look at and how much is that trumped by the reactions, in a non-linear fashion, of actors outside the level of the analysis?
If these pieces are sufficiently interesting, I could contribute my own prejudices later.
A key thing we have to remember is that there is no such thing as “savings” in the intuitive personal sense of that word when we’re talking about the macro picture.
My personal savings is my income in excess of my outgo. But my income is somebody else’s outgo. My outgo is somebody else’s income. Income = outgo, always, when we’re talking about the big picture. This is a fact that is taught early (at least, I personally learned it early), but I think maybe the regular models don’t emphasize it enough and its significance is forgotten.
I personally concentrate – or try to concentrate – on the total flow of funds in the economy dedicated to the purchase of new goods and services.
I want to emphasize I’m just dipping my toe in at this post, but I can give a sort of rough map of my goals.
A long time ago, before we had programs like Mathematica, the economist Bill Phillips decided he wanted to model a system of dynamic flow, so he built an actual physical contraption, an analog computer, which he used to simulate the flow of funds as if they were water. (The Glooper from Terry Pratchett’s Discworld is based on this device.) You can see a partial demonstration here on YouTube.
What I’m playing with right now is taking the methodological approach of the heterodox economist Steve Keen, which is basically a computerized Glooper. In my opinion, Keen is unnecessarily abrasive and not an especially good communicator, but his basic technique of updating and expanding on Phillips is extremely compelling. I’m trying to add central banking and more realistic agents.
Right now, the “agents” in the Glooper model are dead stupid. The valves that control the flow of water are controlled by mindless parameters and simple functions.
It’s not enough to make it accurate. It must be convincing. The trick to make such a model palatable to conventional (neoclassical) tastes is to have more conventional agents populating the Glooper, with their tiny mathematical hands on the valves. The field is strongly reductionist, perhaps to the point of absurdity. Without at least quasi-conventional agents, the model will be totally unconvincing regardless of how accurate it might manage to become.
I don’t doubt that I could eventually create a model that at least partially reflects my own thinking on central banking. I have very little confidence that I could create a model with quasi-conventional agents that would be sufficiently compelling to others. I’m simply not very good at this stuff. If you’re interested in the sort of monetary dynamics I would like to throw in to such a model, in an ideal world where I was a genius, there are two fairly recent (and again lengthy) SDMB threads where I discuss things like savings/investment vs consumer spending, the central bank balance sheet, and the difference between monetary base and traditional government securities.
I’ve got the model in my head. Doing a Glooper model with dumb agents seems fairly straightforward. Doing a convincing model with traditional agents, or anything approximating traditional agents, is a mite tricky.