Modeling an Economy's Dynamics and External Influences Through a System of Differential Equations
Technical Report,01 Sep 2014,24 Mar 2016
AIR FORCE INSTITUTE OF TECHNOLOGY WRIGHT-PATTERSON AFB OH WRIGHT-PATTERSON AFB United States
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This research provides a methodology to develop models for the greater understanding of the application of the economic instrument of national power through the factors that define the economic condition of a country. The major components of an economy are identified as GDP per capita, 10Y treasury bond yield, and a major stock market index. The components have interconnected dynamics along with external influences from the United Stated Federal Funds Rate and foreign direct investment. These connections are considered through a metamodel in the form of a system of differential equations which is solved as an inverse problem. The validity of the model is verified and the model is then used in making short term forecasts. What-if analysis of various policies is explored resulting in insight to policy changes. Through an increased understanding and awareness of the dynamics of the economic environment, a foundation for analysis is built to begin addressing the impacts of pecuniary warfare tactics.
- Economics and Cost Analysis
- Military Operations, Strategy and Tactics