The Types of Models in Economics - 1509 Words

Types of Models in Economics From the definition of a model, it has been said that models in economics have the wide range of forms including graphs, diagrams, and mathematical models. Economists use these models in different purposes; it depends on many factors such as what type of raw data they have, how they can represent the data, and what they want from the model they use. In this section it will be more explanation about what is the main role of these different models and also some important examples in economics. Flow Chart Flow chart is a diagram that shows the connections between the different stages of a process or parts of a system. Economists use a flow chart to explain how the economy is organized and how participants in the†¦show more content†¦The actual mathematical expression of equation (1) can range from a simple algebraic relationship to large complicated sets of differential equations. Economists use a mathematical model as a ‘theory’ to determine the particular problem. Many proven mathematical models are used in economics as the formulas to help economists calculate and analyze the numerical issues easier, e.g. the rule of 70. Econometricians use the scientific way of thinking to develop a new econometric model or a theory to explain the economic system. When a model is built up, it is a safe way to writing down all the factors that is related to the studied economic issue, otherwise it might have been forgotten some influenced factors that can make the trouble inside the model. More detail about how economists develop a model will be discussed later. Why do economists need a ‘Model’? To answer this question, it is better to understand the way economists use to analyze, solve and foresee a particular economic issue. As it is mentioned before that economists use the scientific approach to deal with economic problems, the scientific approach starts from scientific observation (it can be the environment or other fields of interest), after that they will build up a hypothesis, then theyShow MoreRelatedTypes of Probability and Economic Models Essay594 Words   |  3 PagesProbability is indeed used in real life, especially in the field of economics. Economists proceed to model the behavior of economic agents by assuming that these agents form probability estimates. However, there is an interesting division between economists who tend to treat these probability estimates as subjective and those who treat them as objective. In order to get a clear understanding of how probability plays a role in economics, we must first identity objective probability and subjective probabilityRead MoreThe Long Run Causality Direction Between Financial Markets Development And Economic Growth1716 Words   |  7 PagesThis thesis investigates the long-run causality direction between financial markets development and economic growth in Croatia, Slovenia, Serbia and China for varying time periods using VAR models and Granger Causality methods. It also explores the interrelationships between variables using the Impulse Response Function. Financial industry consists of two main parts; debt and equity (Krugman and Obstfeld, 2009). These are also called debt and equity markets. Credit markets which are primarily consistedRead MoreWhat Is The Integration Of Regional Electric Energy System?841 Words   |  4 Pages\IEEEPARstart{T}oday, integration of regional electric energy systems is more considered therefore, researchers prop ose different dynamic economic dispatch approach to find the optimal schedule of power generation resources for a given horizon, while the demand of each area is supplied as well as satisfying the technical constraints. Moreover, the large-scale integration of wind generation into power systems presents a significant challenge to system operator due to the unpredictable and highly variableRead More663352 inst Essay1515 Words   |  7 Pagesï » ¿#663352 Topic: How Big Global Businesses Compare Writer Deadline:  6pm Number of sources: 4     Ã‚  Ã‚  Ã‚   Writing Style: APA   Ã‚  Ã‚  Ã‚   Type of document: Essay   Ã‚  Ã‚  Ã‚   Academic Level:Undergraduate Number of Pages: 4 (Double Spaced)   Ã‚  Ã‚  Ã‚   Category: Business   Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚   Language Style: English (U.S.)   Ã‚  Ã‚  Ã‚   Order Instructions: Assignment 1: How Big Global Businesses Compare  Ã‚   Due Week 4 and worth 200 points      Select one (1) global industry, such as the automobile or cell phone industry. Next, use the InternetRead MoreToyota Motors Company Case Analysis1429 Words   |  6 Pagesheadlines of all the magazines, e-zines among other business press. Models of culture There are three types of culture that includes, specification, and columnisation and refraction model. The three models describes the relationship between the consensus and conflict in the advanced societies that mainly refers to the different relations that exist between the social and the cultural system(Christoph Weckerle, 2008). Specification model of culture assumes the harmony and the consistency in both the culturalRead MoreEssay On Mega-Events984 Words   |  4 PagesThe mega-events not only impact the host region but also the neighbouring regions, which is an idea neglected in much of the economic impacts research. Neighboring regions can provide travel opportunities and accommodations for tourists to the mega-events. During the 2012 Yeosu Expo, due to the peak visitor periods, Yeosu city could not meet the demand for accommodations. Therefore, overnight visitors had to stay in the neighboring regions. Furthermore, the accommodations relatively at a lower priceRead MoreThe Relationship Between Economic Globalization And Labor Market Power1185 Words   |  5 PagesThe relationship between economic globalization and labor market power provides empirical trends in world average and the world equality through structural bargaining power and associated power, thereby allowing workers to achieve convergence across nations (Mahutga). What labor market power does for economic globalization is that it increases the probability of labor internationalism through two models, namely, the structural model and the institutional model. Beverly Sliver, Tamara Kay, Nita RudraRead MoreCognitive Economics : Behavioral Economics1115 Words   |  5 PagesBehavioral economics has also consulted inter-temporal choice. Inter-temporal choice describes to how humans decide about what and how much to do at different times when decide at a time effect the facilities available at another time. Choice under risk or ambiguity relates the dual-system theory. Research suggests that people’s decisions can be affected by the â€Å"type and amount of information† they find. A behavioral equilibrium depends on people take from frequently acts their equilibrium strategiesRead MoreThe Cost-of-Production Theory Essay668 Words   |  3 PagesAll production involves a cost. This cost is not counted simply in terms of money but also in terms of resources used. The resources used in producing a good and service are the real costs of that product. For example, a road construction. In this type of activity the real cost are the human, capital and natural resources in consumes. To road construction requires the labour of many people. The capital resources these people use include equipment, machines, tools. The road construction also requiresRead MoreEconomic Growth Theories and Models, A section of a Research Paper1524 Words   |  6 PagesLiterature review Classical Theory of Economic Growth Harrod Domar Growth Model The Neoclassical growth Model Empirical literature 2.1 Theoretical Literature The long history of ideas on economic growth started from the classical economists like Adam Smith, Robert Malthus, Ricardo and Marx. For more than three decades the Neoclassical and the Endogenous Growth theories were arguing and forwarding economic reasons on trend of economic growth through investment as a general and private investment