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Nation with International Money Circulation

Description:

Increasingly the economy of every nation is linked with the rest of the world through trade, loans across national boundaries and multinational business. This model represents a nation's assets and growth as it is affected by international finance.

Examples:

To various degrees all states and nations have their economies interconnected with patterns of world finance, but the availability of resources and provisions for exchange between countries makes a very uneven pattern of wealth.

 Diagram

Variables:

Q = total assets
P = production
F = fuel reserves
D = national debit

Equations:

S = I/(1 + K5*(F + K9*M/P3)*Q + K6*Q + K7)
P = K1*S*Q*(F + K9*M/P3) + K2*S*Q + K3*S - Y*K12*l/P1
L = TM - M

Simulation:

The graph shows the changes of F(red), D(orange), P(green) and Q(blue) over a time period.
Source code: Intecon.java

"What if" Experiments:

  • What is the effect of increasing the interest rate? Change IT from 3 to 12, considering D=3.
  • What is the effect of massive debt where large interest and/or proftis are being paid to other countries? Make D=3.
  • What is the effect of increasing the home country's money supply which includes $ at home and abroad? Make TM=4.
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