Abstract:
The long term goal attaining of economic system managing requires establishing a dynamic framework such as system dynamics to integrate multiple perspectives. This article considers the problem of economic development in macro level. Since that economic development has a dynamic and multidimensional nature, here to be used of system dynamics method. In this regard, main economic development indicators are utilized for dynamic measurement modeling. This model assesses economic development in Iran over the period 1989-2009 and predicts it to 2019. The results indicate relationships between economic development components.
Machine summary:
A B S T RAC T: Ke y wo r d s : Economic system, Development, System dynamics, GDP, Inflation, Saving, Investment INTRODUCTION Econ omic s ystems, bein g complex adap tive systems, ar e composed of n umerous number s of com pon en t s wh ich h a ve th e sp ecific i n t er n a l relationships.
In this study, the choice of saving as a main variable in the dynamic framework has been largely influenced by the theoretical links between saving and economic growth, on the one hand, and saving and investment on the other.
As a result of economic policies developed by Latin American countries in accordance with the IMF, it was possible to decrease the inflation to one-digit levels toward the end of the 1980s and the goal of researches during this period was a reduction in inflation (Mishkin and Savastano, 2001; Rigobon, 2002, Sahin, 2006).
Gylfason and Herbertsson (2001) find that the relationship between inflation and growth is non-linear and the threshold inflation rate to be around 10% while Khan and Senhadji (2001) find the threshold to be around 1% for industrialized and 11% for developing countries.
This research considers the relationship between GDP and inflation through system dynamics approach as stock indicators.
Since, there is not perfect adaptability between Inflation rate and GDP growth rate, their relationship is studied by system dynamic approach in this paper.
Threshold Effects of Inflation on Economic Growth in Developing Countries.