Economic model

This article is about theoretical modelling. For the overall economic structure of a society, see Economic system.
A diagram of the IS/LM model
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An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed to illustrate complex processes. Frequently, economic models posit structural parameters.[1] A model may have various exogenous variables, and those variables may change to create various responses by economic variables. Methodological uses of models include investigation, theorizing, and fitting theories to the world.[2]

  1. ^ Moffatt, Mike. (2008) About.com Structural Parameters Archived 2016-01-07 at the Wayback Machine Economics Glossary; Terms Beginning with S. Accessed June 19, 2008.
  2. ^ Mary S. Morgan, 2008 "models," The New Palgrave Dictionary of Economics, 2nd Edition, Abstract.
       Vivian Walsh 1987. "models and theory," The New Palgrave: A Dictionary of Economics, v. 3, pp. 482–83.