Economics: Dominant Relations
Gross Domestic Product (GDP) is a function of multifactor productivity (MFP), capital stocks (KS), and labor inputs (LABS), all specified by sector. This approach is sometimes called a Solowian Cobb-Douglas specification, but IFs helps the user get inside the multifactor productivity term, rather than leaving it as a totally exogenous residual.
For a diagram, see Economic-Value Added and Economic Multifactor Productivity.
For equations documenting, see the production function.
Key dynamics are directly linked to the dominant relations:
· Multifactor productivity is a function partly of exogenous specification of an annual growth rate in it for the systemic technology leader (mfpleadr), base rates of relative technological advance in other countries determined via an inverted U-shaped function that assumes convergence with the leader (see changeable functions), and of an exogenously-specified additive factor for control of specific regions or countries (mfpadd). In addition, there is a linkage from the saturation of networking to MFP (controlled by numnwpgrinc) and a linkage from energy prices and thus possible technology constraints to MFP (to be controlled by elmfpep)
· Capital stock is a function of investment and depreciation rates. Endogenously-determined investment can be influenced exogenogously by a multiplier (invm) and the lifetime of capital (lks) can be changed.
· Labor supply is determined from population of appropriate age in the population model (see its dominant relations and dynamics) and endogenous labor force participation rates, influenced exogenously by the growth of female participation (femshgr).
Economic: Selected Added Value
The larger economic model provides also representation of and some control over sector-specific consumption patterns; trade including protectionism levels and terms of trade; taxation levels; economic freedom levels; and financial dynamics around foreign aid, borrowing, and external debt.