This paper examines the relationship between sovereign debt dynamics and the stability of financial institutions using a system dynamics framework. The model, which builds upon the seminal work of Saeed and Parayno (1993), incorporates three heterogeneous banks, a central government and a rating agency. Further, the banks and the central government are assumed to be boundedly rational and backward looking interacting via both the local and international capital markets. The model is calibrated to conform to time-series data of Jamaicas debt-deficit dynamics and banking system performance between FY 1997/8 and FY 2003/4 and then used to perform a set of counterfactual exercises based on the impact of exogenous hypothetical shocks to the Jamaican economy four years prior to the onset of recent the global financial crisis. Accordingly, the paper proposes an early warning system for the vulnerability of banking institutions to a default on public debt. Scenario analyses, conducted using the framework, suggests that significant shocks to net international reserves and exports in 2004 would catalyze a significant fall-out of the banking sector in the near to medium term, with the country being more vulnerable to shocks to net international reserves. We close with some implications for prudential regulation.
Industrial companies increasingly rely on services to stand out from the crowd. Alongside direct strategic and economic advantages, these industrial services can also provide impulses for the further development of the producer´s good. Likewise, modifications of the material product may lead to new or advanced service offers. Hence, product modifications may lead to service adaptations, which again lead to product enhancements. Consequently, product and service innovations seem to interact, driving a dynamic loop and accelerating the innovation activities of a company. This article analyzes the causes by means of a literature review. Afterwards a system dynamics model is constructed to describe the assumed interaction system of product and service innovations in industrial companies and show first consequences resulting from this dynamic loop. Finally, the impacts of some drivers are tested, to give some insights into the behavior of this system.
We will introduce a new system dynamic modelling and simulation environment based on open source components. The development was initiated by a group of active system dynamics modellers who had needs and ideas for an open toolset. The new needs for features like hierarchical modules, module libraries, collaborative model development and efficient model communication in system dynamics together with the development of open source modelling framework Simantics and simulation environment OpenModelica have driven us to start developing an open source modelling and simulation software for system dynamics. In this paper we discuss how current open source components can be used to build a comprehensive tool for system dynamics modelling and what impact open source could have on system dynamics modelling. Even though the development is still on its early stages, the open source components have enabled us to rapidly develop a tool capable of hierarchical modelling, simulation and some basic result and model analysis. When using open source, the modelling software becomes more affordable and distribution of models becomes easier, modelling software can be adapted to individual needs and models can be used and validated by all stakeholders.
In Korea, presidential pardons for traffic violations have been carried out almost every three years, starting from 1995. Whenever Presidents announced pardons for traffic violators, they repeatedly emphasized justifiable reasons that drivers under administrative ruling should be given another chance to make a living by driving. Nonetheless, whenever Presidents issued pardons towards violators of traffic offenses, they were not free from a series of criticism or blame. In fact, the pardons were controversial from the outset.
This paper provides the CSI (cloud computing, smart devices, and the Internet of things) system dynamics model to simulate the future trend in the fields of education, health care, and smart work system. The simulations focus on the policy strategies for success in each field. In addition, this study has a unique meaning in terms of system dynamics modeling approach. A new attempt to build an archetype model for applying to different policy fields was adopted as a new trial.
The objective of the study is to conduct an exploratory study of the causes that constitute to skilled labor shortage in Norway. Subsequently, we formulate policy to increase skilled labor supply. We apply system dynamics methodology to model the causal relationship between individuals motivation to tertiary education participation, from wages and job opportunity perspective. From the simulation, we find that if tertiary education participation persists as it is, skilled labor shortage will increase from 40,000 in 1994 to 190,000 skilled laborers in 2050, which accounts for 11% of the total skilled labor force. With the introduction of voluntary-based internship program into current tertiary curriculum, promotion of online tertiary education, and encouragement of more foreign tertiary students to study in the country, total university students in 2050 will be 1.30% higher, domestic skilled labor force will be lifted 2.5%, and skilled labor shortage will be reduced by 35%.
The Health Systems Design Laboratory applied progressively more complex concept models to help elicit expert knowledge from medical professionals leadership at a population health agency (PHA) as part of a study of medical professional capacity planning over a 20-year horizon. In this paper we document the knowledge elicitation process employed with PHA managers and medical professionals in two half-day sessions in which we introduced first principles of System Dynamics methodology and applied those in progressively more complex concept models. We observe that our working group, made up of persons with widely divergent levels of experience with complicated models and systems thinking consultations, quickly learned iconography and terminology of system dynamics and contributed to the development of dynamic hypotheses.
Prior exploration is an instructional strategy which has improved performance and knowledge acquisition in system-dynamics based learning environments, but only to a limited degree. This study investigates whether model transparency, showing users the internal structure of models, can extend the prior exploration strategy and improve learning even more. In an experimental study, participants in a web-based simulation learned about and managed a small developing nation. All participants were provided the prior exploration strategy but only half received prior exploration embedded in a structure-behavior diagram intended to make the underlying models structure more transparent. Participants provided with the more transparent strategy demonstrated better knowledge acquisition of the underlying model on an objective measure (multiple-choice posttest) but no difference on a subjective measure (open-ended verbal protocols based on short essay questions). Furthermore, their performance (managing the nation) was the equivalent to those in the less transparent condition. Combined with our previous studies, the results suggest that while prior exploration is a beneficial strategy for both performance and knowledge acquisition, making the model structure transparent in this way (with structure-behavior diagrams) is more limited in its effect and may depend on the participants level of expertise.
When evaluating the effectiveness of interactive learning environments it is important to include measures of knowledge acquisition that complement measures of performance. In this paper we report on participants knowledge acquisition in a dynamic decision making task where participants learned about and managed a small developing nation. In the course of the experiment participants not only had to make decisions but also answer multiple-choice questions and short essay questions. The results suggest that participants had a fairly good understanding of the reinforcing nature of national development processes and of processes that are in close causal proximity to their decisions. On the other hand, participants largely failed to recognize nonlinearities, the existence of the outflows to stocks and the proper treatment of delays with different durations. Knowledge acquisition was facilitated by the intensity of participants exploration activities during a simulation-based, guided exploration phase between reading textual instructions and making actual, simulation-based decisions.