Delay mechanisms are the essential devices by which dynamic phenomena are understood. These fundamental dynamic sub-assemblies define specific arrangements of rates-of-change with the state variables that they control. Such structures are best visualized in signal path diagrams, the animation of which requires application of numerical methods. Though signal path analysis is a rather daunting topic, we do hope to provide some sense of comfort (however false) with SFEcon's use of this discipline.
Model 0 is constructed from two elementary delay mechanisms. First order delays are already familiar in economics where they appear in the form of exponentially weighted averages. Higher order delays are also familiar in that they formalize the concept of a ‘pipeline’ as used in business logistics, financial planning, etc.
It can be said that SFEcon views the economy as a gigantic, distributed analog computer that delays and smoothes indicia as to where the economic optimum can be found. Pursuing this analogy, we can view the model’s quantities and distributions of economic goods as state variables in which these indicia repose.