SFEcon Model 3 is our response to Kurt Roemer's reservations regarding the uses of his solution to the calculation problem as a predictive model of economic activity:
With intermediaries, governments, and dependent populations becoming increasing important economic actors, their demands on the economic system require distinct expressions that are certainly beyond marginalism's capabilities to portray. But the non-economic sectors' consumption of assets, with its consequent impact on prices, necessitates their differentiated presence in useful systems of economic calculation. 1
Model 1 advanced Model 0's structure to include the 'non-economic' sectors:
Governments use assets and create exogeneous financial flows around which the industrial and household sectors must sub-optimize;
Dependent populations in each nation command no wages, do consume assets, and subsist on government largess;
And financial intermediaries also consume assets. These are purchased with the spread between the profits harvested from industries and the dividends paid to investors.
Model 2 advanced Model 0's structure to include international finance.
Model 3 synthesizes Models 1 and 2. It is the basis for our claim that the SFEcon project can now advance to 1) defining an empirically relevant international matrix structure, and 2) investing that structure with a history of the production and utility parameters with which to operate the SFEcon emulator.
A .pdf detailing this line of development from the standpoint of financial intermediation is available here.
Model 3's desktop prototype operates several Excel workbooks simultaneously. These reside together in a folder on MS OneDrive:
Instructions for setting-up the Model 3 demonstration are in an MS Word document in the folder.
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