Economic Modelling

An economic model is a theoretical construct and a simplified framework designed to describe, investigate, and predict complex economic processes. Inherently, economic modelling is a practice of articulation of theoretical assumptions, and the use of real data to simulate and forecast potential consequences. Subsequently, economic models, when designed properly, provide a great decision-making and policy making tool.

Economic models, are either deterministic or probabilistic/stochastic. Deterministic models assume certainty, require information on cause-and-effect, and are meant to yield a single solution. Probabilistic/ stochastic models include elements of randomness, and require measurement constructions under uncertain assumptions. Given that economic systems are complex and endogenous (change originates from within the system), the economic models should, where possible, be probabilistic/stochastic. Moreover, heterogeneous economic processes and the endogeneity of variables in full systems create contemporaneous feedback loops that may become permanent features of the economic systems (such as non-marginal impulses of climate change effects), and so it is essential that economic models are set up in a way that characterise these features not only in the short-run but also in the long-run.

Here, at CITBA, we have expertise in building probabilistic/stochastic, systematic, and dynamic economic models that posit structural parameters and are capable of investigating contemporaneous relationships between economic, social, and environmental variables using systems of equations. Our research attitude is holistic and inspired by issues of pertinent to climate change, natural disasters, public health, urban economics, and sustainability at micro and macro scales. We have capabilities and skills to create leading economic models for SMEs, industries, and governments to help them with their future planning. We have expertise to deal with data that are either discrete and equally spaced time intervals, or come from different sections at a single point in time. Our economic analysis uses econometric methods and estimation techniques, such as time series analysis, regression analysis, Structural Vector Auto-Regressions, Vector Error Correction models, etc.

For further information on the Economic Modelling research being conducted by CITBA please contact A/prof Taha Chaiechi taha.chaiechi@jcu.edu.au