THE ECONOMIC CONSEQUENCES OF BREXIT
Category : News
THE ECONOMIC CONSEQUENCES OF BREXIT: A CHALLENGE FOR THE SYSTEM DYNAMICS COMMUNITY
The advent of Brexit will cause a shock to the economy which many commentators believe will be the most profound for a generation, possibly even since the Second World War. Anticipating what might transpire, without the aid of a modelling tool, seems slim. System Dynamics is well-known as a methodology for projecting dynamic behaviour in a complex system and so the challenge of modelling the economic effects of Brexit over the next ten years or so is one which the SD community should respond to. Below is an outline of such a ‘challenge’: can the SD community respond and contribute to this endeavour in strategic economic planning?
Although the financial crisis in 2008 took almost all economists by surprise, in the Brexit case we don’t have to attempt to foresee the event itself but we do need to consider the economic consequences. If the dynamics inherent to this economic shock can be modelled then the government and the Bank of England will know which trends to monitor closely and they will be placed on a footing to respond proactively rather than reactively.
This task should not be regarded as a competition but as a challenge which illustrates the utility of SD for economic modelling
THE DETAILS OF THE CHALLENGE
- Prepare and document an SD model projecting the consequences of Brexit on the UK economy; the team can consist of any number of persons
- Likely horizon is 10 years (2018-2028); model would depict the main economic variables such as GDP; inflation; interest rates; unemployment; government debt; consumer spending etc. Model can embrace fewer or more of these macro variables. It can be set at industry level, designed to address the consequences on a specific industry, if preferred.
- We have 2017 data to examine the immediate effects; most important here is the fall in the £
- Models to encompass a maximum of ~100 variables (rates; levels; aux). Parameters are extra
- Can use any SD (or indeed wider) modelling software which produces graphs covering the next 10 years
- Can submit up to TWO models (to cover any dilemmas you may have)
Make your submission to the President of the UK Chapter