This is a real big update to my simulation and reworks the entire logic of it. Though doing so allows me to investigate even more stuff. Check out the post on the old sim if you haven't seen it.
At this point, the sim has become so complex, I don't think I can explain it in as much depth as the previous one.
So I'll keep it simple and show you my assumptions, results, and code. There are 10 sectors in the economy this time (so the visualization has changed)
As always, "economic reproduction" is the condition where nobody in the economy gains or looses money by the end of the production period.
The code and pictures are in the comments.
Also, I'd like /u/Sebrof and /u/pancake@lemmygrad.ml to see this post.
Assumptions:
- There are no banks, governments, population growth or technological changes. None of these things are modeled yet since they distract from the point of the model, which is to see how labor prices and economic reproduction are related.
My next model will try to model these things to see if the relationship between labor prices and economic reproduction still holds
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The logic of this model is inverted to the last one. In the previous model, we started with a net output (sold to consumers) then calculated how much gross output would be needed (sold to consumers and to factories) to maintain this. This time, I randomly generate a gross output then compute a net output.
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I randomly generate 100,000 economies, each with its own technological level (the 10x10 A matrix), a set of prices (10x1 column vector), and employment in industries (10x1 vector). I assume everyone is employed. Also, this time, there is only 1 price vector per economy.
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For each economy, I randomly generate a "basket of consumption", which is the amount of products that its people will consume. I scale the basket so that it could be produced by half the labor of the economy, and keep the basket constant for all time.
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This time, there is foreign trade. If the economy produces more of a product than what is required for the basket, that's exports. Otherwise it imports.
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I simulate 100 time steps for each economy. Every time step, the sectors of the economy will update their prices and employment. There were many possible rules for choosing how these updates happened. I made it so that the sectors hire workers in proportion to how much money they have (divided by how much it costs to hire workers). Prices are scaled down as a sector grows (due to competition)
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Then I compute all the financial data (like revenues, wages, incomes, costs, trade imbalances, profits, etc) and plot it.
The important accounting identities are:
National income = Wages + trade balance
National income = Revenues of industry - Costs of industry (not including wages)
pretend that it was a joke and not me being utterly unaware of American geography (I'm not a citizen of burger)
, the post would really appreciate it