A note on the integration of system dynamics and economic models

Equilibrium is probably the principal focus of most areas of economic analy sis. However, the policy maker is often interested not only in the equilibr ium predictions arising from an economic model, but also in the path taken by policy variables as they move towards that equilibrium. It is therefore likely that integration into a dynamic framework will frequently enhance th e usefulness of an economic model. Recent developments in computer software mean that system dynamics offers a readily accessible methodology for maki ng this principle operational. The approach is illustrated using an example from the British National Health Service, in which a traditional economic model of supply and demand is deployed within a system dynamics model. (C) 2002 Elsevier Science B.V. All rights reserved.