Microsimulation Modelling of the Corporate Firm Exploring Micro-Macr

My interest in microsimulation started to develop when I was exposed to the works of Guy Orcutt and his associates on microsimulation of households in the USA, and those of Gunnar Eliasson and his associates on simulatio~ of Swedish firms. Their approache

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Micro simulation Modelling of the Corporate Firm Exploring Micro-Macro Economic Relations

Springer

Author Or. Frank W. van Tongeren Erasmus University Faculty of Economics P.O. Box 1738 3000 OR Rotterdam The Netherlands

Library of Congress Cataloglng-ln-Publicatlon Data

Tongeren. F.

ri.

van.

mOdei 1 Ing of the corporate flrm explorlng mIcro -macro eccnomlC relatlons I F.W. van Tongeren. p. cm. -- (Lecture notes In economlCS and mathemat1cal systems ; 427) Inc 1udes b 1b 11 ograph 1 ca I references and 1ndexes. ~lcroslmulatlon

ISBN 978-3-540-59443-7 ISBN 978-3-642-52068-6 (eBook) DOI 10.1007/978-3-642-52068-6 1. Bus1ness enterprlses--Mathemat1cal models. -Mathematlcal models. 1. T1tle. II. Ser1es.

2. M1croeconomlcs-

HF100B.T664 1995 33B.5'01'5118--dc20

95-11217

CIP

ISBN 978-3-540-59443-7 This work is subject to copyright. AII rights are reserved, whether the whole or part of the material is concemed, specifically the rights of translation. reprinting, re-use of illustrations, recitation, broadcasting, reproduction on microfilms or in any other way, and storage in data banks. Ouplication of this publication or parts thereof is permitted only under the provisions ofthe German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag Berlin Heidelberg GmbH. Violations are liable for prosecution under the German Copyright Law. © Springer-Verlag Berlin Heidelberg 1995 Originally published by Springer-Verlag Berlin Heidelberg New York in 1995

Typesetting: Camera ready by author 42/3142-543210 - Printed on acid-free paper SPIN: 10486787

to Kaj

Preface My interest in microsimulation started to develop when I was exposed to the works of Guy Orcutt and his associates on microsimulation of households in the USA, and those of Gunnar Eliasson and his associates on firms.

simulatio~

of Swedish

Their approaches promised the exciting possibility to represent an

entire economic system by simulating the behaviour of individual microeconomic units on a computer. The construction of a large scale microsimulation model seemed to be a worthwhile adventure which could yield much more detailed results than existing models. It was also evident that microsimulation of firms is a relatively underdeveloped area, in spite of the large number of operational microsimulation models of households in the USA and Europe. Developing the computer implementation has been an integral part of the research. Translating initially vague ideas into mathematical formulae and subsequently into a structured computer language provides a testing ground for 10Bical consistency of ideas. When writing this book I have purposefully abstained

from

describing

the computer program

and dedicated

solution

algorithms. The reason is that the book is primarily directed towards readers interested in economics and therefore uses the language of economics and not that of computer science. The simulation model has been programmed for the personal computer in Turbo Pascal. Sophistica