A system dynamics scenario model of the New Zealand economy : review and reflections after 25 years

This chapter revisits the macroeconomic modelling and medium-term scenarios undertaken at the New Zealand (NZ) Planning Council (now disbanded) in the mid 1980s. A system dynamics macroeconomic model (SDMACRO) was developed using the DYNAMO simulation package, to create macroeconomic scenarios and forecasts of the NZ economy over the period from 1985 to 1995. This period involved considerable economic reform in NZ, shifting it from a highly regulated economy to one of the most deregulated economies in the world. Reviews of completed economics and social science modelling studies are typically not undertaken. It is argued here that a formal ‘Review and Reflections’ stage be added to the SD modelling process. This chapter provides a brief overview of SDMACRO and its recent conversion into the icon based Vensim simulation package. Simulations are provided to demonstrate that the Vensim version of the model corresponds to the behaviour of the original DYNAMO model. The reforms of the New Zealand economy from 1984 to 1995 are briefly summarised and comparisons are provided with the original model scenarios. Some suggestions are offered about possible future model modifications. Online supplementary files include the original Haywood and Cavana 1986 report and the current Vensim electronic version of SDMACRO.