Methodological Issues and Models in 'History Friendly' Simulations

Simulation techniques have proliferated a lot in the last years. In economics the industrial dynamics approach makes use of simulation techniques to understand the complexity of the industrial process of continuous change. Among these models, a new branch of studies called “History-friendly” models aims at establishing a close link between formal theory, developing stand-alone theoretical simulation models, and empirical evidence, as it stems from a rigorous study of the economic environment under exam. The paper aims to give a methodological contribution to the “History-friendly” methodology. We discuss the flexibility of simulation techniques in representing complex environments. We analyse the relationship between empirical evidence and the implementation of the simulation model. We study “History-friendly” analyses and counterfactuals. A contribution to define the role of “History-friendly” models in the debate about empirical validation of simulations is given. Finally, some examples of “History-friendly” models are examined.