A distinctive feature of macroeconomic analysis is modeling, which allows you to study economic phenomena and processes by constructing their conditional images. Since the specifics of macroeconomics as a whole exclude the possibility of experimental modeling, theoretical modeling is mainly used. The most important for macroeconomics are three methods of mathematical modeling: balance, static and dynamic. In general, mathematical modeling is based on the fact that the main parameters of the economy are commensurate and they establish qualitative and quantitative dependencies of variables that describe the economic process. When building a model, the method of scientific abstraction is used – the most significant connections between variables are reproduced, and the researcher abstracts from the secondary ones.
The balance sheet model assumes that in all markets there is equality of income and expenditure, volume of production and sales, aggregate demand and aggregate supply. And although in reality such an equilibrium is almost unattainable, it is the desire for it that allows solving macroeconomic problems of employment, economic growth, inflation and the stability of the national currency. Static models analyze an economic system in a certain period of time. Dynamic models based on the initial data give a forecast for the development of the economic system. A feature of static modeling is the use of the system of national accounts, which makes it possible to determine the values of macroeconomic parameters for a certain period in order to obtain information about the results of the functioning of the economy. Dynamic models are predictive modeling of economic phenomena and processes.
Thus, macroeconomic models are formalized (logically, graphically and algebraically) descriptions of various economic phenomena and processes in order to identify functional relationships between them. Any model (theory, equation, graph, etc.) is a simplified, abstract reflection of reality, since the whole variety of concrete details cannot be simultaneously taken into account when conducting research. Therefore, no macroeconomic model is absolute, not exhaustive, not comprehensive. It does not provide the only correct answers addressed to specific countries in a particular period of time. However, with the help of such generalized models, a set of alternative ways of managing the dynamics of employment levels, production volumes, inflation, investment, consumption, interest rates, the exchange rate and other internal (endogenous) economic variables is determined, the probabilistic values of which are established as a result of the solution of the model. External (exogenous) variables, the value of which is determined outside the model, are often the main instruments of the government’s fiscal policy and the monetary policy of the Central (National) Bank – changes in the values of government spending, taxes and money supply.
The multivariate solutions to economic problems provided through models make it possible to achieve the necessary alternativeness and flexibility of macroeconomic policies. The use of macroeconomic models makes it possible to optimize the combinations of instruments of fiscal, monetary, foreign exchange and foreign trade policy, to successfully coordinate the measures of the government and the Central (National) Bank to manage cyclical fluctuations of the economy. The most promising from this point of view are models that take into account the dynamics of inflation expectations of economic agents. Their use in macroeconomic forecasting allows to reduce the risk of the phenomenon of unexpected inflation, which has the most destructive impact on the economy, as well as to mitigate the problem of distrust in the policy of the government and the Central (National) Bank, which is one of the most difficult in macroeconomics.
Such generalized macroeconomic models as the circular flow model, the Walras model, the Phillips, Laffer curves, the Solow model, etc. represent a common toolkit for macroeconomic analysis and do not have any national specifics. Specific values can be the values of empirical coefficients and specific forms of functional relationships between economic variables in different countries. Any macroeconomic model should be evaluated not by the criterion of its momentary “suitability” or “unsuitability” for the economy of a particular country, including Belarus, but by the criterion of its usefulness in the process of cognition of economic dynamics and management of its indicators.
The objective difficulty is to ensure that the prerequisites for building a model are sufficient in terms of the objective and to avoid erroneous conclusions for macroeconomic policy. At the same time, the model can be quite realistic, but too complex, while the simplicity of the model is one of the most important requirements for it in terms of the possibilities of its use in the research process. However, excessive simplification of the model can lead to the exclusion of significant factors from the analysis, as a result of which the conclusions will be incorrect. Therefore, the most difficult moment in building any model is to determine the range of factors that are essential for the macroeconomic analysis of a particular problem.
Along with the classification of economic variables as endogenous and exogenous, another grouping is important, associated with the way they are measured in time. Variables of stock (depletion) can be measured only at a certain point in time and characterize the state of the object of study on a certain date – the beginning or end of the year, etc. Examples of stock (depletion) can serve as public debt, the amount of capital in the economy, the total number of unemployed, etc.
Flow variables are measured per unit of time (per month, per quarter, per year, etc.) and characterize the actual “flow” of economic processes in time: the amount of consumer spending per year, the amount of investment per year, the number of people who lost their jobs during the quarter, etc.
Flows cause changes in inventories: the accumulation of budget deficits over a number of years leads to an increase in public debt; the change in the stock of capital at the end of this year compared to its value at the end of last year can be represented as a flow of net investment for the year, etc. The relationship between stocks and flows forms the basis of the initial macroeconomic model of circular flows.
The main conclusion from the circular flow model is that real and cash flows are carried out unhindered, provided that the total expenditures of households, firms, the state and the rest of the world are equal to the total volume of production. Aggregate spending gives impetus to the growth of employment, output and incomes; from these revenues the expenses of economic agents are again financed, which again return in the form of income to the owners of the factors of production, etc. Cause and effect change places, and the model of circular flows takes the form of a circular circulation.