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Strategic Modelling and Business Dynamics: A feedback systems approach, + Website, 2nd Edition by John D. W. Morecroft

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CHAPTER 3 Modelling Dynamic Systems

Causal loops diagrams are very effective for expanding the boundary of your thinking and for communicating important feedbacks. However, they are not especially good as the basis for a full-blown model and simulator that computes dynamics and performance through time. For a working model, we need better resolution of the causal network. It turns out, not surprisingly, that there is more to causality and dynamics than words and arrows alone. The main new concepts required to make simulators are introduced in this chapter. They transform a simple sketch of causality into a portrait (or better still an animation) that brings feedback loops to life, by specifying the realistic processes that lie behind causal links as the basis for an algebraic model and simulator.

Asset Stock Accumulation

Asset stock accumulation is a very important idea in system dynamics, every bit as fundamental as feedback and in fact complementary to it. You can't have one without the other. Asset stocks accumulate change. They are a kind of memory, storing the results of past actions. When, in a feedback process, past decisions and actions come back to influence present decisions and actions they do so through asset stocks. Past investment ...

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