Design and Analysis of Macro-Economic Models in the Laplace Domain

An Economic-Engineering Approach

Master thesis (2024)

Authors

G.A.M. van Rijen Mechanical Engineering

Contributors

M.B. Mendel Team Bart De Schutter - Mechanical, Maritime and Materials Engineering (mentor)
C. Hutters Team Bart De Schutter - Mechanical, Maritime and Materials Engineering (graduation committee member)
Faculty
Mechanical Engineering, Mechanical Engineering
Copyright: © 2024 Gijs van Rijen
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Published Date

09-02-2024

Language

English

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Faculty

Mechanical Engineering

Abstract

In this thesis, we demonstrate the efficiency of Laplace domain techniques for the design and analysis of economic systems. To make the techniques applicable to economic modeling, we establish the economic analogs to the various tools and nomenclature in the engineering literature. We show that the Laplace domain provides an alternative description of economic systems, offering insights into behavior not apparent in the time domain. This allows economic discounting and cycles to be efficiently analyzed using pole-zero maps, Bode plots, and similar techniques. In addition, we demonstrate that transforming the linear differential equations of economic engineering into algebraic equations in the Laplace domain simplifies the design of economic systems.

We use the Laplace domain techniques to design and analyze a macroeconomic model. By designing the model in the Laplace domain, we are able to integrate supply chain dynamics and the housing market using two-port network theory.
By analyzing the model using a pole-zero map, we show that the economy's discount rates and business cycles are represented by complex poles and the economy's transmission blocking rates by complex zeros. Additionally, we demonstrate that the Bullwhip effect, a supply chain phenomenon, can be intuitively visualized using a Bode plot. These applications illustrate how Laplace-domain techniques enable the efficient design and analysis of economic systems.