IS Model Simulation
This application simulates the goods market of a closed economy with autonomous taxes (i.e. taxes that are independent of the economy's income).
How to use the simulation
- Change one of the parameters (note, you can not change endogenous variables C
and I since they are determined by the parameters)).
- Click the "Update Model" button and observe the effect on the IS curve.
The original curve is yellow while the current one is red. Also check how the
demand in the goods market Ydem changes in relation to production/income Y
which is dispalyed as a blue square marker in the chart.. Note that
the horizontal distance between the blue square marker and the new IS curve represents
the gap between demand (Ydem) and supply (Y) in the goods market.
- Change the production/income (Y) to adjust for the changed demand (Ydem) until
demand and suppy in the goods market are equal (i.e. the blue square marker is on the IS
curve). Don't forget to click the "Update Model" button after each change and
observer the effects on the endogenous variables I and C as well as the effect
on the red marker in the diagram.
Model Details
A detailed model description will be available soon for download.
Author
Carsten Lange
Department of Economics
California State Polytechnic University, Pomona
clange@cpp.edu