Iterative design of economic models via simulation, optimization and modeling Original Research Article

Microeconomic models, e.g., concern models, usually suffer from too simple dynamic equations and from too unrealistic economic data. In the paper, a new iterative design method is presented, which consists of numerical simulation, numerical solution of optimal control problems by direct optimization methods, and modeling. The capability of the method is demonstrated by the improvement of a simple concern model known from literature. In the end, complex and realistic micro- and macroeconomic phenomena known from reality are described. The controls involved in the model are optimally determined and various numerical calculations have been performed.