COVID-19-Related Policies System Dynamics Model: PPP Program Caused 50% Unemployment Rate Drop

COVID-19-Related Policies System Dynamics Model: PPP Program Caused 50% Unemployment Rate Drop

The video above is a presentation by Karim Chichakly, Co-President of ISEE Systems, the makers of system dynamics modeling software platforms STELLA and IThink, which are based on the DYNAMO programming language originally created by Massachusetts Institute of Technology Jay Forrester, and introduced in a book called Business Dynamics in 1956.

In turn, Professor Forrester used system dynamics to evaluate urban development and eventually the World. He headed the team that produced the World 3 Model, which was the center of the classic Limits To Growth book of 1971. It was in that publication that the basics of what we now call “climate change” were introduced in popular culture.

Karim Chichakly uses system dynamics in the form of an economic model designed to evaluate the impacts of various COVID-19-related policies like shelter-in-place and the Payroll Protection Program.

In the video description, ISEE writes:

Karim Chichakly looks at the efficacy of two policies aimed at protecting both lives and the economy during COVID-19:

1. Vertical isolation, a policy endorsed by President Bolsonaro in April 2020 as a way to reopen the Brazilian economy despite a large number of infections
View simulation: https://exchange.iseesystems.com/publ…

2. The CARES Act in the United States, meant to help both businesses and individuals survive the extended lockdown from March to June 2020
View simulation: https://exchange.iseesystems.com/publ…

Do either of these policies meet their objectives? I.e., does vertical isolation keep the economy thriving while protecting the lives of the citizens? In the face of stay-at-home orders, do the provisions of the CARES Act protect both businesses and the livelihood of citizens in the short and medium term?

As some of you know, I’m an expert in system dynamics modeling, so here’s my preliminary evaluation of what Karim has done. The video reveals the basic model details and findings, but to cut to the chase, the Payroll Protection Program was found to cause a 50 percent drop in unemployment rates. Overall, many of the findings in the model out-puts are to be expected, but what was left out, like rental payments and eviction rates, makes it still a work-in-progress.

Still, the overall message is clear: an activist government is necessary to help America recover from COVID-19.

Stay tuned.

Oakland News Now Today Blog - SF Bay Area Daily By Zennie62Media