Details: Simulation by the MODEL Procedure

The solution, given the vector k, of the following nonlinear system of equations is the vector u that satisfies this equation:

\[  \mb {q} (\mb {u} , \mb {k} , {{\btheta }}) = 0  \]

A simulation is a set of solutions u $_{t}$ for a specific sequence of vectors k $_{t}$.

Model simulation can be performed to do the following:

  • check how well the model predicts the actual values over the historical period

  • investigate the sensitivity of the solution to changes in the input values or parameters

  • examine the dynamic characteristics of the model

  • check the stability of the simultaneous solution

  • estimate the statistical distribution of the predicted values of the nonlinear model using Monte Carlo methods

By combining the various solution modes with different input data sets, model simulation can answer many different questions about the model. This section presents details of model simulation and solution.