The Economic and Social Research Institute published "Economic Analysis No. 210 (Special Planning Issue) - Feature: Future Prospects Using New Long-term Projection Models" in July 2025, a collection of papers on the development and application of new models for analyzing ultra-long-term future prospects of the Japanese economy.
This issue features the results of new model development that enables ultra-long-term economic analysis, moving from conventional short- and medium-term analysis-focused models to address long-term challenges facing the Japanese economy including population decline, technological innovation, and climate change.
Yutaka Takahashi's paper "System Dynamics" explains the methodology and features of System Dynamics as an integrated approach for analyzing complex systems. Its utility as a support tool for strategy and policy design using computer simulation is demonstrated.
The paper covers key aspects of System Dynamics:
- Holistic approach to understanding complex system interactions
- Feedback loop modeling and non-linear relationships
- Computer simulation capabilities for policy testing
- Integration of multiple variables and stakeholder perspectives
System Dynamics provides a powerful framework for understanding how different economic, social, and environmental factors interact over time. The methodology is particularly valuable for long-term policy analysis where traditional linear models may miss important feedback effects and system-wide consequences of policy interventions.
The approach enables policymakers to test different scenarios and understand potential unintended consequences of policy decisions, making it an essential tool for comprehensive economic planning in complex, interconnected systems.