System dynamics modeling of production target for Ukraine

Abstract

Desired production is a short-term decision that typically calls for temporary under- or over-utilization of production capacity (e.g., "overtime"). This model jumpstarts the production process by targeting the fraction of productive capacity that will be utilized. Once "desired production" is determined, decisions on utilization of labor and capital will follow. The main target of the model is to develop the system dynamics model about Production Target for Ukraine. The driving force is aggregate demand: the sum of household consumption, government consumption, and net exports. The desired production depends on aggregate demand and desired inventories.