Abstract
The previous chapters developed and discussed a general model of firm behaviour within a model of the economy as a whole. This chapter goes a step further and applies the model to existing Dutch firms. The model is calibrated to data for the Netherlands for the sampling period 1978–87, using micro data on firms in conjunction with published sectoral data from the Dutch Central Bureau of Statistics. This calibration results in a base run simulation which serves as a benchmark for experimental runs.
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One could add a similar list of criteria concerning the computer implementation of the model. Does the computer program perform the tasks which it is supposed to perform. Does the computer program truly represent the equations of the model? Are there bugs? Is the program robust under extreme parameter settings etc.. It is tempting to discuss these issues, because 102 program development is such an integral part of simulation modelling, but this theme shall be avoided since it falls beyond the scope of this book. Many textbooks on simulation modeling contain chapters on program development and program validation techniques, see e.g. Law and Kelton (1992), Bratley et al. (1983).
See also Payne (1988), who conceptualizes pragmatic validity in terms of cost-benefit analysis to determine whether additional effort in model construction is justified.
The Standaard Bedrijfs Indeling (SBI, 1974) is the CBS’s industrial classification scheme.
Oil-and natural gas mining is classified under `MINI’ from 1979 onward, and has been subsumed under `CHEM’ in prior years. Therefore, the share of `CHEM’ is higher in 1978. Unfortunately, our classification cannot disclose the share of these activities in CHEM for earlier years.
The negative growth rate of ELEC consumption points to an index number problem. Between 1980–1987 consumption patterns can be expected to have shifted towards consumer electronics, which is not appropriately discounted in the CBS price index. We have not attempted adjustments, since this would have introduced additional arbitrariness.
An ongoing concern for financial analysts, see e.g. Schoenmakers, (1991).
According to the chairman of the board of directors, the transformation of the company can now be considered completed (interview with G.A. Reudink, in: Onderneming, no.20: p.12).
Metze (1991) reflects on the organizational structure and practice of Philips in a historical perspective, and gives some inside information obtained from former top executives.
This is a lively issue in the Industrial Organization literature. See for instance the analysis of the impact of different valuation systems on the measurement of market power in Verma (1990), and the references contained therein.
We experimented with a grid search procedure which is based on the 2k factorial design techniques in Box and Hunter (1978). Grid search has a very large cost in terms of computer time, but the gain is that information about the local behaviour of the response surface can effectively be used to determine the direction of search.
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© 1995 Springer-Verlag Berlin Heidelberg
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van Tongeren, F.W. (1995). Model application. In: Microsimulation Modelling of the Corporate Firm. Lecture Notes in Economics and Mathematical Systems, vol 427. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-52068-6_6
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DOI: https://doi.org/10.1007/978-3-642-52068-6_6
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