Refinements to Eigenvalue Elasticity Analysis: Interpretation of Parameter Elasticities

System Dynamics Review (Forthcoming)

13 Pages Posted: 18 Aug 2018

See all articles by Sergey Naumov

Sergey Naumov

MIT Sloan School of Management

Rogelio Oliva

Mays Business School, Texas A&M University

Date Written: August 4, 2018

Abstract

The purpose of this article is to report on improvements on the interpretation and insights emerging from dynamic decomposition weight analysis (DDWA). These improvements emerged from efforts to further automate and expand the eigenvalue elasticity analysis methods and resolve inconsistencies on assumptions made in published reports of DDWA usage. In addition to making available to the broad SD community an improved toolset to perform eigenvalue elasticity analysis, in this paper we clarify the set of assumptions needed to obtain reliable results and develop a new framework to assess the impact of model parameters on the projections of behavior modes on stock behavior. We illustrate the use of these developments by updating a previously published model analysis. The paper concludes by summarizing our findings and their implications for the further development of structural dominance analysis.

Keywords: structural dominance analysis, system dynamics, eigenvalue elasticity analysis

Suggested Citation

Naumov, Sergey and Oliva, Rogelio, Refinements to Eigenvalue Elasticity Analysis: Interpretation of Parameter Elasticities (August 4, 2018). System Dynamics Review (Forthcoming). Available at SSRN: https://ssrn.com/abstract=3226521

Sergey Naumov

MIT Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

Rogelio Oliva (Contact Author)

Mays Business School, Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
United States

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