Abstract—In this paper we model macro-economic policies with a Finite State Machine (FSM). The FSM is made of several states and transitions between states, in which a state is modelled by a set of conditions. The allowed transitions between states must be also be defined, in order to complete the model. In this paper we analyze how to use a FSM in order to model macroeconomic decision, where each state represents a set of economic decisions. Together with some pre-defined initial conditions, these adapted FSM models are analyzed in order for us to study what sequence of decisions yield the best results for pre-determined end-goals, based on the FSM’s possibilities. The final model shows what policies must be followed, and by what order, in order to maximize results, yielding some interesting conclusions.

Index Terms—finite state machines, macro economy, modelling, politics

Cite: João Marques Silva and José Azevedo Pereira, "Finite State Machine Modelling of the Macro-Economy" Journal of Advanced Management Science, Vol. 5, No. 5, pp. 333-337, September 2017. doi: 10.18178/joams.5.5.333-337