Yes David it’s a very simplistic difference equation system where the future equilibrium of the system is hard wired into it by the assumption that there is a “natural rate of unemployment” which is set at about 5%, and a natural rate of inflation which is set at about 3% (from memory).

You can actually purchase the TRYM model from the ABS (it runs in an econometrics package) and pull it apart. I haven’t yet done so–too damn busy!–but there are comments on TRYM in some of my presentations and I think in a blog entry or two.

http://www.treasury.gov.au/documents/238/PDF/trym_m.pdf

They appear to be describing equilibrium models here (block diagrams but no sign of any odes) but produce continuous time simulations over a number of years.

Do you have any idea what’s going on here? Some sort of difference equations approach?