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COMPLEX DYNAMICS IN A KEYNESIAN GROWTH MODEL
Author(s) -
Jarsulic Marc
Publication year - 1993
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1993.tb00788.x
Subject(s) - profitability index , economics , chaotic , investment (military) , dynamics (music) , stability (learning theory) , growth model , econometrics , complex dynamics , new keynesian economics , mathematical economics , microeconomics , statistical physics , keynesian economics , mathematics , physics , computer science , mathematical analysis , monetary policy , finance , management , machine learning , politics , political science , acoustics , law
This paper develops a non‐linear differential‐delay model of the Keynesian system. The non‐linearities derive from a non‐linear relationship between capacity utilization and profitability, interacting with the effect of profitability on rates of investment. Local stability properties are established analytically, and numerical techniques indicate the possibility of chaotic behavior for some configurations of parameters. The results suggest that profitability and growth can interact to produce some of the apparently stochastic components of growth cycles.