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On dynamics in a Keynesian model of monetary and fiscal stabilization policy mix with twin debt accumulation

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  • Toichiro Asada
  • Michal Demetrian
  • Rudolf Zimka

Abstract

In this paper, a six‐dimensional model of flexible prices with the monetary and fiscal policy mix, describing the development of the firms’ private debt, the output, the expected rate of inflation, the rate of interest, government expenditure, and government bonds are analyzed. The stress put on the “twin debt accumulation” means that in our model both private debt accumulation and the public debt (government bond) accumulation are explicitly introduced. Questions concerning the existence of limit cycles around its normal equilibrium point are investigated. The bifurcation equation is found. The formulae for the calculation of its coefficients are gained. Numerical example illustrating the results attained is presented by means of numerical simulations.

Suggested Citation

  • Toichiro Asada & Michal Demetrian & Rudolf Zimka, 2019. "On dynamics in a Keynesian model of monetary and fiscal stabilization policy mix with twin debt accumulation," Metroeconomica, Wiley Blackwell, vol. 70(3), pages 365-383, July.
    • Handle: RePEc:bla:metroe:v:70:y:2019:i:3:p:365-383
    DOI: 10.1111/meca.12220
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    Cited by:

    1. Murakami, Hiroki & Zimka, Rudolf, 2020. "On dynamics in a two-sector Keynesian model of business cycles," Chaos, Solitons & Fractals, Elsevier, vol. 130(C).
    2. Kenshiro Ninomiya, 2022. "Financial structure, cycle, and instability," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-23, December.
    3. Murakami, Hiroki & Sasaki, Hiroaki, 2020. "Economic development with public capital accumulation: The crucial role of wage flexibility on business cycles," Economic Modelling, Elsevier, vol. 93(C), pages 299-309.
    4. Sołtysiak Damian, 2023. "On the stability of a certain Keynes-Metzler-Goodwin monetary growth model," Economics and Business Review, Sciendo, vol. 9(1), pages 26-64, April.

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