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Simultaneous Adjustment of Quantities and Prices: An Example of Hamiltonian Dynamics

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  • Paola Antonello

Abstract

In a well-known essay first published in 1953, Goodwin analyzed the dynamic adjustment of quantities and prices to long-run equilibrium values, in a set ofn 'Walrasian' markets. He treated the crossed adjustment of prices and quantities as a linear Hamiltonian vector field. In more recent work, Goodwin introduced non-linear perturbations in his multi-sectoral adjustment model. He assumed that real consumption depends non-linearly on relative prices. This paper shows the following: (1) Goodwin's behavioural hypotheses are compatible with the assumption that agents maximize; (2) if the dynamic process is Hamiltonian, then symplectic coordinate changes are essential tools of analysis; (3) if the real wage is rigid and returns to scale are not constant, then the Hamiltonian model can generate chaotic transients or, in extreme cases, pure chaotic motions.

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  • Paola Antonello, 1999. "Simultaneous Adjustment of Quantities and Prices: An Example of Hamiltonian Dynamics," Economic Systems Research, Taylor & Francis Journals, vol. 11(2), pages 139-162.
    • Handle: RePEc:taf:ecsysr:v:11:y:1999:i:2:p:139-162
    DOI: 10.1080/09535319900000011
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    References listed on IDEAS

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    1. R. M. Goodwin, 1983. "Essays in Linear Economic Structures," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-05507-4.
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