Dynamics of an Extended Kaldor Model with Rational Expectation of Capital Efficiency and Adaptive Expectation of Inflation
AbstractThe paper deals with non-linear dynamics of an extended Kaldor model including not only production and capital stock dynamics but also the interest rate and price dynamics with an adaptive expectation of inflation. Presented structure of the model is described by the system of the five differential equations. The first one shows the production dynamics of the extended model. The second one describes interest rate as equalizing factor of the monetary market. The third one explains capital stock movement, the last two equations show price dynamics and inflation. The above system is analysed by usual way.In the first place we find an equilibrium of the model, check its stability and describe its dynamics especially in the case of the unstable equilibrium where the limit cycle or chaos could occur. For the description of dynamic behaviour of this model we will use traditional means as phase portraits. For the solving of the more complex problems such as changes of the model parameters that cause the changes in dynamic behaviour of the model we will use computer animations which are very useful means for a demonstration of the dependence of the trajectories of phase variables on changes of the model parameters
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2004 with number 281.
Date of creation: 11 Aug 2004
Date of revision:
non-linear dynamics; capital stock dynamics; price dynamics with an adaptive expectation of inflation; unstable equilibrium; limit cycle; chaos;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-26 (All new papers)
- NEP-CMP-2004-07-26 (Computational Economics)
- NEP-MAC-2004-07-26 (Macroeconomics)
- NEP-MON-2004-07-26 (Monetary Economics)
- NEP-PKE-2004-07-26 (Post Keynesian Economics)
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