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Some Numerical Explorations of the Keynes-Metzler-Goodwin Monetary Growth Model

Author

Listed:
  • CHIARELLA, CARL

    (University of Technology, Sydney, Australia)

  • FLASCHEL, PETER

    (Bielefeld University, Germany)

Abstract

We study numerically Keynes-Metzler-Goodwin growth, modelling households, firms and government as interacting across real and financial markets. The model allows for sluggish wage / price adjustment, disequilibrium on the market for goods, equilibrium in asset markets and a dynamic government budget restraint. It is first studied in the presence of its intrinsic nonlinearities. Then we add an extrinsic nonlinearity capturing the institutional feature of downward wage rigidity. The dynamic properties of the resulting nonlinear model are studied via bifurcation diagrams, stability basins, by adding stochastic noise to aggregate demand, and by distributional characteristics of key economic quantities.

Suggested Citation

  • Chiarella, Carl & Flaschel, Peter, 2010. "Some Numerical Explorations of the Keynes-Metzler-Goodwin Monetary Growth Model," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 45(1), pages 1-28.
  • Handle: RePEc:dse:indecr:0012
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    More about this item

    Keywords

    Monetary Growth; Stability; Hopf Bifurcations; Business Fluctuations; Complex Dynamics;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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