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Stability, instability and complex behavior in macrodynamic models with policy lag

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  • Toichiro Asada
  • Hiroyuki Yoshida

Abstract

We construct simple macrodynamic models with policy lag by means of mixed difference and differential equations, and study how lags in policy response affect the macroeconomic (in)stability. Local dynamics of the prototype model are studied analytically, and the global dynamics of the prototype and the extended models are studied by means of numerical simulations. We show that the government can stabilize the intrinsically unstable economy if the policy lag is sufficiently short, but the system becomes locally unstable when the policy lag is too long. We also show the existence of cycles and complex behavior in some range of the policy lag.

Suggested Citation

  • Toichiro Asada & Hiroyuki Yoshida, 2000. "Stability, instability and complex behavior in macrodynamic models with policy lag," Discrete Dynamics in Nature and Society, Hindawi, vol. 5, pages 1-15, January.
    • Handle: RePEc:hin:jnddns:938097
    DOI: 10.1155/S1026022600000583
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    Cited by:

    1. Shunsuke Shinagawa & Eiji Tsuzuki, 2019. "Policy Lag and Sustained Growth," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(3), pages 403-431, October.

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