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Kaldorian assumptions and endogenous fluctuations: a note on Schinasi’s IS–LM model

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  • Giovanni Bella

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  • Paolo Mattana

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  • Beatrice Venturi

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Abstract

Results on Schinasi’s (Rev Econ Stud 48:649–653, 1981 ; J Econ Theory 28:369–375, 1982 ) variant of the dynamic fixed-price IS–LM model have remained so far confined to Kaldorian type economies, namely to those economies which present a greater-than-unity marginal propensity to spend out of income. This paper shows that, in the case of a negative interest rate sensitivity of savings, stable endogenous cycles can actually emerge as equilibrium solutions of the model also in the case of non-Kaldorian type economies. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Giovanni Bella & Paolo Mattana & Beatrice Venturi, 2013. "Kaldorian assumptions and endogenous fluctuations: a note on Schinasi’s IS–LM model," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(1), pages 71-81, March.
  • Handle: RePEc:spr:inrvec:v:60:y:2013:i:1:p:71-81
    DOI: 10.1007/s12232-013-0176-2
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    References listed on IDEAS

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    1. Benhabib, Jess & Schmitt-Grohe, Stephanie & Uribe, Martin, 2001. "The Perils of Taylor Rules," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 40-69, January.
    2. Sasakura, Kazuyuki, 1994. "On the dynamic behavior of Schinasi's business cycle model," Journal of Macroeconomics, Elsevier, vol. 16(3), pages 423-444.
    3. Umberto Neri & Beatrice Venturi, 2007. "Stability and bifurcations in IS-LM economic models," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 54(1), pages 53-65, March.
    4. Costas Azariadis & Roger Guesnerie, 1986. "Sunspots and Cycles," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 725-737.
    5. Paolo Mattana & Kazuo Nishimura & Tadashi Shigoka, 2009. "Homoclinic bifurcation and global indeterminacy of equilibrium in a two‐sector endogenous growth model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 25-47, March.
    6. Garry J. Schinasi, 1981. "A Nonlinear Dynamic Model of Short Run Fluctuations," Review of Economic Studies, Oxford University Press, vol. 48(4), pages 649-656.
    7. Schinasi, Garry J., 1982. "Fluctuations in a dynamic, intermediate-run IS-LM model: Applications of the Poincare-Bendixon theorem," Journal of Economic Theory, Elsevier, vol. 28(2), pages 369-375, December.
    8. Jess Benhabib & Kazuo Nishimura & Tadashi Shigoka, 2008. "Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 337-355, June.
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    More about this item

    Keywords

    Dual steady state; Homoclinic bifurcation; Oscillating solutions; C61; C62; E32;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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