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Cross-diffusion Modeling in Macroeconomics

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  • Laszlo Balazsi
  • Krisztina Kiss

Abstract

This paper deals with the stability properties of a closed market, where capital and labour force are acting like a predator-prey system in population-dynamics. The spatial movement of the capital and labour force are taken into account by cross-diffusion effect. First, we are showing two possible ways for modeling this system in only one country's market (applying a simple functional response and a Holling-type ratio-dependent response as well), examining the conditions of their stability properties. We extend the ratio-dependent model into two countries common market where two kind of cross-diffusion effects are present, and find those additional conditions, whose are necessary for the stability of the global common market besides the stability of each countries local markets. Our four-dimensional model highlights that a hectic movement of the capital toward labour force can cause a Turing instability.

Suggested Citation

  • Laszlo Balazsi & Krisztina Kiss, 2013. "Cross-diffusion Modeling in Macroeconomics," Papers 1302.3958, arXiv.org.
    • Handle: RePEc:arx:papers:1302.3958
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