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Inflation and speculation in a dynamic macroeconomic model
[Inflation et spéculation dans un modèle macroéconomique dynamique]

Author

Listed:
  • Matheus Grasselli

    () (Department of Mathematics and Statistics, McMaster University, Hamilton, Canada, Fields Institute for Research In Mathematical Sciences - Fields Institute for Research In Mathematical Sciences)

  • Adrien Nguyen Huu

    () (CERMICS - Centre d'Enseignement et de Recherche en Mathématiques et Calcul Scientifique - ENPC - École des Ponts ParisTech)

Abstract

We study a monetary version of the Keen model by merging two alternative extensions, namely the addition of a dynamic price level and the introduction of speculation. We recall and study old and new equilibria, together with their local stability analysis. This includes a state of recession associated with a deflationary regime and characterized by falling employment but constant wage shares, with or without an accompanying debt crisis. We also emphasize some new qualitative behavior of the extended model, in particular its ability to produce and describe repeated financial crises as a natural pace of the economy, and its suitability to describe the relationship between economic growth and financial activities.

Suggested Citation

  • Matheus Grasselli & Adrien Nguyen Huu, 2015. "Inflation and speculation in a dynamic macroeconomic model
    [Inflation et spéculation dans un modèle macroéconomique dynamique]
    ," Post-Print hal-01097661, HAL.
  • Handle: RePEc:hal:journl:hal-01097661
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01097661
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    References listed on IDEAS

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    1. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
    2. Keen, Steve, 2013. "A monetary Minsky model of the Great Moderation and the Great Recession," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 221-235.
    3. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky’s “Financial Instability Hypothesis”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(4), pages 607-635, July.
    4. Desai, Meghnad, 1973. "Growth cycles and inflation in a model of the class struggle," Journal of Economic Theory, Elsevier, vol. 6(6), pages 527-545, December.
    5. Franke, Reiner, 1996. "A Metzlerian model of inventory growth cycles," Structural Change and Economic Dynamics, Elsevier, vol. 7(2), pages 243-262, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Grasselli, Matheus R. & Nguyen-Huu, Adrien, 2018. "Inventory growth cycles with debt-financed investment," Structural Change and Economic Dynamics, Elsevier, vol. 44(C), pages 1-13.
    2. repec:eee:ecolec:v:146:y:2018:i:c:p:228-239 is not listed on IDEAS
    3. repec:eee:ecolec:v:147:y:2018:i:c:p:383-398 is not listed on IDEAS
    4. Adam B. Barrett, 2017. "Stability of zero-growth economics analysed with a Minskyan model," Papers 1704.08161, arXiv.org, revised Nov 2017.
    5. repec:elg:rokejn:v:5:y:2017:i:4:p631-647 is not listed on IDEAS
    6. Antonin Pottier & Adrien Nguyen-Huu, 2017. "Debt and investment in the Keen model: a reappraisal of modelling Minsky," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(4), pages 631–647-6, October.
    7. Matheus R Grasselli & Alexander Lipton, 2018. "The Broad Consequences of Narrow Banking," Papers 1810.05689, arXiv.org.
    8. Matheus R. Grasselli & Alexander Lipton, 2018. "On the Normality of Negative Interest Rates," Papers 1808.07909, arXiv.org.

    More about this item

    Keywords

    limit cycles; local stability; Minsky's financial instability hypothesis; Keen model; stock-flow consistency; financial crisis; dynamical systems in macroeconomics;

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • E - Macroeconomics and Monetary Economics
    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • G - Financial Economics

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