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A Non-mathematical Non-linear Model of the Trade Cycle: Mathematical Reflections on Hugh Hudson's Classic

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  • V. Ragupathy
  • K.Vela Velupillai
  • Stefano Zambelli

Abstract

Hugh Hudson’s classic article on A Model of the Trade Cycle has never, to the best of our knowledge, received the serious attention it deserved (and deserves, even now, 55 years after its original publication). It was written in what we would like to call the classic Hicks-Kaldor mode, i.e., relying on ingenious diagrammatic techniques for expository purposes, and, indeed, developing an innovative model of the trade cycle where interaction of monetary and real forces were modeled in terms of elements common to the classic nonlinear endogenous models of these two pioneers. In this paper we reconsider the analytical contents of Hudson’s classic, and its expository technique, in the light of later, mathematical, approaches to the same topic. Our conclusion is that there is still much to be gained in the expository style adopted by Hudson; but, more importantly, there are innovative suggestion and still relevant suggestions on theorizing and understanding actual performances of advanced industrial economies. Above all Hudson’s classic is permeated with the policy underpinnings of a rich model of the trade cycle.

Suggested Citation

  • V. Ragupathy & K.Vela Velupillai & Stefano Zambelli, 2012. "A Non-mathematical Non-linear Model of the Trade Cycle: Mathematical Reflections on Hugh Hudson's Classic," ASSRU Discussion Papers 1215, ASSRU - Algorithmic Social Science Research Unit.
  • Handle: RePEc:trn:utwpas:1215
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    References listed on IDEAS

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    1. H. Rose, 1967. "On the Non-Linear Theory of the Employment Cycle," Review of Economic Studies, Oxford University Press, vol. 34(2), pages 153-173.
    2. V. Ragupathy & K. Vela Velupillai, 2012. "Existence Proofs in Nonlinear Endogenous Theories of the Business Cycle on the Plane -- The Origins," ASSRU Discussion Papers 1210, ASSRU - Algorithmic Social Science Research Unit.
    3. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
    4. W. W. Chang & D. J. Smyth, 1971. "The Existence and Persistence of Cycles in a Non-linear Model: Kaldor's 1940 Model Re-examined," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 37-44.
    5. Benhabib, Jess & Day, Richard H., 1982. "A characterization of erratic dynamics in, the overlapping generations model," Journal of Economic Dynamics and Control, Elsevier, vol. 4(1), pages 37-55, November.
    6. K. Vela Velupillai, 2008. "JAPANESE CONTRIBUTIONS TO NONLINEAR CYCLE THEORY IN THE 1950s," The Japanese Economic Review, Japanese Economic Association, vol. 59(1), pages 54-74.
    7. 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.
    8. Rose, Hugh, 1969. "Real and Monetary Factors in the Business Cycle," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(2), pages 138-152, May.
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    More about this item

    Keywords

    Trade Cycles; Nonlinear Models; Endogenous Cycles; Monetary-Real Interactions; Generalised IS/LM Dynamics;

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