On the stability of a certain Keynes-Metzler-Goodwin monetary growth model

• Authors: Damian Sołtysiak

Abstracts

EN

The arctile has three aims. The rfist aim is to develop an im proved version of the Keynes-Metzler-Goodwin (the KMG) monetary growth model originally presented and analysed in a series of publications by Carl Chiarella, Peter Flaschel and Willi Semler. The improvement of the model is obtained by modifying some of its equations in a way which ensures that they reflect real macroeconomic dependencies more properly. The equations that have been modified describe nifal demand expectaotins, determinants of producotin de cisions, fixed capital accumulation, tax revenues, govern ment budget deficit and money demand. The second aim is to transform the model into an intensive form described by seven non-linear diefrenatil equaotins and determine its unique steady state which shows proporotins between vari ables on the balanced growth path. The third ultimate aim is to present a mathematical proof that the new improved version of the KMG model is locally asymptotically stable.

Keywords

EN

Keynesian macroeconomics; disequilibrium; macroeconomics; monetary growth models; nonlinear economic dynamics; stability

• Publisher: Uniwersytet Ekonomiczny w Poznaniu
• Journal: Economics and Business Review
• Year: 2022
• Volume: 9
• Issue: 1
• Pages: 26-64

Dates

published

2023

Contributors

author

Damian Sołtysiak

• Department of Applied Mathematics, Poznań University of Economics and Business

• https://orcid.org/0000000211107554

References

• Araujo, R. A., Flaschel, P., & Moreira, H. N. (2020). Limit cycles in a model of supply-side liquidity/protfi-rate in the presence of a Phillips curve. Economia, 21(2), 145-159.
• Asada, T. (2012). Modeling financial instability. Intervention: European Journal of Economics and Economic Policies, 9, 215-232.
• Asada, T., Chiarella, C., Flaschel, P., & Franke, F. (2003). Open economy macrodynamics. Springer.
• Asada, T., Chiarella, C., Flaschel, P., Mouakil, T., Proaño, C., & Semmler, W. (2011). Stock flow interactions, disequilibrium macroeconomics and the role of economic policy. Journal of Economic Surveys, 25(3), 569-599.
• Asada, T., Demetrian, M., & Zimka, R. (2018). On dynamics in a Keynesian model of monetary and sfical policy with debt eefct. Communicaotins in Non-linear Science and Numerical Simulations , 58, 131-146.
• Asada, T., Demetrian, M., & Zimka, R. (2019). On dynamics in a Keynesian model of monetary and fiscal stabilization policy mix with twin debt accumulation. Metroeconomica, 70(3), 365-383.
• Charpe, M., Chiarella, C., Flaschel, P., & Semmler, W. (2011). Financial assets, debt and liquidity crises: A Keynesian approach. Cambridge University Press.
• Chiarella, C., & Flaschel, P. (2000). The dynamics of Keynesian monetary growth. Cambridge University Press.
• Chiarella, C., Flaschel, P., Franke, R. (2005). Foundations for a disequilibrium theory of the business cycle. Cambridge University Press.
• Chiarella, C., Flaschel, P., Franke, R., Araujo, R., Charpe, M., Proaño, Ch., & Szczutkowski, A. (2021). Unbalanced growth from a balanced perspective . Edward Elgar.
• Chiarella, C., Flaschel, P., Franke, R., & Semmler, W. (2002). Stability analysis of a highdimensional macrodynamic model of real-nfiancial interacotin: A cascade of matri - ces approach. Working Paper, 123. School of Finance and Economics, UTS Business School, University of Technology, Sydney.
• Chiarella, C., Flaschel, P., Franke, R., & Semmler, W. (2006). A high-dimensional model of real-financial market interaction: The cascade of stable matrices approach. In C. Chiarella, R. Franke, P. Flaschel & W. Semmler (Eds.), Quantitative and empirical analysis of nonlinear dynamic macromodels, contributions to economic analysis (vol. 277, s. 359-384). Elsevier.
• Chiarella, C., Flaschel, P., Groh, G., & Semmler, W. (2000). Disequilibrium, growth and labor market dynamics. Springer.
• Chiarella, C., Flaschel, P., & Semmler, W. (2012). (2013). (2014). Reconstructing Keynesian macroeconomics, vol. 1-3: Integrated approaches. Routledge.
• Duménil, G., & Lévy, D. (1991). Micro adjustment toward long-term equilibrium. Journal of Economic Theory, 52(2), 369-395.
• Dut, A. (2012). Distributional dynamics in post Keynesian growth models. Journal of Post Keynesian Economics, 34(3), 431-451.
• Filipowicz, K., Misiak, T., & Tokarski, T. (2016). Bipolar growth model with investment lfows. Economics and Business Review, 2(3), 32-56 htps://doi.org/10.18559/ ebr.2016.3.4
• Fischer, S. (1972). Keynes-Wicksell and neoclassical models of money and growth. American Economic Review, 62, 880-890.
• Flaschel, P. (2020). A baseline model of 'Social Protection' in open economies of the KMG variety. Working Paper: Bielefeld University.
• Gandolfo, G. (2005). Economic dynamics. Springer Verlag.
• Goodwin, R. M. (1967). A growth cycle. In C. H. Feinstein (Ed.), Socialism, capitalism and economic growth (pp. 54-58). Cambridge University Press.
• Groth, C. (1988). IS-LM dynamics and the hypothesis of adaptive-forward-looking expectations. In P. Flaschel & M. Krüger (Eds.), Recent approaches to economic dynamics (s. 251-266). Verlag Peter Lang.
• Keynes, J .M. (1936). The general theory of employment, interest and money. Macmillan.
• Kiedrowski, R. (2018). Profit rates equalization and balanced growth in a multi-sector model of classical competion. Journal of Mathematical Economics , 77, 39-53.
• Lavoie, M. (2014). Post-Keynesian economics: New foundations . Edward Elgar.
• Metzler, L. A. (1941). The nature and stability of inventory cycles. Review of Economic Statistics , 23, 113-129.
• Murakami, H. (2016, December). Alternative monetary policies and economic stabil - ity in a medium-term Keynesian model. Evolutionary and Institutional Economics Review, 13(2), 323-362.
• Murakami, H. (2018). Existence and uniqueness of growth cycles in post Keynesian systems. Economic Modelling, 75, 293-304.
• Murakami, H. (2020). Monetary policy in the unique growth cycle of post Keynesian systems. Structural Change and Economic Dynamics, 52(C), 39-49.
• Napoletano, M., Dosi, G., Fagiolo, G., & Roventini, A. (2012). Wage formation, invest - ment behavior and growth regimes: An agent-based analysis. Revue de L'OFCE, 5(124), 235-261. htps://www.cairn.info/revue-de-l-ofce-2012-5-page-235.htm
• Ogawa, S. (2019a). Dynamic analysis of a disequilibrium macroeconomic model with dual labor markets. Metroeconomica, 70(3), 525-550.
• Ogawa, S. (2019b). Eefctive demand and quantity constrained growth: A simple two - -sector disequilibrium approach. MPRA Paper 93336. University Library of Munich.
• Ogawa, S. (2020). Monetary growth with disequilibrium: A non-Walrasian baseline model. MPRA Paper 101236. University Library of Munich.
• Rødseth, A. (2000). Open economy macroeconomics. Cambridge University Press.
• Rose, H. (1966). Unemployment in a theory of growth. Internaotinal Economic Review , 7, 260-282.
• Sargent, T. (1987). Macroeconomic theory. Academic Press.
• Stein, J. (1966). Money and capacity growth. Journal of Polictial Economy , 74, 451-465.

Identifiers

DOI

10.18559/ebr.2023.1.2

Biblioteka Nauki

2192163