Some numerical explorations of the Keynes-Metzler-Goodwin monetary growth model

University of Dehli
Publication Type:
Journal Article
Indian Economic Review, 2010, 45 (1), pp. 1 - 28
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We study numerically Keynes-Metzler-Goodwin growth, modelling households, firms and government as interacting across real and financial markets. The model allows for sluggish wage / price adjustment, disequilibrium on the market for goods, equilibrium in asset markets and a dynamic government budget restraint. It is first studied in the presence of its intrinsic nonlinearities. Then we add an extrinsic nonlinearity capturing the institutional feature of downward wage rigidity. The dynamic properties of the resulting nonlinear model are studied via bifurcation diagrams, stability basins, by adding stochastic noise to aggregate demand, and by distributional characteristics of key economic quantities.
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