Keynesian Macrodynamics: Convergence, roads to instability and the emergence of complex business fluctuations

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dc.contributor.author Chiarella, C
dc.contributor.author Hung, H
dc.contributor.author Flaschel, P
dc.date.accessioned 2012-02-02T11:02:10Z
dc.date.issued 2010
dc.identifier.citation AUCO Czech Economic Review, 2010, 4 (3), pp. 236 - 262
dc.identifier.issn 1802-4696
dc.identifier.other C1 en_US
dc.identifier.uri http://hdl.handle.net/10453/15707
dc.description.abstract We reformulate the traditional AS-AD growth model, with a Taylor policy rule replacing the conventional LM-curve. The essential features of the model are gradually adjusting wages and prices, perfect foresight on current inflation rates and an adaptive revision of the inflationary climate in which the economy is operating. We compare this approach with the New Keynesian approach with staggered price and wage setting and find that whilst both approaches have common components, they have radically different dynamic implications due to the treatment of the forward-looking part of our wage-price spiral. We show that an estimated version of our model implies local asymptotic stability, due to stable interaction of goods market dynamics with the interest rate policy rule of the central bank, and due to a normal working of a real-wage feedback chain. These results are however endangered when there is a global floor to money wage inflation rates, leading in fact to economic breakdown. In this latter case, the return of some money wage flexibility in deep depressions is of help in restoring the viability of the model, thereby avoiding explosive dynamics and the collapse of the economy.
dc.language eng
dc.title Keynesian Macrodynamics: Convergence, roads to instability and the emergence of complex business fluctuations
dc.type Journal Article
dc.parent AUCO Czech Economic Review
dc.journal.volume 3
dc.journal.volume 4
dc.journal.number 3 en_US
dc.publocation Czech Republic en_US
dc.identifier.startpage 236 en_US
dc.identifier.endpage 262 en_US
dc.cauo.name BUS.School of Finance and Economics en_US
dc.conference Verified OK en_US
dc.for 1401 Economic Theory
dc.personcode 030348
dc.personcode 716350
dc.percentage 100 en_US
dc.classification.name Economic Theory en_US
dc.classification.type FOR-08 en_US
dc.edition en_US
dc.custom en_US
dc.date.activity en_US
dc.location.activity en_US
dc.description.keywords Keynesian dynamics, wage and price Phillips curves, persistent business cycles, complex dynamics en_US
dc.description.keywords Humans
dc.description.keywords Complementary Therapies
dc.description.keywords Decision Making
dc.description.keywords Women's Health
dc.description.keywords Health Services Research
dc.description.keywords Patient Acceptance of Health Care
dc.description.keywords Australia
dc.description.keywords Female
dc.description.keywords Keynesian dynamics, wage and price Phillips curves, persistent business cycles, complex dynamics
dc.description.keywords Complex dynamics
dc.description.keywords Keynesian dynamics
dc.description.keywords Persistent business cycles
dc.description.keywords Wage and price Phillips curves
pubs.embargo.period Not known
pubs.organisational-group /University of Technology Sydney
pubs.organisational-group /University of Technology Sydney/Faculty of Business
pubs.organisational-group /University of Technology Sydney/Faculty of Business/Finance
pubs.organisational-group /University of Technology Sydney/Strength - Quantitative Finance
utslib.copyright.status Closed Access
utslib.copyright.date 2015-04-15 12:17:09.805752+10
utslib.collection.history Closed (ID: 3)


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