A two-dimensional non-equilibrium dynamic model

Orlando Gomes

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a non-equilibrium dynamic model (NEDyM) with Keynesian features (it allows for a disequilibrium between output and demand and it considers a constant marginal propensity to consume), but where production is undertaken under plain neoclassical conditions (a constant returns to scale production function, with the stocks of capital and labor fully employed, is assumed). The model involves only two endogenous / prognostic variables: the stock of physical capital per unit of labor and a goods inventory measure. The two-dimensional system allows for a careful analysis of local and global dynamics. Points of bifurcation and long-term cyclical motion are identified. The main conclusion is that the disequilibrium hypothesis leads to persistent fluctuations generated by intrinsic deterministic factors.

Keywords: NEDyM; Endogenous business cycles; Nonlinear growth; Keynesian macroeconomics; Cyclical dynamics and chaos (search for similar items in EconPapers)
JEL-codes: C62 E12 E32 O41 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-mac
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Related works:
Journal Article: A two-dimensional non-equilibrium dynamic model (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4817

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