Rational strategies of agents' behavior in the model of nonlinear macroeconomic dynamics

M. Chepelev V. Kapustian

Economy and Forecasting, 2012, issue 2, 138-152

Abstract: The authors consider a macroeconomic model described by a system of nonlinear differential equations that demonstrates a variety of behavioral modes, such as: collapse (occurs when level of capital or effective demand reduces to zero), stationary points, limit cycles, and chaotic attractors. The analyzed model has an endogenous source of perturbations, i.e. fluctuations in the level of capital, demand and profitability rate are not caused by external disturbances but arise due to economic mechanisms that underlie the model. The article identifies the equilibrium states that exist in the analyzed system under different exogenous parameters' values. Each identified stationary point is characterized by a certain level of the national income. The control procedure allowing the transfer of the economy from one equilibrium state to another with a simultaneous growth of national income is presented. It was found that, for the successful implementation of such a transition, it is necessary not only to change the level of demand and investments, but also influence the variables (tax rate) under which the parties (entrepreneurs and government) support or do not support each other. Control costs calculated for the capital structure estimates based on the financial statements of the Ukrainian enterprises have increased comparing to the theoretical values. Reduction of the total management costs can be achieved by an increase of the share of variable capital in the productive capital. In this case, less investment is needed to transfer the economy to a state with higher national income, although the government expenditures would slightly increase in the process.

Date: 2012
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