Interacting Two-Country Business Fluctuations

Toichiro Asada, Carl Chiarella, Peter Flaschel and Reiner Franke
Additional contact information
Toichiro Asada: Faculty of Economics, Chuo University

No 128, Working Paper Series from Finance Discipline Group, UTS Business School, University of Technology, Sydney

Abstract: In this paper we investigate the closed-economy Keynes-Wicksell-Goodwin model of Chiarella and Flaschel (2000) for the case of two interacting open economies. We introduce these coupled two-country KWG dynamics on the extensive form level by means of a subdivision into nine modules describing the behavioral equations, the laws of motion and the identities or budget equations of the model. We then derive their intensive form representation and the 10 laws of motions of the model on the basis of certain simplifying asumptions. Thereafter we present the uniquely determined steady state solution of the dynamics and discuss in a mathematically informal way its stability properties, concerning asymptotic stability and loss of stability by way of super- or subcritical Hopf-bifurcations. In a final section we explore numerically a variety of situations of interacting real and financial cycles, where the steady state is locally repelling, but where the overall dynamics are bounded in an economically meaningful domain by means of a kinked money wage Phillips curve, exhibiting downward rigidity of the money-wage, coupled with upward flexibility of the usual type.

Keywords: interacting kwg economies; stability; persistent cycles; coupled oscillators (search for similar items in EconPapers)
JEL-codes: E12 E32 (search for similar items in EconPapers)
Date: 2003-05-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as: Asada, T., Chiarella, C., Flaschel, P. and FRanke, R., 2007, "Interacting Two-Country Business Fluctuations: Euroland and the USA", In: Growth and Cycle in the Eurozone, 109-118.

Downloads: (external link)
http://www.finance.uts.edu.au/research/wpapers/wp128.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.finance.uts.edu.au:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
Working Paper: Interacting Two-Country Business Fluctuations
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uts:wpaper:128

Access Statistics for this paper

More papers in Working Paper Series from Finance Discipline Group, UTS Business School, University of Technology, Sydney PO Box 123, Broadway, NSW 2007, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Duncan Ford ().