DYNAMICS OF NATURAL RATES OF GROWTH AND EMPLOYMENT

Carl Chiarella and Peter Flaschel

Macroeconomic Dynamics, 1998, vol. 2, issue 3, 345-368

Abstract: We investigate the dynamics of an integrated Keynesian disequilibrium model of monetary growth that allows for a variety of labor-market and employment-adjustment processes. The structure of the model is naturally nonlinear, i.e., no extrinsic nonlinear economic behavioral relationships are imposed at first. The dynamics of the model are nine-dimensional and are investigated analytically by considering appropriate subdynamics. The model generates limit cycles (via Hopf bifurcations) and more complex dynamic behavior (when a natural kink in the money-wage Phillips curve is taken into account). It exhibits hysteresis effects with respect to long-run unemployment as well as growth and implies the occurrence of steady-state depressions in particular.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:2:y:1998:i:03:p:345-368_00

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