Some Numerical Explorations of the Keynes-Metzler-Goodwin Monetary Growth Model

Carl Chiarella and Peter Flaschel

Indian Economic Review, 2010, vol. 45, issue 1, 1-28

Abstract: We study numerically Keynes-Metzler-Goodwin growth, modelling households, firms and government as interacting across real and financial markets. The model allows for sluggish wage / price adjustment, disequilibrium on the market for goods, equilibrium in asset markets and a dynamic government budget restraint. It is first studied in the presence of its intrinsic nonlinearities. Then we add an extrinsic nonlinearity capturing the institutional feature of downward wage rigidity. The dynamic properties of the resulting nonlinear model are studied via bifurcation diagrams, stability basins, by adding stochastic noise to aggregate demand, and by distributional characteristics of key economic quantities.

Keywords: Monetary Growth; Stability; Hopf Bifurcations; Business Fluctuations; Complex Dynamics (search for similar items in EconPapers)
JEL-codes: E24 E31 E32 (search for similar items in EconPapers)
Date: 2010
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