Incorporating Fuzzy Logic in Harrod’s Economic Growth Model

Joan Carles Ferrer-Comalat, Salvador Linares-Mustarós and Ricard Rigall-Torrent
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Joan Carles Ferrer-Comalat: Department of Business Administration, University of Girona, C/Universitat de Girona 10, 17071 Girona, Spain
Salvador Linares-Mustarós: Department of Business Administration, University of Girona, C/Universitat de Girona 10, 17071 Girona, Spain
Ricard Rigall-Torrent: Department of Economics, University of Girona, C/Universitat de Girona 10, 17071 Girona, Spain

Mathematics, 2021, vol. 9, issue 18, 1-20

Abstract: This paper suggests the possibility of incorporating the methodology of fuzzy logic theory into Harrod’s economic growth model, a classic model of economic dynamics for studying the growth of a developing economy based on the assumption that an economy with only savings and investment income is in equilibrium when savings are equal to investment. This model was the first precursor to exogenous growth models, which in turn gave rise to endogenous growth models. This article therefore represents a first step towards introducing fuzzy logic into economic growth models. The study concerned considers consumption and savings to depend on income by means of uncertain factors, and investment to depend on the variation of income through the accelerator factor, which we consider uncertain. These conditions are used to determine the equilibrium growth rate of income and investment, as well as the uncertain values for these variables in terms of fuzzy numbers. As a result, the new model is shown to expand the classical model by incorporating uncertainty into its variables.

Keywords: fuzzy logic; fuzzy arithmetic; extension principle; economic models; Harrod’s growth (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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