Analysis and Policy Implications of the KMG-Tobin Model

Toichiro Asada, Peter Flaschel, Tarik Mouakil and Christian Proaño
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Toichiro Asada: Chuo University
Tarik Mouakil: University of Cambridge

Chapter 4 in Asset Markets, Portfolio Choice and Macroeconomic Activity, 2011, pp 62-92 from Palgrave Macmillan

Abstract: Abstract In this chapter we study analytically the properties of the KMG-Tobin model and use them to make some policy proposals. First, the intensive form of the dynamics is derived in order to allow for steady state considerations (in the following section) on the basis of nine autonomous laws of motion that exhibit a unique point of rest or steady state. The next section focuses on the short-run comparative statics of the financial markets module of the system. The stability of the full 9D dynamical system is then analysed by way of a sequence of subsystems of increasing dimension. Following this, the next section analyses the dynamical behaviour of the system when it is displaced from its steady state position, but still remains in a neighbourhood of the steady state. Conclusions are drawn in the final section.

Keywords: Monetary Policy; Central Bank; Money Supply; Capital Gain; Asset Market (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30777-3_4

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DOI: 10.1057/9780230307773_4

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