Stabilization Policy as Bifurcation Selection: Would Keynesian Policy Work if the World Really were Keynesian?

William Barnett, Yijun He and .
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Yijun He: Washington University in St. Louis

Macroeconomics from University Library of Munich, Germany

Abstract: This paper is a follow on to our earlier papers exploring the dynamic properties of the UK continuous time macroeconometric model. This paper is focussed on policy implications. We take the position that the term "stabilization policy" implies that the economy would be unstable without policy, and hence stabilization policy only can be understood as bifurcation to stability, conditionally upon the assumption that the economy would be unstable without that policy bifurcation. We apply the methodology of mathematical bifurcation to investigate this point of view. We conclude that bifurcation selection to stability is more complicated than commonly believed to be the case in much Keynesian economics. However, this conclusion is consistent with common views in the mathematical literature on bifurcation of high dimensional systems.

Keywords: bifurcation; stabilization; chaos; nonlinearity (search for similar items in EconPapers)
JEL-codes: C14 C22 E32 E37 (search for similar items in EconPapers)
Date: 1999-06-15
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Stabilization Policy as Bifurcation Selection: Would Keynesian Policy Work if the World Really Were Keynesian? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:9906008

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