Keynesian Macrodynamics: Convergence, roads to instability and the emergence of complex business fluctuations

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dc.contributor.author Chiarella, Carl en_US
dc.contributor.author Hung, Hing en_US
dc.contributor.author Flaschel, Peter en_US
dc.contributor.editor en_US
dc.date.accessioned 2012-02-02T11:02:10Z
dc.date.available 2012-02-02T11:02:10Z
dc.date.issued 2010 en_US
dc.identifier 2010002607 en_US
dc.identifier.citation Chiarella Carl, Hung Hing, and Flaschel Peter 2010, 'Keynesian Macrodynamics: Convergence, roads to instability and the emergence of complex business fluctuations', Nakladatelstvi Karolinum, vol. 4, no. 3, pp. 236-262. en_US
dc.identifier.issn 1802-4696 en_US
dc.identifier.other C1 en_US
dc.identifier.uri http://hdl.handle.net/10453/15707
dc.description.abstract We reformulate the traditional AS-AD growth model, with a Taylor policy rule replacing the conventional LM-curve. The essential features of the model are gradually adjusting wages and prices, perfect foresight on current inflation rates and an adaptive revision of the inflationary climate in which the economy is operating. We compare this approach with the New Keynesian approach with staggered price and wage setting and find that whilst both approaches have common components, they have radically different dynamic implications due to the treatment of the forward-looking part of our wage-price spiral. We show that an estimated version of our model implies local asymptotic stability, due to stable interaction of goods market dynamics with the interest rate policy rule of the central bank, and due to a normal working of a real-wage feedback chain. These results are however endangered when there is a global floor to money wage inflation rates, leading in fact to economic breakdown. In this latter case, the return of some money wage flexibility in deep depressions is of help in restoring the viability of the model, thereby avoiding explosive dynamics and the collapse of the economy. en_US
dc.language en_US
dc.publisher Nakladatelstvi Karolinum en_US
dc.title Keynesian Macrodynamics: Convergence, roads to instability and the emergence of complex business fluctuations en_US
dc.parent AUCO Czech Economic Review en_US
dc.journal.volume 4 en_US
dc.journal.number 3 en_US
dc.publocation Czech Republic en_US
dc.identifier.startpage 236 en_US
dc.identifier.endpage 262 en_US
dc.cauo.name BUS.School of Finance and Economics en_US
dc.conference Verified OK en_US
dc.for 140100 en_US
dc.personcode 716350 en_US
dc.personcode 030348 en_US
dc.personcode 0000017722 en_US
dc.percentage 100 en_US
dc.classification.name Economic Theory en_US
dc.classification.type FOR-08 en_US
dc.edition en_US
dc.custom en_US
dc.date.activity en_US
dc.location.activity en_US
dc.description.keywords Keynesian dynamics, wage and price Phillips curves, persistent business cycles, complex dynamics en_US


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