Finance Discipline Group
UTS Business School
University of Technology, Sydney

Working Paper Series

Title:
Towards Applied Disequilibrium Growth Theory: IV Numerical Investigations of the Core 18D Model
Author(s): Carl Chiarella, Peter Flaschel & Peiyuan Zhu
Date of publication: April 2003
Working paper number: 96
Abstract:
In this paper we investigate, from the numerical perspective, the 18D core dynamics of a theoretical 39D representation of an applied disequilibium model of monetary growth of a small open economy. After considering the model from the viewpoint of national accounting, we provide a compact description of the intensive form of the model, its laws of motion and accompanying algebraic expressions and its unique interior steady state solution. We then give a survey of various types of subsystems that can be decomposed from the integrated 18D dynamics by means of suitable assumptions and also survey the feedback channels that can typically be found in these decomposed or re-integrated model types. These subsystems and their partial or full integration are investigated and compared in the remainder of the paper from the perspective of bifurcation diagrams that separate situations of asymptotic stability from stable cyclical behavior as well as pure explosiveness. In this way we lay the foundations for future extensions of the paper, which will show, in contract to what is generally believed to characterize structural macroeconomic models, that applied integrated macrodynamical systems can have a variety of interesting attractors and transients to them. Such attractors are obtained in particular when locally explosive situations are turned into bounded dynamics by the addition of specifically tailored extrinsic nonliearities.
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Known citations:

Chiarella, C. and Flaschel, P., 1999a, "Towards Applied Disequilibrium Growth Theory: I The Starting Model", Working Paper: 93, Finance Discipline Group, University of Technology, Sydney.

Chiarella, C. and Flaschel, P., 1999b, "Towards Applied Disequilibrium Growth Theory: II Intensive Form and Steady State Analysis of the Model", Working Paper: 94, Finance Discipline Group, University of Technology, Sydney.

Chiarella, C. and Flaschel, P., 2003, "Towards Applied Disequilibrium Growth Theory: V Housing Investment Cycles, Private Debt Accumulation and Deflation", Working Paper: 97, Finance Discipline Group, University of Technology, Sydney.

Chiarella, C., Flaschel, P., Groh, G., Koper, C. and Semmler, W., 1999a, "Towards Applied Disequilibrium Growth Theory: VI Substitution, Money-Holdings, Wealth-Effects and Further Extensions", Working Paper: 98, Finance Discipline Group, University of Technology, Sydney.

Chiarella, C., Flaschel, P., Groh, G., Koper, C. and Semmler, W., 1999b, "Towards Applied Disequilibrium Growth Theory: VII Intensive Form and Steady State Calculation in the Case of Substitution", Working Paper: 99, Finance Discipline Group, University of Technology, Sydney.

Chiarella, C., Flaschel, P. and Semmler, W., 1999, "The Macrodynamics of Debt Deflation", Working Paper: 7, Center for Economic Policy Analysis, New School for Social Research.

Flaschel, P., 20, "Disequilibrium Growth in Monetary Economies: Basic Components and the KMG Working Model", In Lionello F. Punzo (ed) Cycles, Growth and Structural Change, 128-168.