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DYNAMICS OF NATURAL RATES OF GROWTH AND EMPLOYMENT

Published online by Cambridge University Press:  01 September 1998

Carl Chiarella  and
Peter Flaschel
Carl Chiarella
Affiliation:
University of Technology, Sydney
Peter Flaschel
Affiliation:
University of Bielefeld
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Abstract

We investigate the dynamics of an integrated Keynesian disequilibrium model of monetary growth that allows for a variety of labor-market and employment-adjustment processes. The structure of the model is naturally nonlinear, i.e., no extrinsic nonlinear economic behavioral relationships are imposed at first. The dynamics of the model are nine-dimensional and are investigated analytically by considering appropriate subdynamics. The model generates limit cycles (via Hopf bifurcations) and more complex dynamic behavior (when a natural kink in the money-wage Phillips curve is taken into account). It exhibits hysteresis effects with respect to long-run unemployment as well as growth and implies the occurrence of steady-state depressions in particular.

Keywords

Endogenous GrowthEndogenous fluctuationsHysteresisComplex DynamicsSteady-State Depressions
Type
Research Article
Information
Macroeconomic Dynamics , Volume 2 , Issue 3 , September 1998 , pp. 345 - 368
Copyright
© 1998 Cambridge University Press

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