Inflation and speculation in a dynamic macroeconomic model
General Finance
2014-12-24 v1 Dynamical Systems
Abstract
We study a monetary version of the Keen model by merging two alternative extensions, namely the addition of a dynamic price level and the introduction of speculation. We recall and study old and new equilibria, together with their local stability analysis. This includes a state of recession associated with a deflationary regime and characterized by falling employment but constant wage shares, with or without an accompanying debt crisis. We also emphasize some new qualitative behavior of the extended model, in particular its ability to produce and describe repeated financial crises as a natural pace of the economy, and its suitability to describe the relationship between economic growth and financial activities.
Keywords
Cite
@article{arxiv.1412.7500,
title = {Inflation and speculation in a dynamic macroeconomic model},
author = {Matheus Grasselli and Adrien Nguyen Huu},
journal= {arXiv preprint arXiv:1412.7500},
year = {2014}
}