Neokeynesian and Neoclassical Macroeconomic Models: Stability and Lyapunov Experiments
Year: 2007 Volume: 1 Issue: 3 Pages: 302-311
Abstract: The non-linear approach to economic dynamics enables us to study traditional economic models using modified formulations and different methods of solution. In this article we compare the dynamic properties of the Keynesian and Classical macroeconomic models. We start with an extended dynamic IS-LM neoclassical model generating the behavior of the real product, the interest rate, expected inflation, and the price level over time. Limiting behavior, stability, and the existence of limit cycles and other specific features of these models will be compared.
JEL classification: C00, E12, E13
Keywords: macroeconomic models, Keynesian and Classical model, non-linear differential equations, linearization, asymptotical stability, Lyapunov exponents
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