An introduction to economic dynamics

Table of Contents......Page 6
List of tables and boxes......Page 9
Preface......Page 10
1.1 Definitions and concepts......Page 14
1.2 Dynamic models......Page 16
1.3 Deterministic dynamical models......Page 18
1.4 Dynamical systems on a spreadsheet......Page 19
1.5 Experimentation......Page 22
1.6 Difference equations......Page 23
1.7 Attractors and repellors......Page 25
1.8 Nonlinear dynamical systems......Page 27
1.9 Continuous models......Page 33
1.10 Continuous differential equations on a spreadsheet......Page 35
Exercises......Page 38
2.1 Beyond the textbook......Page 40
2.2 The linear cobweb model......Page 44
2.3 Experimentation......Page 47
2.4 Different expectations......Page 48
2.5 The Goodwin model of expectations......Page 50
2.6 Nonlinear cobwebs......Page 52
2.7 Ceilings and floors......Page 53
2.8 Cobwebs in interrelated markets......Page 56
Exercises......Page 58
3.1 The Keynesian-cross diagram......Page 61
3.2 Some simple dynamics......Page 63
3.3 Experimentation: 1......Page 65
3.4 The dynamic multiplier......Page 67
3.5 A dynamic model with taxes......Page 69
3.6 Experimentation: 2......Page 71
3.7 The multiplier–accelerator model......Page 73
3.8 Introduction of net exports......Page 76
3.9 Experimentation: 3......Page 79
Exercises......Page 80
4.1 Trajectories and fixed points......Page 82
4.2 Isoclines and vector forces: continuous models......Page 85
4.3 Constructing continuous trajectories with a spreadsheet......Page 87
4.4 Isoclines and vector forces: discrete models......Page 89
4.5 Constructing discrete trajectories with a spreadsheet......Page 90
4.6 A cautionary note......Page 91
4.7 A variety of trajectories......Page 92
4.8 Limit cycles......Page 97
4.9 Lorenz curves and strange attractors......Page 98
4.10 Conclusion......Page 100
Exercises......Page 102
5.1 The static model......Page 104
5.2 Instantaneous money market adjustment......Page 107
5.3 A continuous model......Page 111
5.4 Continuous IS-LM on a spreadsheet......Page 114
5.5 A discrete version of the IS-LM model......Page 118
5.6 Interest rate ceiling......Page 120
Exercises......Page 121
6.1 The Phillips curve......Page 123
6.2 A simple macroeconomic model of inflation......Page 124
6.3 The dynamics of the simple model......Page 128
6.4 Dynamic model with positive inflation......Page 130
6.5 A change in the money supply......Page 136
6.6 A change in the natural level of unemployment......Page 137
6.7 Continuous model......Page 138
6.8 Conclusion......Page 140
Exercises......Page 141
7.2 Monopoly and advertising......Page 143
7.3 Advertising model: discrete version......Page 146
7.4 Diffusion models......Page 148
7.5 Static theory of oligopoly......Page 151
7.6 Discrete dynamic model with output adjusting instantaneously......Page 153
7.7 Dynamic oligopoly with three firms......Page 155
7.8 Partial-adjustment duopoly model......Page 156
Exercises......Page 159
8.1 What are saddles?......Page 162
8.2 Two examples......Page 163
8.3 The Dornbusch model under perfect foresight......Page 170
8.4 A numerical example......Page 174
8.5 A rise in the money supply......Page 177
8.6 Announcement effects......Page 179
8.7 Discrete systems exhibiting saddle solutions......Page 183
Exercises......Page 185
9.1 Budgetary concepts......Page 187
9.2 Budget dynamics with no inflation and no monetary financing......Page 189
9.3 A numerical example......Page 193
9.4 Budget dynamics with inflation and money plus bond financing......Page 194
9.5 Some numerical examples......Page 197
9.6 Budget criteria of the Maastricht Treaty......Page 201
9.7 Some final observations on the Maastricht Treaty......Page 204
Exercises......Page 205
10.1 Introduction......Page 207
10.2 Defining bifurcations......Page 208
10.3 Saddle-node bifurcation......Page 211
10.4 A transcritical bifurcation and a pitchfork bifurcation......Page 213
10.5 The logistic equation, periodic-doubling bifurcations and chaos......Page 215
10.6 Sensitivity to initial conditions and unusual patterns......Page 220
10.7 Van der Pol equations and a Hopf bifurcation......Page 222
10.8 Lorenz equations again......Page 224
Exercises......Page 226
Brief answers to selected exercises......Page 228
Further reading......Page 233
D......Page 234
I......Page 235
S......Page 236
W......Page 237