| Author(s): |
prof. Ing. Miloslav Vošvrda CSc., Jan Kodera
|
| Type: |
IES Working Papers |
| Year: |
2005 |
| Number: |
93 |
| ISSN / ISBN: |
|
| Published in: |
IES WP 2005/93 |
| Publishing place: |
Prague |
| Keywords: |
investment ratio, propensity to save, expected inflation, nonlinear system, and price dynamics |
| JEL codes: |
E44 |
| Suggested Citation: |
|
| Abstract: |
The purpose of this paper is to study a price level dynamics in a simple four-equation model. A basis of this model is developed from dynamical Kaldorian model which could be noticed very frequently in works of non-linear economic dynamics. Our approach is traditional. The difference is observed in a choice of an investment function. The investment function depending on the difference of logarithm of production and logarithm of capital (logarithm of the productivity of capital) is in a form of the logistic function. These two equations create relatively closed sub-model generating both production and capital stock trajectories. Two other equations describe the price level dynamics as a consequence of money market disequilibrium and continuously adaptive expectation of inflation. Our investigation is firstly aimed to core model dynamics, i.e., a dynamics of the production and capital stock. Secondly is to analyze dynamics of the model as a whole, i.e., to the first part is superadded the price dynamics and expected inflation dynamics depending on both an adaptation parameter of the commodity market and a parameter of the expectation. Thirdly we compute Lyapunov exponents for a simple model of closed economy showing it’s a chaotic behaviour. Simulation studies are performed. |
| Downloadable: |
WP 93_Vosvrda
|
