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The Z-Transform Method for Multidimensional Dynamic Economic Systems

Author

Listed:
  • Xiaoyong Cui

    (Guanghua School of Management, Peking University)

  • Liutang Gong

    (Guanghua School of Management, Peking University)

  • Xiaojun Zhao

    (Guanghua School of Management, Peking University)

  • Heng-fu Zou

    (Guanghua School of Management, Peking University
    Institute for Advanced Studies, Wuhan University
    CEMA in Central University of Finance and Economics)

Abstract

This paper uses the Z-transform to develop a method for solving the linearized multidimensional discrete-time systems, which can be used to discuss the e¡èects of policies on economy (including the welfare gains and initial e¡èects on economy) raised by multi-sector perfect-foresight-discrete-time models. Our method is not restricted on the dimension of the dynamic system, and it cannot only analyze the effect of permanent policy change on the economy, but also it can be used to analyze the e¡èect of temporal policy change on the economy. As an application example, we analyze the effects of fiscal policy on the initial economy and social welfare in the discrete-time Uzawa-Lucas model.

Suggested Citation

  • Xiaoyong Cui & Liutang Gong & Xiaojun Zhao & Heng-fu Zou, 2012. "The Z-Transform Method for Multidimensional Dynamic Economic Systems," CEMA Working Papers 532, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:532
    as

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    References listed on IDEAS

    as
    1. Meijdam, Lex & Verhoeven, Marijn, 1998. "Comparative Dynamics in Perfect-Foresight Models," Computational Economics, Springer;Society for Computational Economics, vol. 12(2), pages 115-124, October.
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    3. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
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    5. Chamley, Christophe, 1981. "The Welfare Cost of Capital Income Taxation in a Growing Economy," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 468-496, June.
    6. B. Douglas Bernheim, 1981. "A Note on Dynamic Tax Incidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(4), pages 705-723.
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    More about this item

    Keywords

    Z-transform; Steady-state comparisons; Multi-sector model;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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