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Dynamics in a nonlinear Keynesian good market model

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  • Ahmad Naimzada
  • Marina Pireddu

Abstract

In this paper we show how a rich variety of dynamical behaviors can emerge in the standard Keynesian income-expenditure model when a nonlinearity is introduced, both in the cases with and without endogenous government spending. A specific sigmoidal functional form is used for the adjustment mechanism of income with respect to the excess demand, in order to bound the income variation. With the aid of analytical and numerical tools, we investigate the stability conditions, bifurcations, as well as periodic and chaotic dynamics. Globally, we study multistability phenomena, i.e., the coexistence of different kinds of attractors.

Suggested Citation

  • Ahmad Naimzada & Marina Pireddu, 2013. "Dynamics in a nonlinear Keynesian good market model," Working Papers 254, University of Milano-Bicocca, Department of Economics, revised Sep 2013.
    • Handle: RePEc:mib:wpaper:254
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    File URL: http://repec.dems.unimib.it/repec/pdf/mibwpaper254.pdf
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    References listed on IDEAS

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    1. repec:bla:scandj:v:93:y:1991:i:2:p:161-78 is not listed on IDEAS
    2. Hommes,Cars, 2015. "Behavioral Rationality and Heterogeneous Expectations in Complex Economic Systems," Cambridge Books, Cambridge University Press, number 9781107564978, October.
    3. De Cesare, Luigi & Sportelli, Mario, 2005. "A dynamic IS-LM model with delayed taxation revenues," Chaos, Solitons & Fractals, Elsevier, vol. 25(1), pages 233-244.
    4. Fanti, Luciano & Manfredi, Piero, 2007. "Chaotic business cycles and fiscal policy: An IS-LM model with distributed tax collection lags," Chaos, Solitons & Fractals, Elsevier, vol. 32(2), pages 736-744.
    5. Medio,Alfredo & Gallo,Giampaolo, 1995. "Chaotic Dynamics," Cambridge Books, Cambridge University Press, number 9780521484619, October.
    6. De Cesare, Luigi & Sportelli, Mario, 2012. "Fiscal policy lags and income adjustment processes," Chaos, Solitons & Fractals, Elsevier, vol. 45(4), pages 433-438.
    7. Michael Wegener & Frank Westerhoff, 2012. "Evolutionary competition between prediction rules and the emergence of business cycles within Metzler’s inventory model," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 251-273, April.
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    Cited by:

    1. Ahmad Naimzada & Marina Pireddu, 2013. "Dynamic behavior of real and stock markets with a varying degree of interaction," Working Papers 245, University of Milano-Bicocca, Department of Economics, revised Jun 2013.
    2. Fausto Cavalli & Ahmad Naimzada & Marina Pireddu, 2015. "Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms," Discrete Dynamics in Nature and Society, Hindawi, vol. 2015, pages 1-17, May.
    3. Naimzada, Ahmad & Pireddu, Marina, 2014. "Dynamic behavior of product and stock markets with a varying degree of interaction," Economic Modelling, Elsevier, vol. 41(C), pages 191-197.
    4. Cavalli, Fausto & Naimzada, Ahmad & Pireddu, Marina, 2015. "Heterogeneity and the (de)stabilizing role of rationality," Chaos, Solitons & Fractals, Elsevier, vol. 79(C), pages 226-244.
    5. Naimzada, Ahmad & Pireddu, Marina, 2015. "Real and financial interacting markets: A behavioral macro-model," Chaos, Solitons & Fractals, Elsevier, vol. 77(C), pages 111-131.

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    More about this item

    Keywords

    nonlinearities; complex dynamics; Keynesian model; business cycle; fiscal policy;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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