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Early Nonlinear Modelling in Economic Analysis: The Hicks Model for Greece Revisited

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  • Michaelides, Panayotis G.
  • Belegri-Roboli, Athena
  • Arapis, Gerasimos

Abstract

The present paper discusses the transition from linear modelling to the first nonlinear models in economic analysis. In this vein, an important contribution was J. Hicks’s A Contribution to the Theory of the Trade Cycle where he developed his own endogenous model of the cycle. Hicks thought that fluctuations in investment,– caused by nonlinear changes in autonomous investment and the acceleration principle governing induced investment – led to an adjustment process taking place throughout many periods. In this paper we introduce some modifications regarding the econometric estimation of Hicks’s nonlinear model and an empirical application for Greece (1960-2007) takes place demonstrating the almost ideal fit of the model.

Suggested Citation

  • Michaelides, Panayotis G. & Belegri-Roboli, Athena & Arapis, Gerasimos, 2009. "Early Nonlinear Modelling in Economic Analysis: The Hicks Model for Greece Revisited," MPRA Paper 67112, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:67112
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    References listed on IDEAS

    as
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    3. Michal Kalecki, 1937. "A Theory of the Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(2), pages 77-97.
    4. Olav Bjerkholt (ed.), 1995. "Foundations of Modern Econometrics," Books, Edward Elgar Publishing, volume 0, number 46.
    5. Hendry,David F. & Morgan,Mary S., 1997. "The Foundations of Econometric Analysis," Cambridge Books, Cambridge University Press, number 9780521588706, September.
    6. Steven Rappaport, 1996. "Abstraction and unrealistic assumptions in economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 3(2), pages 215-236.
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    More about this item

    Keywords

    Linear; Nonlinear; dynamics; Hicks; economics.;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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