Disequilibrium, Growth and Labor Market Dynamics: Macro PerspectivesIn this book on disequilibrium, growth and labor market dynamics we take predominantly a macroeconomic perspective. We present a working model that can easily be varied in different directions in order to subsume innovations in the literature on macroeconomics, old and new, and to contribute to important currently discussed macroeconomic issues. Our working model is set up in a way that there is a close relationship between our presented dynamic models and modern macro econometric models with disequilibrium both in the labor and the goods markets. One of our objectives is, therefore, to narrow the gap between theoretical and applied structural macrodynamic model building. We hope that the book will be a useful reference for all researchers, academic teachers and practitioners of macroeconomic and macro econometric model building who are interested in economic dynamics, independently of whether they use equilibrium or disequilibrium methods in their own research. We base this hope on the fact that our approach contains a number of unique features. The emphasis on the identification and analysis of the basic feedback mechanisms at work in modern macro economies. A detailed study of the partial as well as integrated dynamic interaction between these feedback mechanisms that consti tute the interdependence of markets and sectors of the modern macro economy. The rela tionship between the macroeconomic framework of our working model and the Walrasian, Non-Walrasian and New-Keynesian reformulations of macroeconomics. |
Contents
Introduction Integrated Macro dynamics | 1 |
Disequilibrium Growth and Labor Market Dynamics Foundations | 13 |
221 Textbook ISLMPC modeling | 14 |
222 Keynesian ISLMPC analysis | 15 |
223 Reinterpreting the ISLMPC dynamics | 18 |
23 Goods market disequilibrium and quantity adjustments | 23 |
231 An early modeling of the trade cycle | 25 |
232 Metzlerian inventory dynamics | 33 |
642 Profit share targets | 277 |
643 Markup adjustments | 281 |
65 Summary | 283 |
Applied Disequilibrium Growth Theory | 289 |
72 A general framework for modeling disequilibrium growth | 293 |
722 The structure from the viewpoint of national accounting | 297 |
723 Aggregate concepts from the system of national accounts | 303 |
73 Households | 305 |
24 Labor market and real wage dynamics | 41 |
242 Debt deflation and adverse real wage adjustment | 48 |
25 Labor market two Phillipscurves and nominal adjustments | 52 |
Disequilibrium Growth and Labor Market Dynamics Synthesis and Perspectives | 61 |
32 The working KMG model of fluctuating growth | 62 |
33 Integrated macrodynamics in an open economy | 75 |
34 Microfoundations and macromechanisms | 86 |
35 Macroeconometric model building | 96 |
351 The national accounts of the model | 97 |
352 The implied CTD growth model | 101 |
353 The 18D core dynamics | 103 |
354 Numerical investigations | 106 |
36 Summary and outlook | 111 |
37 Appendices | 113 |
372 The working model in extensive form | 114 |
FlexPrice Approaches Exceptional Limit Cases? | 123 |
An extended KMG reference case | 124 |
43 Substitution and endogenous technical change | 134 |
Classical real and dichotomizing nominal dynamics? | 143 |
Walrasian reformulation and saddle point stability | 153 |
46 KMG equilibrium growth | 168 |
47 Summary | 178 |
Labor market dynamics and classical viability | 180 |
FixPrice Approaches Regime Switching Overstated | 189 |
52 A NonWalrasian model of monetary growth | 191 |
53 From NonWalrasian to Keynesian modeling of monetary growth | 196 |
54 Regime switching in KMG growth | 201 |
542 Exhausted inventories and excessive aggregate demand | 212 |
543 Numerical analysis | 216 |
55 Summary | 222 |
An early NonWalrasian contribution | 223 |
Market Imperfections Basic Integration and Comparison | 229 |
62 A discretetime KMG reference case | 232 |
Given income distribution | 247 |
631 Revising the wageprice module of KMG growth | 250 |
Local analysis | 255 |
633 Global characteristics of the 2D case | 258 |
2D analysis | 260 |
635 4D and 6D extensions of the 2D stagflation dynamics | 265 |
Adjusting income distribution | 271 |
641 Marked up marginal wage costs | 272 |
74 Firms | 317 |
75 Government and the monetary authority | 323 |
76 Quantity and price adjustment | 325 |
77 Asset market dynamics | 330 |
78 The foreign sector | 332 |
79 A summing up | 334 |
A brief comparison | 338 |
Notation | 346 |
Representing technology by nested CES CET production functions | 349 |
Intensive Forms and Steady State Calculations | 353 |
82 The real and the financial structure of the economy | 356 |
822 The financial sector | 358 |
823 National accounting | 359 |
83 Intensive form of the implied 39D dynamics | 366 |
84 Steady state calculations | 374 |
85 Simplifying assumptions | 382 |
86 Intensive form of the implied 22D dynamics | 384 |
87 The steady state solution of the 22D dynamics | 393 |
88 Concluding observations | 401 |
Ways Ahead Analyzing Structural Macroeconometric Model Building | 405 |
92 Further simplifying assumptions | 406 |
93 The 18D core dynamics of the model | 409 |
932 Static relationships | 412 |
94 Steady state analysis | 414 |
942 Steady state comparisons | 417 |
Some examples | 418 |
952 A 5D KMG type subdynamics | 421 |
953 The 5D dynamics with a housing sector | 424 |
955 Nominal dynamics in the real part of the economy | 425 |
956 The integrated real dynamics of the economy | 426 |
96 Adding policy issues to the real dynamics | 428 |
962 Fiscal policy rules | 430 |
963 Fiscal and monetary policy rules in interaction | 433 |
97 Adding asset price dynamics to the real dynamics | 435 |
One way routes and interactions | 437 |
98 Numerical investigations of the full 18D dynamics | 440 |
99 The Fair model for the US economy | 454 |
910 Conclusions and outlook | 465 |
References | 467 |
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Disequilibrium, Growth and Labor Market Dynamics Carl Chiarella,Peter Flaschel,Gangolf Groh No preview available - 2014 |
Common terms and phrases
actual adaptive expectations adjustment speeds aggregate demand analysis approach asset holders asset markets assumed assumption asymptotic stability basic behavior capacity utilization capital stock chapter Chiarella and Flaschel considered consumption determined disequilibrium growth domestic dynamical system economy eigenvalue endogenous equations equilibrium exchange rate expected sales exports feedback figure firms Flaschel 1999e function growth model growth rate households implies income inflationary expectations intensive form interest rate interior steady investment Jacobian Keynesian KMG growth KMG model labor market laws of motion limit cycle macroeconometric model macroeconomic monetary growth money wage Murphy model NAIRU nominal nonlinear output parameter Phillips curve Powell and Murphy present price level production quantity adjustment rate of capacity rate of employment rate of interest real wage saddle point sales expectations sector situation stability steady state value taxes unit of capital value added tax wage and price wage share workers π²