Foundations for a Disequilibrium Theory of the Business Cycle: Qualitative Analysis and Quantitative Assessment
Cambridge University Press
Edition: Illustrated, 10/27/2005
EAN 9780521850254, ISBN10: 0521850258
Hardcover, 550 pages, 22.9 x 15.2 x 3 cm
Language: English
Building on The Dynamics of Keynesian Monetary Growth by Chiarella and Flaschel (2000), this book is a key contribution to business cycle theory, setting out a disequilibrium approach with gradual adjustments of the key macroeconomic variables. Its analytic study of a deterministic model of economic activity, inflation and income distribution integrates elements in the tradition of Keynes, Metzler and Goodwin (KMG). After a qualitative analysis of the basic feedback mechanisms, the authors calibrate the KMG model to the stylized facts of the business cycle in the U.S. economy, and then undertake a detailed numerical investigation of the local and global dynamics generated by the model. Finally, topical issues in monetary policy are studied in small macromodels as well as for the KMG model by incorporating an estimated Taylor-type interest rate reaction function. The stability features of this enhanced model are also compared to those of the original KMG model.
Figures
Tables
Notation
Foreword J. Barkley Rosser, Jr
Preface
1. Competing approaches to Keynesian macrodynamics
Part I. Textbook Approaches
2. AS-AD growth theory
a complete analysis of the textbook model
3. Disequilibrium growth
the point of departure
Part II. Analytical Framework. Theory and Evidence
4. The Keynes-Metzler-Goodwin model
5. Calibration of three wage-price modules
6. Calibration of the full KMG model
7. Subsystems and sensitivity analysis of the KMG model
Part III. Monetary Policy
8. The Taylor Rule in small macro models
9. Incorporating the Taylor Rule into KMG
References.
Review of the hardback: 'Chiarella, Flaschel, and Franke have honed traditional stability analysis of aggregative macroeconomic models into an astonishingly penetrating critical tool. Their dispassionate and balanced study of current macroeconomic approaches throws much light on the conceptual contradictions that trouble this field, and motivate their suggested remedy, a return to a thorough disequilibrium dynamics in the tradition of Keynes, Metzler, and Goodwin. No serious student of mathematical macroeconomics working within any framework can afford to ignore this research and its implications.' Duncan K. Foley, Leo Model Professor, New School University