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Credit-Driven Investment, Heterogeneous Labor Markets and Macroeconomic Dynamics

Charpe, Matthieu, Flaschel, Peter, Krolzig, Hans-Martin, Proano, Christian R, Semmler, Willi, Tavani, Daniele. (2014) Credit-Driven Investment, Heterogeneous Labor Markets and Macroeconomic Dynamics. Journal of Economic Interaction and Coordination, . ISSN 1860-711X. E-ISSN 1860-7128. (doi:10.1007/s11403-014-0126-4) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.1007/s11403-014-0126-4

Abstract

In this paper we set up a baseline, but nevertheless advanced and complete model representing detailed goods market dynamics, heterogeneous labor markets, dual and cross-dual wage-price adjustment processes, as well as counter-cyclical government policies. The cyclical movements of output generate, through Okun’s law, employment variations in the heterogeneous labor market. The core of the resulting Keynesian macrodynamics is however given by credit-financed investment behavior and loan-rate setting by credit suppliers. The framework is constructed in such way that simplified, lower dimensional versions of the model can be obtained by setting parameters describing specific feedback effects from one sector to another equal to zero. Starting from such low dimensional sub-dynamics, we show the local stability of the full 7D model through a “cascade of stable matrices” approach if the feedback chains are sufficiently tranquil in their transmission mechanisms. However, local stability is the point of departure for the numerical investigation of local explosiveness and the forces that can bound such a behavior.

Item Type: Article
DOI/Identification number: 10.1007/s11403-014-0126-4
Additional information: number of additional authors: 5;
Uncontrolled keywords: Macroeconomic stability/instability, Segmented labor markets, Business cycles, Fiscal and monetary policy rules, E12, E24, E31, E52
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Stewart Brownrigg
Date Deposited: 07 Mar 2014 00:05 UTC
Last Modified: 06 Feb 2020 04:09 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/40519 (The current URI for this page, for reference purposes)
Krolzig, Hans-Martin: https://orcid.org/0000-0001-8488-7048
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