Discrete Dynamics in Nature and Society
Volume 2007 (2007), Article ID 98059, 16 pages
doi:10.1155/2007/98059
Research Article
Numerical Exploration of Kaldorian Macrodynamics: Hopf-Neimark Bifurcations and Business Cycles with Fixed Exchange Rates
1Faculty of Economics, Chuo University, 742-1 Higashinakano, Hachioji, Tokyo 192-0393, Japan
2Faculty of Engineering, University of Patras, Patras 26500, Greece
Received 15 June 2006; Accepted 9 February 2007
Copyright © 2007 Toichiro Asada et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
We explore numerically a three-dimensional discrete-time Kaldorian macrodynamic model in an open economy with fixed exchange rates, focusing on the effects of variation of the model parameters, the speed of adjustment of the goods market α, and the degree of capital mobility β on the stability of equilibrium and on the existence of business cycles. We determine the stability region in the parameter space and find that increase of α destabilizes the equilibrium more quickly than increase of β. We determine the Hopf-Neimark bifurcation curve along which business cycles are generated, and discuss briefly the occurrence of Arnold tongues. Bifurcation and Lyapunov exponent diagrams are computed providing information on the emergence, persistence, and amplitude of the cycles and illustrating the complex dynamics involved. Examples of cycles and other attractors are presented. Finally, we discuss a two-dimensional variation of the model related to a “wealth effect,” called model 2, and show that in this case, α does not destabilize the equilibrium more quickly than β, and that a Hopf-Neimark bifurcation curve does not exist in the parameter space, therefore model 2 does not produce cycles.