An Introduction to Economic Dynamics: Modelling, Analysis and Simulation

✍ Scribed by Srinivas Raghavendra, Petri T. Piiroinen

• Publisher: Routledge
• Year: 2023
• Tongue: English
• Leaves: 256
• Series: Routledge Advanced Texts in Economics and Finance, 39
• Category: Library

✦ Synopsis

An Introduction to Economic Dynamics provides a framework for students to appreciate and understand the basic intuition behind economic models and to experiment with those models using simulation techniques in MATLAB®.

This book goes beyond the often-limited scope of other texts on economic models, which have largely focused on elucidating static equilibrium models. Comparative static analysis inhibits students from asking how the equilibrium position is achieved from an initial out-of-equilibrium position and limits their understanding of the dynamics that underlie such analysis. In this textbook, readers are introduced to ten well-established macroeconomic models – including Keynesian multiplier models, Samuelson’s multiplier and Solow’s growth model – and guided through the dynamical systems behind each model. Every chapter begins with an overview of the economic problem which the model is designed to help solve followed by an explanation of the mathematics of the model. Solutions are provided using simulation and visualisation techniques in MATLAB®, which are interwoven organically with the analysis and are introduced in a step-by-step fashion to guide the reader along the way. Appendices provide an introduction to MATLAB® along with all the necessary codes.

The book is ideally suited for courses in economic dynamics, macroeconomic modelling and computational economics, as well as for students of finance, mathematics and engineering who are interested in economic models.

✦ Table of Contents

Cover
Endorsements
Half Title
Series
Title
Copyright
Dedication
Contents
Preface
Chapter 1 Introduction to Economic Dynamics
1.1 A short primer on MATLAB®
Chapter 2 The Cobweb Model
2.1 Economic problem
2.2 Modelling
2.3 Analysis, simulation and visualisation
2.3.1 Cobweb plots
2.4 Concluding remarks, extensions and challenges
Chapter 3 Expectation Dynamics in the Cobweb Model
3.1 Economic problem
3.2 Modelling
3.3 Analysis, simulation and visualisation
3.3.1 Cobweb plots
3.4 Concluding remarks, extensions and challenges
Chapter 4 Keynesian Multiplier Model
4.1 Economic problem
4.2 Modelling
4.3 Analysis, simulation and visualisation
4.4 Concluding remarks, extensions and challenges
Chapter 5 The Is/Lm Model
5.1 Economic problem
5.2 Modelling
5.3 Analysis, simulation and visualisation
5.4 Remarks, extensions and challenges
Chapter 6 Debt, Deficit and Stabilisation Policy
6.1 Economic problem
6.2 Modelling
6.3 Analysis, simulation and visualisation
6.3.1 Simulation and visualisation
6.4 Concluding remarks, extensions and challenges
Chapter 7 Expectation Dynamics and Hyperinflation
7.1 Economic problem
7.2 Modelling
7.3 Analysis, simulation and visualisation
7.3.1 The naive expectation model
7.3.2 The perfect foresight model
7.3.3 Analysis of the rational expectation model
7.3.4 Simulation and visualisation
7.4 Concluding remarks, extensions and challenges
Chapter 8 The Dornbusch Exchange Rate Overshooting Model
8.1 Economic problem
8.2 Modelling
8.2.1 Commodity price dynamics
8.3 Analysis, simulation and visualisation
8.4 Concluding remarks, extensions and challenges
Chapter 9 The Solow-Swan Growth Model
9.1 Economic problem
9.2 Modelling
9.3 Analysis, simulation and visualisation
9.4 Concluding remarks, extensions and challenges
Chapter 10 An Endogenous Growth Model
10.1 Economic problem
10.2 Modelling
10.3 Analysis, simulation and visualisation
10.3.1 Stability analysis
10.3.2 Simulation analysis and visualisation
10.3.3 Discussion
10.4 Concluding remarks, extensions and challenges
Chapter 11 Business Cycles I: Samuelson’S Multiplier-Accelerator Model
11.1 Modelling
11.2 Analysis, simulation and visualisation
11.3 Concluding remarks, extensions and challenges
Chapter 12 Business Cycles II: The Real Business Cycle Model
12.1 Economic problem
12.2 Modelling
12.3 Analysis and visualisation
12.3.1 Solution method
12.3.2 Equilibrium solution: The optimal path
12.3.3 Optimal paths under parameter variations
12.3.4 Optimal paths for stochastic variations in parameters
12.4 Concluding remarks, extensions and challenges
Appendix A Difference and Differential Equations
A.1 First-order linear difference equation
A.2 Second-order linear difference equation
A.3 First-order linear differential equations
A.4 Second-order linear differential equations
A.5 Systems of linear first-order differential equations
Appendix B Matlab® Codes
B.1 Chapter 1
B.2 Chapter 2
B.3 Chapter 3
B.4 Chapter 4
B.5 Chapter 5
B.6 Chapter 6
B.7 Chapter 7
B.8 Chapter 8
B.9 Chapter 9
B.10 Chapter 10
B.11 Chapter 11
B.12 Chapter 12
Index