Burying Samuelson's multiplier-accelerator and resurrecting Goodwin's growth cycle in Minsky
Samuelson's Multiplier-Accelerator model is based on the economic mistake of adding together desired investment and actual savings to derive aggregate expenditure, when it is the sum of actual investment and actual savings. Its fluctuations are not a model of the business cycle, but convergence...
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| Veröffentlicht in: | Feedback economics |
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| Format: | UnknownFormat |
| Sprache: | eng |
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2021
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Tag hinzufügen | Zusammenfassung: | Samuelson's Multiplier-Accelerator model is based on the economic mistake of adding together desired investment and actual savings to derive aggregate expenditure, when it is the sum of actual investment and actual savings. Its fluctuations are not a model of the business cycle, but convergence to or divergence from the trivial solution. Goodwin’s relatively neglected growth cycle model is shown to be a valid foundation for modelling the business cycle and is derived directly from macroeconomic definitions. When the private debt ratio is added to those definitions, Minsky's "Financial Instability Hypothesis" results. I illustrate modelling of this hypothesis in the open-source system dynamics program named after Minsky, which has been designed predominantly to enable monetary dynamics to be modelled. I use Minsky's unique feature of Godley Tables to show the macroeconomic difference between the false Loanable Funds model of banking and the realistic "bank originated money and debt" model. I show that a third-order difference equation growth cycle model can be derived from the concept of an investment accelerator. I close with an Appendix showing the use of Godley Tables in epidemic modelling. |
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| ISBN: | 9783030671891 3030671895 |