|A System Block Diagram For A Business Cycle Model|
I have previously presented a (replication of an) analysis of a discrete-time formalization of Kaldor's Keynesian model of business cycles. The system block diagram, above, is another way of specifying the model. This diagram, I think, helps make certain characteristics of the system more readily apparent:
- The non-linear component of the system, that is, the inverse tangent function, stands out.
- Only two state variables, national income (Yt) and the value of the capital stock (Kt), need to be specified for this system.
- The ordered pair (Yt, Kt) = (μ, σμ/δ) is a fixed point of the function specified by this system.
I am not sure about the use of one-step time lags to represent iteration for the Kaldor model. Presumably, Steve Keen has thought about this question for his software.