Friday, May 24, 2013

A System Block Diagram For Nicholas Kaldor

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.

I think Keynes' General Theory can be read as leading towards systems thinking prior to its development in other disciplines.

1 comment:

Anonymous said...

Please define capital and how to measure it.