Tuesday, October 24, 2017

Structural Economic Dynamics with a Choice of Technique: A Numerical Example

A Bifurcation Diagram with Two Temporal Paths
I have a working paper with the post title. Here's the abstract:
This article illustrates the application of bifurcation analysis to structural economic dynamics with a choice of technique. A numerical example of the Samuelson-Garegnani model is presented in which technical change is introduced. Examples of temporal paths through the parameter space illustrate variations of the wage frontier. A single technique is initially uniquely cost-minimizing for all feasible rates of profits. Eventually, the technique for which coefficients of production decrease at the fastest rates is always cost-minimizing. During the transition between these positions, reswitching, the recurrence of techniques, and capital-reversing can arise. This example emphasizes the importance of fluke switch points and illustrates possible variations in the existence of Sraffa effects.

No comments: