An analysis of the effectiveness of policy based on basins of attraction

Article Abstract:

The reduction of inflation rates using monetary policies is analyzed using basins of attraction. The study aims to find out the state of the economy in the long-run if these policies, either gradual or one-time, are adopted. A nonlinear dynamic model depicting unemployment and inflation is used. The presence of basin boundaries shows the importance of analysis of basins and their implications for monetary policies. When a one-time or shock policy is used, there is a deviation from the desired outcome of the policy.

Prices, Management, Inflation (Finance), Monetary policy, Metabolic regulation, Growth, Growth (Physiology), Growth regulators, Inflation (Economics)

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Active monetary policy and instability in a Phillips curve system

Article Abstract:

The Phillips curve system is shown to yield to chaos by the inclusion of an active stabilizing monetary policy as it increases the motion of the whole system. The instability is shown to be further enhanced by the behavioral and monetary parameters of the model suggesting that expectations incorporation has destabilizing effects on a nonlinear macroeconomic model of unemployment, inflation and monetary policy.

Econometrics & Model Building, Models, Econometrics, Macroeconomics, Business models

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Transitions from stable equilibrium points to periodic cycles to chaos in a Phillips curve system

Article Abstract:

The response characteristics of a nonlinear semi-empirical model of inflation and unemployment are studied. Results show that the equilibrium point destabilizes at certain critical parameter values, leading to the regular cyclical movement of economic parameters. Changes in parameters such as money supply and growth rate also give rise to the complex behavior of inflation and unemployment.

Equilibrium (Economics)

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