A three-country Kaldorian business cycle model with fixed exchange rates: a continuous time analysis. (English) Zbl 1482.37106
Summary: This paper analyses a three-country, fixed exchange rates Kaldorian nonlinear macroeconomic model of business cycles. The countries are connected through international trade, and international capital movement with imperfect capital mobility. Our model is a continuous time version of the discrete time three-country Kaldorian model of Inaba and Asada [P. Krugman, The Self-Organizing Economy, Blackwell, Oxford UK (1996)]. Their paper provided numerical studies of the dynamics of the three countries under fixed exchange rates. This paper provides analytical examinations of the local stability of the model’s equilibria, and of the existence of business cycles. The results are illustrated by numerical simulations.
MSC:
| 37N40 | Dynamical systems in optimization and economics |
| 37G15 | Bifurcations of limit cycles and periodic orbits in dynamical systems |
| 91B64 | Macroeconomic theory (monetary models, models of taxation) |
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