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Stochastic Stability in Macro Models

Authors: Kiernan, E; Madan, Dilip B;

Stochastic Stability in Macro Models

Abstract

Stability in macro models may be attained by the addition of heteroscedastic shocks. This is illustrated by stabilizing the Harrod-Domar model in one dimension. In two dimensions, a saddle point is required and the method is applied to the Buiter-Miller model. Choosing broadly Keynesian and monetarist parameterizations, cyclical behaviour is investigated on simulated data. The results indicate that Keynesian models are harder to stabilize. When stabilized they possess cycles of four to five years and monetarist models with large shocks are comparable to the Keynesian model.

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Powered by OpenAIRE graph
Found an issue? Give us feedback
selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
4
Average
Average
Average
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