Explorations in Qualitative Macroeconomics
Arthur Farley, Kuan-Pin Lin
Committee:
Technical Report(Dec 1969)
Keywords:

In this chapter, we present an approach to qualitative reasoning about macroeconomic systems. The basic element of our scheme is the market model, an entity that adjusts itself to restore equilibrium after perturbation. We define a process that performs market adjustment following perturbation of a parameter. Complex economic theories are represented in terms of multiple markets with their interaction realized by variables of one market being parameters to others. We generalize our reasoning process to cope with multiple-market models. Comparing final to initial values of model variables implements comparative statics. We consider modeling situations of disequilibrium and present a method for generating multi-market dynamics. We illustrate our notions by consideration of Keynesian macroeconomic models.