Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/187757 
Year of Publication: 
2017
Citation: 
[Journal:] European Financial and Accounting Journal [ISSN:] 1805-4846 [Volume:] 12 [Issue:] 1 [Publisher:] University of Economics, Faculty of Finance and Accounting [Place:] Prague [Year:] 2017 [Pages:] 19-34
Publisher: 
University of Economics, Faculty of Finance and Accounting, Prague
Abstract: 
The objective of this article is to derive a simple dynamic macroeconomic model of an open economy to show how an economy as a dynamic system can work. The proposed model is resulted from the traditional Mundell-Fleming model. Unlike the Mundell-Fleming model, we introduce a continuous dynamic and non-linearity. Non-linearity in our model is represented by a non-linear investment function. The non-linear investment function is introduced as the propensity to invest function, which is assumed to be captured by the logistic function of production. After that, the stability of the model is analysed using Hurwitz stability theorem. The behaviour of our non-linear macroeconomic model of open economy is demonstrated on two numerical examples in which two different sets of parameters are selected to examine the dynamic of the system with emphasis on the impact of export multiplier. The presented examples show that the model is able to generate very complex dynamic.
Subjects: 
Dynamic model
Exchange rate dynamics
Limit cycle
Money market dynamics
Uncovered interest rate parity
JEL: 
F44
Persistent Identifier of the first edition: 
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.