×

Chaotic business cycles and fiscal policy: An IS-LM model with distributed tax collection lags. (English) Zbl 1133.91482

Summary: A continuous time economic IS-LM model with distributed tax collection lag is proposed. Phase transitions from stability to stable oscillations and finally to chaotic motion are shown to occur. The model thus offers an explanation of the multiperiodicity and irregularity in business cycles. The suggested implications in fiscal control policy could be of help in the current economic and political debate on the role of fiscal policy in the European countries.

MSC:

91B62 Economic growth models
37N40 Dynamical systems in optimization and economics
PDFBibTeX XMLCite
Full Text: DOI

References:

[1] Berry, B. J.L.; Kim, H., Long waves 1790-1990: intermittency, chaos and control, (Kiel, L. D.; Elliott, E., Chaos theory in the social sciences (1997), The University of Michigan Press: The University of Michigan Press Ann Arbor)
[2] Chen, P., Empirical and theoretical evidence of economic chaos, Syst Dyn Rev, 4, 1-2, 1-38 (1988)
[3] Choudhry NN. Collection lags, fiscal revenue and inflationary financing: empirical evidence and analysis. International Monetary Fund Working Paper: WP/91/41, 1991.; Choudhry NN. Collection lags, fiscal revenue and inflationary financing: empirical evidence and analysis. International Monetary Fund Working Paper: WP/91/41, 1991.
[4] De Cesare, L.; Sportelli, M., A dynamic IS-LM model with delayed taxation revenues, Chaos, Solitons & Fractals, 25, 233-244 (2005) · Zbl 1110.91020
[5] Fanti, L., Fiscal policy and tax collection lags: stability, cycles and chaos, Rivista Internazionale di Scienze Economiche e Commerciali, 51, 3, 341-365 (2004)
[6] Fanti, L.; Manfredi, P., Progressive income tax, collection lags, and stability, Public Fin., 53, 3-4, 312-330 (2003)
[7] Farkas, M., Periodic motions (1995), Springer-Verlag: Springer-Verlag New York, Tokyo
[8] Goodhart, C. A.E.; Crockett, A. D., The importance of money, Bank England Quar Bull, 10, 159-198 (1970)
[9] Kopits G. Fiscal rules: useful policy framework or unnecessary ornament? International Monetary Fund Working Paper: WP/01/145, 2001.; Kopits G. Fiscal rules: useful policy framework or unnecessary ornament? International Monetary Fund Working Paper: WP/01/145, 2001.
[10] Invernizzi, S.; Medio, A., On lags and chaos in economic dynamic models, J Math Econ, 20, 521-550 (1991) · Zbl 0749.90012
[11] Lorenz, H. W., Nonlinear economic dynamics and chaotic motion (1993), Springer-Verlag: Springer-Verlag New York, Tokyo · Zbl 0841.90036
[12] Manfredi, P.; Fanti, L., Cycles in dynamic economic modelling, Econ Modell, 21, 573-594 (2004)
[13] Medio, A., Chaotic dynamics (1992), Cambridge University Press: Cambridge University Press Cambridge · Zbl 0783.58002
[14] Sasakura, K., On the dynamic behavior of Schinasi’s business cycle model, J Macroecon, 16, 3, 423-444 (1994)
[15] Serletis, A., Is there chaos in economic series?, Can J Econ, 29, S210-S212 (1996)
[16] Schinasi, G. J., Nonlinear dynamic model of short run fluctuations, Rev Econ Stud, 48, 4, 649-656 (1981) · Zbl 0467.90013
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.