A discrete‐time model of a closed economy is employed in order to introduce the whole dynamics of stock adjustments in the IS‐LM diagram. Discrete‐time modeling allows us to represent the traverse process from the initial stationary state equilibrium to the new one by means of a family of intermediary IS(t) and LM(t) curves intersecting at each t to determine the appropriate short run equilibrium. Sufficient conditions for the dynamic process to be non‐cyclical are derived under plausible assumptions. Two appendices provide the stability analysis and a numerical simulation of the model used. Copyright © 1989, Wiley Blackwell. All rights reserved
Boitani, A., Christodoulakis, N., A NOTE ON IS‐LM AND STOCK ADJUSTMENT PROCESSES, <<METROECONOMICA>>, 1989; 40 (1): 67-85. [doi:10.1111/j.1467-999X.1989.tb00442.x] [http://hdl.handle.net/10807/168831]
A NOTE ON IS‐LM AND STOCK ADJUSTMENT PROCESSES
Boitani, Andrea
Primo
;
1989
Abstract
A discrete‐time model of a closed economy is employed in order to introduce the whole dynamics of stock adjustments in the IS‐LM diagram. Discrete‐time modeling allows us to represent the traverse process from the initial stationary state equilibrium to the new one by means of a family of intermediary IS(t) and LM(t) curves intersecting at each t to determine the appropriate short run equilibrium. Sufficient conditions for the dynamic process to be non‐cyclical are derived under plausible assumptions. Two appendices provide the stability analysis and a numerical simulation of the model used. Copyright © 1989, Wiley Blackwell. All rights reserved
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