Economics and Finance


Lessons We Can Learn from Post-Keynesian Theory and Nonlinear Dynamics for Macroeconomics Modelling: A Toy Model for Indonesia Case

Authors: Victor Christianto, Florentin Smarandache, Yunita Umniyati, Thee Houw Liong

It has been known for long time that most macroeconomics models normally used for economics forecast are based on neoclassical paradigm, which relies on certain assumptions such as Efficient Market Hypothesis and Near to Equilibrium condition. But in recent years, there is growing awareness that world economy is getting more unstable and unpredictable. This condition is more appropriate for Keynesian and Hyman Minsky’s idea of FIH (financial instability hypothesis).Therefore it seems better for this unstable situation to consider what lessons we can learn from Post-Keynesian theory and also nonlinear dynamics for macroeconomics modelling. In this paper we will discuss one of the most discussed PK author, Steve Keen who is able to offer a mathematical model of Hyman Minsky’s ideas. We will discuss a toy model for Indonesia case, but of course this toy model needs to be verified with more robust model such as MINSKY software.

Comments: 11 Pages. This paper has been submitted to RBE (Review of Behavioral Economics)

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Submission history

[v1] 2017-08-09 01:51:23
[v2] 2017-08-14 02:29:39

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