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Bifurcation Analysis Of Zellner's Marshallain Macroeconomic Model

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Executive Summary

The Marshallian Macroeconomic Model in Zellner and Israilevich (2005) provides a novel way to examine sectoral dynamics through the introduction of a dynamic entry/exit equation in addition to the usual demand and supply functions found in models of this class. In this paper the authors examine the possibility of cyclical behavior in the Marshallian Macroeconomic Model and investigate the existence of a Hopf bifurcation with respect to the parameter in the entry/exit equation. With the formulation of the Marshallian Macroeconomic Model (MMM) by Veloce and Zellner (1985) for a single sector, and later extension to a multi-sector model by Zellner and Israilevich (2005), Zellner and his co-authors attempted to incorporate sectoral dynamics and its effects on aggregates and vice-versa.

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