Template-Type: ReDIF-Article 1.0
Author-Name: Vasily E. Tarasov
Author-Name: Valentina V. Tarasova
Title:  Accelerators in Macroeconomics: Comparison of Discrete and Continuous Approaches
Abstract:  We prove that the standard discrete-time accelerator equation cannot be considered as an exact discrete analog of the continuous-time accelerator equation. This leads to fact that the standard discrete-time macroeconomic models cannot be considered as exact discretization of the corresponding continuous-time models. As a result, the equations of the continuous and standard discrete models have different solutions and can predict the different behavior of the economy. In this study, we propose a self-consistent discrete-time description of the economic accelerators that is based on the exact finite differences. For discrete-time approach, the model equations with exact differences have the same solutions as the corresponding continuous-time models and these discrete and continuous models describe the same behavior of the economy. Using the Harrod-Domar growth model as an example, we show that equations of the continuous-time model and the suggested exact discrete model have the same solutions and these models predict the same behavior of the economy.
Keywords: Macroeconomics, Accelerator, Harrod-Domar Growth Model, Finite Difference, Exact Difference
Journal: American Journal of Economics and Business Administration
Pages: 47-55
Volume: 9
Issue: 3
Year: 2017
Month: November
DOI: 10.3844/ajebasp.2017.47.55
File-URL: https://thescipub.com/pdf/ajebasp.2017.47.55.pdf
File-Format: Application/pdf
File-URL: https://thescipub.com/abstract/ajebasp.2017.47.55
File-Format: text/html
Handle: RePEc:abk:jajeba:ajebasp.2017.47.55